Research PaperInference by college admission departments

•College admission departments underestimate the relationship between an applicant's decision not to submit her SATI score and her actual SATI score.•College admission departments do partially update their beliefs about the applicants SATI scores based on their decision to withhold them, but underestimate this relationship when making inference on the applicant's SATI score by approximately 15 points.•The admission departments' inaccurate inference does not appreciably change the composition of the student body primarily because the colleges have a great deal of other information to base their acceptance decision.

Theoretical, experimental and empirical research by economists and psychologists suggests biases in how people draw inferences. Eyster and Rabin (2005) review extensive experimental evidence that suggests people do not fully take into account how other people's actions depend on their private information. Using data from two colleges with optional SAT I policies, this paper quantifies the extent to which players underestimate this relationship. This policy provides applicants with a choice of whether to disclose their SATI scores to the college. Our empirical estimates indicate that colleges do underestimate the relationship between an applicant's action (not submitting) and type (SATI score).