Theory Seminar: Sophistication and Cautiousness in College Applications
The School of Economics invites you to a seminar presented by
(University of Technology Sydney)
As in many places in the world, Chinese provinces reformed their college admission mechanisms from the Immediate Acceptance mechanism to the new ones that share the features of the Deferred Acceptance mechanism. In this article, we propose a novel approach to evaluate these reforms in terms of the student welfare by estimating the fractions of three behavioral types as well as the student preferences. We first show that the reforms would not affect the equilibrium outcome played by rational students, but our data do not support this hypothesis. Motivated by this observation, we include the following types of students classified by their strategic sophistication and beliefs: the rational type, the naive type and the cautious type. We identify and estimate the fractions of these types only from the assignment data before and after the policy change, which allows us to analyze the welfare effect of policy changes separately by the behavioral types.