College applicants in centralized systems rank programs before they know where they will be admitted and whether they will enroll and complete. We surveyed Norwegian applicants about these prospects for their first two choices after applying but before admissions and link their beliefs to administrative records. Comparing applicants just above and below admission cutoffs allows us to validate these beliefs with outcomes. Marginal applicants slightly overpredict enrollment if admitted to their first choice and underpredict it at their second, increasing between-program prediction error. While they substantially overpredict completion given enrollment for both programs, the error in the difference between programs is much smaller. In a model of applicants’ rankings, correcting completion beliefs for one program changes the predicted probability of ranking the current first choice above the second by 12–14 percentage points, whereas correcting both barely changes it. Our study sheds light on validation of subjective counterfactuals and implications of their correction.
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How does college education shape entrepreneurship? We first document striking differences between college fields in the share of students becoming entrepreneurs. We then leverage quasi-random variation in college admissions near GPA-based thresholds to study the causal impact of the college environment on subsequent entrepreneurship. Exposure to more entrepreneurially intensive college programs, measured as a higher share of entrepreneurs among alumni, substantially increases the probability that a student starts their own business.
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We study how GPA-based and holistic admission tracks in a centralized college market affect programs' degree completion through the information (screening) and selection (sorting) they generate. We validate a simple partial equilibrium model of program admissions by exploiting admission cutoffs and a reform that relaxed caps on holistic seats. We find that programs choose cutoffs and quotas so that marginal completion is similar across tracks when holistic quotas are slack but higher in the holistic track when they bind. A sorting–screening decomposi- tion shows that at the admission margin most gains from holistic admissions come from self-selection of higher-potential students into the holistic track, with modest screening gains. Programs do not internalize admission externalities, and marginal applicants rejected from the holistic track are about 5 percentage points less likely to complete a degree elsewhere than comparable GPA-track rejects, with gaps in selective programs with small holistic quotas twice as high. Expanding holis- tic quotas in constrained programs would thus raise total degree completion, and we find that this favors students with weaker academic records and family back- grounds.
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In this paper we investigate how heterogeneous agents choose among tournaments with different prizes. We show that if the number of agents is sufficiently small, multiple equilibria can arise. Depending on how the prize money is split over the tournaments, these may include, for example, a perfect-sorting equilibrium in which high-ability agents compete in the high-prize tournament, while low-ability agents compete for the low prize. However, there are also equilibria in which agents follow a mixed strategy and there can be reverse sorting, i.e. low-ability agents are in the tournament with the high prize, while high-ability agents are in the low-prize tournament. We show that total effort always decreases compared to a single tournament. However, splitting the tournament may increase the effort of low-ability agents.
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To stimulate investment in training by individuals, the Dutch tax system allows a deduction of out-of-pocket training expenditures from taxable income. This paper investigates to what extent the resulting cost reduction encourages training investments. Two different identification strategies are used. The first strategy uses the progressive structure of the income tax scheme and compares groups with taxable income just above or just below kinks. The second strategy takes advantage of the 2001 tax reform, which implied substantial changes in marginal tax rates. These strategies exploit different sources of exogenous variation and are based on different identifying assumptions. Nevertheless, the results point in the same direction: tax incentives increase training participation.
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