Hedging When Applying: Simultaneous Search with Correlation

• 成果类型: Article
• 署名作者: Ali, S. Nageeb; Shorrer, Ran I.
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20211137
• 发表日期: 2025
• 页码: 571-598
• 关键词: AFFIRMATIVE-ACTION; admissions

摘要

Applicants to schools, colleges, and jobs hedge by applying to a broad range of options, including reaches, matches, and safeties. We develop a simultaneous-search framework that rationalizes this practice. In this framework, the admissions process is correlated across schools so that if an applicant is rejected by one school, she is more likely to be rejected by more selective schools. We find that an applicant then optimally targets both safeties and reaches. We characterize how the optimal portfolio varies with the applicant's beliefs, risk attitudes, and application costs and offer an algorithm that delivers the optimal portfolio in polynomial time.