Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/177675
Authors: 
Shorrer, Ran I.
Sóvágó, Sándor
Year of Publication: 
2017
Series/Report no.: 
Tinbergen Institute Discussion Paper 17-107/V
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.
Subjects: 
College admissions
dominated strategies
market design
obvious misrepresentation
school choice
strategy-proof
JEL: 
C70
D47
D61
D63
Document Type: 
Working Paper

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