Prestige Seeking in College Application and Major Choice

We develop a signaling model of prestige seeking in competitive college applications. A prestigious program attracts high-ability applicants, making its admissions more selective, which in turn further increases its prestige, and so on. This amplifying effect results in a program with negligible quality advantage enjoying a significant prestige in equilibrium. Furthermore, applicants “sacrifice” their fits for programs in pursuit of prestige, which results in the misallocation of program fits. Major choice data from Seoul National University provides evidence for our theoretical predictions when majors are assigned through competitive screening—a common feature of college admissions worldwide