Does banning affirmative action lower college student quality?

American colleges and universities value both the academic qualifications and the ethnic and racial diversity of their student bodies. Because candidates from minority groups tend to have lower high-school grads and standardized-test scores than their majority counterparts, elite colleges and professional schools achieve diversity through lower admissions standards for minority students. This paper models the decision problem of a college admissions office that values both student quality and diversity. In the model, candidates from a majority group and a minority group compete for a limited number of seats in an entering class; minority candidates are on average less academically qualified than majority candidates. This model is similar to taste-based discrimination in the sense that the admissions office's taste for diversity is tantamount to a preference for minority candidates. The core result that a college may achieve diversity by partially ignoring candidates' qualifications derives from an intuition much like statistical discrimination, except that instead of race serving as a signal of qualification, qualification serves as a signal of race.