College Admissions

Abstract

I propose a centralized clearinghouse for college admissions in which students can signal enthusiasm by commitment, as in early-decision programs. Furthermore, students can specify financial aid in their preferences and they can be matched with multiple colleges simultaneously. This clearinghouse keeps the desirable properties of the decentralized college admissions, like signaling and yield management, while getting rid of the undesirable aspects, such as unfairness and unraveling.

To study centralized college admissions, I advance the theory of stability for many-to-many matching markets with contracts. In particular, I show that stable matchings exist even when colleges do not have path-independent (or substitutable) choice rules. I provide a comparative statics for the student-proposing deferred acceptance algorithm. Furthermore, I introduce a new monotonicity condition on choice rules to study yield management for colleges and generalize the rural-hospitals theorem when contracts may have different weights. My framework opens new venues for market-design research and raises questions about the standard assumptions made in the literature.

Keywords: College admissions, early decision, matching with contracts, choice rule, path independence, substitutability, monotonicity, law of aggregate demand, rural hospitals theorem

JEL Classification: C78, D47, D71, D78