Modeling College Admission as a Signaling Game

Abstract

This paper models the college admission process as a signaling game between the admissions office and a pool of heterogeneous applicants characterized by academic abilities and demonstrated interest. In the screening and selection process, applicants attempt to signal their private information through their performance on a standardized test (for academic abilities) and interview (for demonstrated interest).  We show, under general conditions, that a separating equilibrium exists in which it is incentive-compatible for applicants to reveal their characteristics truthfully, and thus the admissions office does not fall victim to the problem of information asymmetry. Furthermore, we delineate how this equilibrium can be induced by setting appropriate “scoring” thresholds associated with standardized tests and interviews.