A Theory of Affirmative Action in College Admissions

To address the issue of when minority and nonminority candidates compete for admissions to a college, we show that an academic quality--oriented college maximizes the test score of its incoming class by adopting an admissions rule that favors the minority. Such a "handicapping" rule increases competition and induces candidates to invest more in educational attainment. These results reconcile the often-assumed conflicts between diversity and academic quality. However, we also show that the non-minority responds to the affirmative action admissions more aggressively, which tends to widen the racial test score gap. (JEL H0, J7) Copyright 2006, Oxford University Press.