Study of Financial Need Reporting

In many educational and public policy related settings, economic agents draw resources from a common pot to subsidize consumption of a good or service (consider scholarship aid or services at a public health clinic). From an organizational vantage point, an optimal allocation of resources would enable consumption (participation) for anyone eligible while minimizing the economic surplus given out to agents. In practice, this is difficult to implement due to asymmetric information on agents’ valuations. This study seeks to examine, via randomized experiment, the extent to which pro-sociality of agents can be utilized to improve upon a scheme where everyone receives the same subsidy or a fixed subsidy based on observable characteristics. In particular we test the extent to which provision of accurate information on one’s position of relative need (as measured by FAFSA) impacts agents’ reported valuations in scholarship applications for co-curricular educational travel programs at several U.S. universities.