Early Admission in the College Admissions Market

Background Two different types of early admissions – Early Decision (ED) and Early Action (EA) Started in 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 top- choice 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 lower- ability full-pay students. *Kim, Matthew. "Early Decision and Financial Aid Competition Among Need-Blind Colleges and Universities." Journal of Public Economics (2010): 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 welfare- enhancing for high-ability students unless high- ability 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 high- ability 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. ???