This is a working paper with Anaïs Fabre, Tomas Larroucau, Christopher Neilson and Ignacio Rios. The paper explores how information and beliefs have an effect on outcomes within the tertiary education market in Chile, which is a centralized college admissions system. The paper includes two waves of surveys done in 2019 and 2020 and an RCT done in 2021 with both government and NGOs. The abstract is below, and you can find the latest version of the working paper here.
We analyze the prevalence and relevance of application mistakes in a seemingly strategy-proof centralized college admissions system. We use data from Chile and exploit institutional features to identify a common type of application mistake: applying to programs without meeting all requirements (admissibility mistakes). We find that the growth of admissibility mistakes over time is driven primarily by growth on active score requirements. However, this effect fades out over time, suggesting that students might adapt to the new set of requirements but not immediately. To analyze application mistakes that are not observed in the data, we design nationwide surveys and collect information about students’ true preferences, their subjective beliefs about admission probabilities, and their level of knowledge about admission requirements and admissibility mistakes. We find that between 2% - 4% of students do not list their true most preferred program, even though they face a strictly positive admission probability, and only a fraction of this skipping behavior can be rationalized by biases on students’ subjective beliefs. In addition, we find a pull-to-center effect on beliefs, i.e., students tend to attenuate the probability of extreme events and under-predict the risk of not being assigned to the system. We use these insights to design and implement a large-scale information policy to reduce application mistakes. We find that showing personalized information about admission probabilities has a causal effect on improving students’ outcomes, significantly reducing the risk of not being assigned to the centralized system and the incidence of admissibility mistakes. Our results suggest that information frictions play a significant role in affecting the performance of centralized college admissions systems, even when students do not face clear strategic incentives to misreport their preferences.