TY  - RPRT
TI  - Local Signals in a Global Tournament: Information Frictions, Optimism, and College Completion
AU  - Weingarten, Zach
AU  - Behrman, Jere
AU  - Postlewaite, Andrew
PY  - 2026
T3  - EdWorkingPaper
M1  - 26-1561
PB  - Annenberg Institute at Brown University
DO  - 10.26300/0pd3-d028
UR  - https://edworkingpapers.com/ai26-1561
AB  - Families frequently receive local signals about children’s skills, such as class rank in high school, yet the college market in which most students ultimately compete is much broader. Using nationally-representative data, we show that student effort, parental investment, and beliefs about college degree attainment all respond predominantly to local ranks as opposed to global ranks, despite both strongly predicting college completion. We develop and estimate a dynamic model separating optimistic beliefs, information frictions, and peer interactions. Counterfactual-policy experiments show that more-precise information, provided sufficiently early, raises skill accumulation and college completion. Eliminating optimism has the opposite effects on all outcomes.
ER  -