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Obvious Mistakes in a Strategically Simple College-Admissions Environment

60 Pages Posted: 28 Jun 2017 Last revised: 8 Nov 2017

Ran I. Shorrer

Pennsylvania State University

Sándor Sóvágó

VU University Amsterdam

Multiple version iconThere are 2 versions of this paper

Date Written: November 6, 2017

Abstract

In a centralized marketplace that was designed to be simple, we identify participants whose choices are dominated. Using administrative data from Hungary, we show that college applicants make obvious mistakes: they forgo the free opportunity to receive a tuition waiver worth thousands of dollars. At least 10 percent of the applicants made such mistakes in 2013. Costly mistakes have externalities: they transfer tuition waivers from high- to low-socioeconomic status students, and increase the number of students attending college. To shed light on the mechanisms underlying mistakes, we exploit a reform that substantially increased the selectivity of admission with financial aid in some fields of study. Increased admission selectivity raises the likelihood of making obvious mistakes, especially among high-socioeconomic status and low-achieving applicants. Our results suggest that mistakes are more common when their expected cost is lower. Still, the average cost of a mistake in 2013 was 114-365 dollars.

Keywords: College admissions, dominated strategies, market design, obvious misrepresentation, school choice, strategy-proof

Suggested Citation

Shorrer, Ran I. and Sóvágó, Sándor, Obvious Mistakes in a Strategically Simple College-Admissions Environment (November 6, 2017). Available at SSRN: https://ssrn.com/abstract=2993538 or http://dx.doi.org/10.2139/ssrn.2993538

Ran I. Shorrer (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Sándor Sóvágó

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

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