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. • ???