7+ Year Member
- Aug 17, 2010
- Resident [Any Field]
Interesting stuff from one of my favorite legal blogs. The blog has particular interest in market theory and economics, so it occasionally reaches broad topics. Check this one out regarding the admissions process as a market, and how that affects the rational applicant's decision on how many applications to send out (it's ostensibly about college admissions, but I think the med school angle is obvious):
Full post: http://volokh.com/2010/11/18/diversification-and-the-market-for-college-admissions/It seems to me maybe akin to the condition in portfolio theory that market prices in shares assume that risk that can be eliminated through diversification will be eliminated that way and will not be compensated for in share prices; the market assumes diversification. In college admissions, if large numbers of students diversify their risk by applying to a large number of colleges diversifying their holdings of lottery tickets to those colleges a student who fails to to diversify by applying to a large number of colleges will be penalized with lower odds of admission even beyond simply increasing the odds, other things equal.
Is this second proposition correct or is it not correct, or does proposition two merely collapse into proposition one? If there were only one student in the world applying, and colleges were not required to take any students at all, and if the chances of admission to any one college were genuinely unknown and uncertain as to the student, then presumably the student should increase the odds and hedge against the uncertainty by applying to more rather than fewer schools. That is proposition one.
The second proposition adds other students also applying. Given that they are also bidding for entry, and assuming the same unknowns, they will have the same reasons to increase the number of colleges to which they apply. So everyone ideally wants to apply everywhere. But if for some reason everyone else automatically applies to 100 colleges and you apply to only one, are your chances worse because of the fact that everyone else has applied to every available college? That is proposition two the addition of new players to the game who hold in effect a diversified portfolio while you hold only one application, and unlike stock, you havent bought lots and lots of application lottery tickets to that college; you can only buy one.
My point is two fold, if Im right. One is that there are two very good reasons, one intrinsic and the other strategic, for increasing without limit the number of colleges to which you apply. The other is that if you fail to do so when others do, you put yourself in a distinctly worse relative position. Is this akin to market diversification and compensation for bearing diversified versus undiversified risk? Am I correct in this analysis or not? If not, what am I missing or doing wrong?