Prisoner\'s Dilemma In College Admissions

First there was advertising, then there were breast implants, and now there is the college admissions process. Don Herzog identifies yet another Prisoner’s Dillemma, where the popularity and dominance of the US News & World Report college ranking system leads to an undesirable bias on the part of both prospective students and college administrators in favor of early-decision programs, even though nearly everyone would be better off without these programs.

Here's how early-decision programs work. Students can apply to only one college on an early-decision basis. They commit to enrolling if they're accepted. (High schools help enforce the deal: they won't send out any more transcripts and references for students who win early decision.) The more students a college takes early decision, the higher its yield and the higher its selectivity. It didn't take long for admissions officers and other administrators to notice that they had a recipe for climbing, even vaulting, in the US News rankings. Just expand their early-decision programs, as one college after another did, up and down the status hierarchy. For it's not just that the #12 campus would rather be #9. The #78 campus would rather be #68, too. And so on.

For the campuses, it's what game theorists think of as a security dilemma or an arms race. Whatever you think of early decisions, you can't afford to slip in the rankings as other campuses take advantage of those programs. Your prestige will go down and you'll attract inferior students. Then too, your improvement matters only insofar as it's relative to what others do. They can match or exceed your improvement with their own, forcing you to struggle back with further expansion of early decision. For students, it's what game theorists think of as a tournament competition. Rightly or wrongly, many students believe their life chances depend on going to the best campus they can. (That thought can't be a fantasy. Indeed, to the extent that graduate schools and employers notice the increasingly important work admissions offices are doing in sorting out students, they will pay more and more attention to where students earned their degrees.) So the students are racing, too, trying to keep their high-school transcripts as polished as they can, trying to get the best SAT and ACT scores they can — Kaplan and Princeton Review are busy cashing in on student anxieties — and trying to figure out by the beginning of their senior year of high school where they want to go to college. And the more other students rely on US News, the more you may think you need to, too: it's hard for many students to believe that there are endless dozens of good schools and they just have to find one that's a good match for them.

Not only are students racing, but they also face excruciating strategic choices, because it's now easier to get into many schools early decision than it is to wait for the general pool. Fallows cited research (published here) showing that applying early decision boosted a student's chances of admission as much as an additional 100 points out of 1600 possible points on the SAT would. Picture the heartbreak of the student who really wants to go to School A, but worries that A is a long shot and she can probably ensure herself admission to School B if she applies there early decision — and frets that if she waits to hear from both A and B in the regular season, she might not get into either one.

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It's so nice to see that the

It's so nice to see that the free market is working properly.

Pete - let's take your

Pete - let's take your argument to the extreme. Suppose that all admissions were by early decision. By your argument, this would reduce stress for everyone, and they'd still have a good chance to get into a good school. Doesn't it seem worse to have to pick only one school? What if more information comes in from visiting or pondering or discussing with your parent? What if it depends on which financial aid package you get? What if it depends on what college your sweetheart gets into? There are lots of reasons why in this area, as others, more choice is a good thing.

There are two problems with

There are two problems with this, the first is the pressure to choose early. For *most* students choosing a college really does narrow ones choice of majors quite a bit as it is fairly daunting to move from one campus to another, and often results in lost credits (i.e. money) etc.

One does not attend the School of the Art Institute of Chicago to become a Unix Systems Administrator (so I'm wierd). One does not attend the Rolla School of Mines (University of Missori, Rolla) to acquire a degree in English (the do have an English Program there (or at least did)). By forcing (or making children think they're being forced, same thing) the system is artificially narrowing their choices.

This has detrimental effects for both the children (It's For The Children!!!) as they may wind up in a place that is less than optimal for their needs.

These decisions are not being made by children who are fully informed and acting of their own volition, there is often a great deal of pressure from (high school) administrators and parents.

The parents may or may not have the best interests of their children in mind, but the school administrators, both the highschool and the college are more worried about their rankings and their statistics. High Schools *like* to talk about how many of their students go on to higher education. College administrators *like* full campuses, and they'd like to claim that they're getting the cream of the crop.

This then winds up distorting the rankings of a supposed disinterested third party (US N&WR) which then propigates bad information to those who are interested in making a decision at a more rational pace.

It's always bad to optimize your proceedures to measure well instead of to function well.

Like most of your rants,

Like most of your rants, this is complete nonsense Micha. How do you know if they are not better off?

The students are not "limited" the just have to choose at a different time, will likely get into a better school, and of course they will have less stress. It was great to get into college before the end of the first semester senior year.

The problem Don has

The problem Don has identified is that because of the incentives created by the US News rankings, college admissions committees are in a sense rent seeking against each other for the same set of students, and students are in a sense rent seeking against each other for the same set of universities. Both college admissions committees and students would be better off collectively if they could reach a cease-fire, where instead of each side limiting their group of potential options, they leave these possibilities open and are better able to choose a match for themselves. But because of the collective action problem, all actors are given the wrong individual incentives and, to paraphrase Adam Smith, thereby led by an invisible hand to promote an undesirable end which was no part their intention.

Kids like early decision,

Kids like early decision, colleges like early decision. What is wrong?

What is undesirable about this at all?

I expected Herzog's quote to

I expected Herzog's quote to offer some confirmation of Micha's "everyone would be better off" assertion. Nada. I re-read it. Still nothing. So, I'll leave it up to Micha himself. Yes, I read the little hypothetical anecdote about the poor fretting applicant, but, how does this all translate to "nearly everyone would be better off without them"? If a college wants to offer up a contractual agreement between itself and applicants, then who are we to bitch and moan?

Just give it time---when the relative worth of a product constantly falls, while at the same time, the relative cost of that same product constantly rises, it is inevitable that it will price itself out of the market sooner or later. We're already seeing this. I've been saying for awhile that the market will hit a breaking point sooner or later, where it is no longer worth spending the first 10+ years of your working life paying off your student loan debts. The only reason it hasn't happened full-scale already is because of bullshit government subsidization (which, of course, is the reason behind many other problems, like the proliferation of utterly useless majors).

Either way, it's their choice to make, whether or not to offer early admission contracts. If it produces higher yields and better student quality, then, how can it be bad for everyone? Herzog seems to bemoan EA, because it forces other schools to follow suit---but that argument is specious at best. Yes, most new cars offer air conditioning standard. And any car manufacturer, to keep up with the times, is forced to offer it. Would Mr. Herzog also bemoan the plight of the poor car buyers who must endure having A/C? I just don't buy this argument. Yes, innovation in a market sector often forces competitors to offer that same innovation, or get left behind. And after a period, it stops being an innovation, and becomes a standard item. This is a natural market function---so, I just don't understand Herzog's (and Micha's) problem with it---whether it's regarding early admission, or air conditioning.

Micha, How exactly is it


How exactly is it "rent-seeking" to present an (obviously) mutually beneficial contract, which nobody is obligated to agree to, but which many choose to? Rent-seeking, as I understand it, is defined as "when an entity seeks to extract uncompensated value from others by manipulation of the economic environment -- often including regulations or other government decisions."

Simply offering a contractual agreement, which nobody is required to sign, does not fit this bill. By your definition, any two (or more) private entities that enter into a contractual agreement that is beneficial to all parties involved, but not necessarily beneficial to any parties not involved would be defined as "rent-seeking". I simply don't buy this. Maybe I could see your point if the government was "forcing" early admissions on people. Maybe I could see your point if certain colleges were petitioning the government to manupulate the market for their gain, but others' loss. But this is not the case. Read this. If a college wants to offer a contract or a product that is beneficial to them, but not necessarily beneficial to others, this does not constitute "rent-seeking", any more than a business offering 0% down and 0% APR is "rent-seeking".

In other words, by your definition, any market innovation that favors the innovator, and perhaps disfavors the non-innovators, is thereby "rent-seeking". No. Sorry, not buying that one. Offering EA contracts does not manipulate the economic environment or extract uncompensated value any more than a sale at Macy's. It is a VOLUNTARY contract. I, for one, did not want to lock in when I applied, so I did not apply EA anywhere. I was not forced into anything, and I turned out just fine. This is not rent-seeking, this is market innovation---the influences of US News notwithstanding.

Evan, When I use the term


When I use the term rent-seeking, I am saying nothing about voluntary vs. coercive (many other economists use this term that way too). Read the first link in this post to advertizing or the second to breast implants - both are cases (or potential cases) or entirely private, voluntary rent-seeking, where actors are wasting resources fighting over the same fixed pool of wealth.