The College Portfolio Problem

IO/Economic Theory Joint Seminar

Nageeb Ali (Pennsylvania State University)

November 7, 2022, 14:15–15:30


Room Auditorium 4

Economic Theory Seminar


A college applicant faces the following risky choice: she applies to a portfolio of colleges whilebeing uncertain about which school would admit her. Admissions decisions are correlated insofaras being rejected by a lower ranked school may imply that she is rejected by a higher rankedschool. We show that solutions to this decision problem involve applying to a combination ofreach,match, andsafetyschools. When application costs decrease, a college applicant broadens therange of schools to which she applies by including both those that are more selective and thosethat are safer options.