Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240664 
Year of Publication: 
2018
Series/Report no.: 
Working Papers No. 2018-23
Publisher: 
Banco de México, Ciudad de México
Abstract: 
We analyze a college admissions game with asymmetric information between students and colleges. Students' preferences for colleges depend on the observable quality of the schools. In contrast, colleges' preferences for students depend on the latter's abilities, which are private information. Students and schools are matched via a decentralized mechanism in which students signal their abilities with costly observable signals. A closed-form symmetric separating equilibrium of this game that depends on the supply of and demand for schools seats and on college quality is characterized. In this equilibrium, an increase in the number of students, a reduction in the number of school seats or a drop in the quality of schools reduce the incentive of low-ability students to invest in signaling and increase it for high-ability students.
Subjects: 
College Admissions
Decentralized Mechanisms
Incomplete Information
Coordination Problems
Costly Signaling
JEL: 
D82
C70
C71
C72
C78
Document Type: 
Working Paper
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