17 Pages Posted: 1 Dec 2013 Last revised: 30 Apr 2014
Date Written: April 29, 2014
I analyze a formal application process where the quality of applicants is not observable. Some potential applicants err in their self-assessment, and a service provider, who administers a formal application process, misjudges the qualifications of some applicants. Two types of errors are analyzed: Classifying qualified candidates as unqualified (type alpha), and classifying unqualified as qualified (type beta). I examine the role played by admission policies and application fees in reducing applications and acceptances of less qualified applicants.
Keywords: Application fees, qualifications assessment errors, formal application process, admission policy
JEL Classification: L1, L8, G21
Suggested Citation: Suggested Citation