Download Early Admission in the College Admissions Market

Early Admission in the College
Admissions Market
Background
• Two different types of early admissions
– Early Decision (ED) and Early Action (EA)
• Started in 1976-1977 by Ivy League and MIT
• Some schools opted for EA while others opted
for ED
• Currently most selective schools have some
form of early admissions with vast majority
having ED.
Early Decision vs. Early Action
• Early Decision
– Binding contract between student and university that
if the student is accepted, he/she will attend.
• Early Action
– Applying to a school EA allows the student to apply
and get accepted or rejected earlier than with regular
decision. The student can still choose if he/she wants
to attend university.
• Single Choice Early Action
– Similar to EA but can only apply to one school.
Questions to be Addressed
• Why does early admissions exist?
• Who does early admissions help and who
does it hurt?
• How does EA compare to ED?
• Can other signaling mechanisms be used in
place of early admissions?
Signaling Device
• Early admissions is used to signal enthusiasm
for a specific school.
• It is used to signal that a student is organized
enough to be able to apply early.
College Admissions Model*
• Some colleges are top-tier, some are second-tier.
Colleges tend to know how they are ranked.
• Students are either elite or non-elite and have
strong preferences over schools. Students know if
they are elite or non-elite.
• Although students can be elite or non-elite,
colleges have preferences over students in these
subsets.
• Colleges prefer elite students and enthusiastic
students.
Haque, Rezwan. "Knowing What to Make of It: An Evaluation of Early Action as a Signal
in the College Admissions Market." (2008): Print.
College Admissions Model cont.
• Colleges have a quota.
– Quota=Admitted Students*Take-up Rate
– Ideally, college knows take-up rate but in reality,
this is usually an estimate.
• How do colleges not exceed their quota?
No Early Admissions
• All students apply to all colleges.
• Colleges do not know students’ preferences.
• Some elite students prefer second-tier
colleges (maybe for sports team or specialized
program).
• Matching quota becomes very difficult
– Increased reliance on waitlist is stressful for
students.
Single-Choice Early Action
• Top-tier schools now have a way of
determining which elite students are
enthusiastic.
• Second-tier schools can see which non-elite
students are enthusiastic.
• Strategy Proof?
Single-Choice Early Action Strategy
• Assuming very small quota at top-tier school:
– Elite students may opt to apply early to top-choice
second-tier school to guarantee admissions.
– Signal becomes much less meaningful (although
still guarantees second-tier school that elite
student is at least somewhat interested).
– Similar to Boston School Problem.
• Strategy-proof for non-elite students.
Possible Example of Strategy
• Hamilton College has two rounds of ED, ED I
and ED II.
• Economics professors at Hamilton College,
Elizabeth J. Jensen and Stephen Wu studied
how ED II students performed at Hamilton.
• Controlling for differences in high school
performance, ED II students tend to perform
worse at Hamilton.
Possible Reason for Worse
Performance:
• Students who apply ED II tend to be students
that were rejected or deferred from topchoice college.
• Survey at Hamilton showed that these
students were less enthusiastic about the
school.
• Maybe applied because ED II admissions tends
to be higher and seemed like a good strategy?
Early Decision
• Not completely strategy-proof, but perhaps
more so.
• Elite students who apply ED to second-tier
school guarantee themselves that they will
attend that university.
Quota Matching
• As seen in this model, matching a university’s
quota becomes much easier with early
admissions.
• Assumptions about take-up rate become less
relevant (although still a problem).
• Universities are filled with more enthusiastic
students.
Accepting Students for the Right
Reasons
• Many students who apply early are more
enthusiastic about the school in general.
• Many students who apply early are applying
because they want to take advantage of
aspects specific to a school (Ex. Brown’s Open
Curriculum or Dartmouth’s trimester system).
Knowledge of Base Student
• Students who apply early signal type of
student that is enthusiastic about school.
• Useful information for better decision-making
during the regular admissions process.
• Ex. If many students who were in school plays
applied early, maybe students who act tend to
be enthusiastic about the school.
Student Benefits
• Early admissions tends to be easier than
regular admissions.
– Some schools even incentivize students to apply
early. For example, the University of Pennsylvania
only considers legacy status if one applies early.
– Less stressful senior year (although maybe more
stressful senior fall).
Problems for Students
• Students who underestimate their ability may
apply early to a school that is not their top
choice, but is easier to get into.
• Are students ready to make a potentially
binding decision by senior fall?
• What happens when preferences are not
strict?
• Financial Aid packages.
What Happens When Preferences Are
Not Strict?
• Student forced to choose to apply to one
school early without all information.
• Decision as to what school to apply to early is
randomized.
• Must apply to at least one of the school early
to capture advantages of applying early.
• EA/ED does not accurately signal enthusiasm.
• Maybe utility function in Haque’s model
should account for regret?
Financial Aid
• Model* shows early admissions is strictly
welfare reducing for lower-ability financial aid
students while welfare enhancing for lowerability full-pay students.
*Kim, Matthew. "Early Decision and Financial Aid Competition Among Need-Blind
Colleges and Universities." Journal of Public Economics. 94.5-6 (2010): 410-420. Print.
Intuition for Financial Aid Claim
• Advantageous to apply early to a school for
chances at admission.
• High-ability students may not need advantage.
• High-ability financial aid students have better
chance at regular admission so wait to see
financial aid packages.
• Low-ability full-pay students apply early to
capture benefits, money is not issue.
• Low-ability financial aid students must decide if
applying early is worth passing up potentially
better financial aid packages.
Financial Aid cont.
• In reality, early admissions not strictly welfareenhancing for high-ability students unless highability is restricted so much that these are only
student who are at the very top of elite students.
• Early admissions is generally welfare-reducing for
nearly all financial-aid students since many highability full pay students still tend to apply early to
a school.
• Are where more research is needed for term
paper.
Simultaneous Signaling vs.
Sequential Signaling
• Early Admissions is an example of Sequential
Signaling.
• The American Economic Association uses
simultaneous signaling as part of their
application process.
– This could be used for college admissions and
would not hurt financial aid applicants.
– Decisions for all college admissions would be
made at the time regular admissions are made.
Simultaneous Signaling vs.
Sequential Signaling
• Simultaneous signaling does not help school
with quota problem.
• Students who apply early to a top choice and
gain admission
Other Simultaneous Signals
• The quality of an application can be and is
used as a simultaneous signal for colleges.
• College essays about why a student wants to
attend a specific university can signal a
student’s enthusiastic interest in the school.
• These signals are, however, less reliable since
the quality of the essay depends on other
factors such as writing skills.
Other Simultaneous Signals
• Attendance of information sessions and tours.
• A student who is very enthusiastic about a
school is likely to have a lot of contact with
alumni, admissions officers, and other faculty.
• This signal can be misleading since many
students visit many schools.
Further Exploration for Term Paper
• Merits of other signaling devices and how
they may be used more effectively.
• Exploration of similar markets.
• More exploration on ED 2 at other schools
since this may be a good example of strategy
involved with early admissions.
• Financial aid market.
• ???