| This dissertation contains three essays on applied microeconomics.;"Early admission program; does it hurt efficiency"? Early admission program is an essential part of the admission process at selective universities in US. Recent empirical findings show that early admission standards are lower than regular admission standards. This gives rise to concerns about the inefficiency in selection of students that might be caused by early admission programs. This essay studies the university admission process, focusing on how universities and students pursue their goals and how efficient the resulting outcome is. This essay shows that, the early admission program may arise as an equilibrium phenomenon, and different admission standards result from an individual university's optimal choice to improve the selection of students. If universities have imperfect and independent observations of students' qualities, an adverse selection problem arises in admission process. Among the admitted students in one university, the better quality students are more likely to be admitted by other universities and less likely to matriculate at this university. This results in a lower average quality of matriculating students than of admitted students. The early admission program will screen the students who will surely matriculate and enable a university to treat them differently. This essay also shows that the overall selection of students may improve with different admission standards in contrast to what is commonly believed.;"Matching friction and self selection with private information: A welfare comparison". This essay studies assignment problems with both search frictions and incomplete information, focusing on efficiency comparisons. Applicants and positions should be matched, but application opportunities are limited and the qualities of applicants are not perfectly observed. While matching frictions (limited application opportunity) directly impairs efficiency, it may indirectly improve efficiency when there exists private information. Matching friction will make applicants more cautious about their application decisions and hence facilitates self-selection in the application stage. If there exists enough complementarity between the qualities of applicants and positions, matching friction may improve efficiency. This sheds new light on the institutional design problem. The institution that restricts application opportunities can be better than the institution which does not, and the extent of complementarity is a key factor in this comparison.;"Competition and cooperation when prize is given to a fixed portion". This essay analyzes a tournament situation in which a prize is given to a fixed portion of contestants. While this scheme can induce the optimal incentive to work, it usually harms cooperation among contestants. This essay shows how this negative effect of tournament can be relaxed without impairing the incentive to work. As the number of contestants in a tournament increases while the portion of winners is held constant by increasing the number of prizes proportionately, the negative effect on cooperation will diminish whereas the incentive to work remains. |
