The past four decades have seen the develop ment of an enormous literature on the effects of education on earnings (for example, see Mincer, 1974; Becker, 1975). Numerous researchers have also investigated the determinants of individuals' decisions to invest in postsecondary schooling (for example, see Fuller, Manski, and Wise, 1982; Catsiapis, 1987), and the functioning of admis sion processes (see Olmstead and Sheffrin, 1981). With the average annual cost of attending a pri vate university approaching $20,000, including tuition, room and board, and supplies, and the annual cost for a public university approaching $10,000, and with private and federal aid becom ing more problematic, educational scholarships become increasingly important in a family's plan ning for financing a child's education.1 At the same time, however, there are time and psycho logical costs of entering a scholarship competi tion, a competition characterized by uncertainty of one's chances of winning. To the extent that we can provide more information about a winner is selected, the more efficient will con sumers be in their decisions to allocate their time and money to enter such a contest.2 Further, the increasing real cost of higher education increases the importance of scholarships in determining ed ucational decisions, so that it is also important to see how the selection process may favor, either explicitly or implicitly, candidates with particu lar attributes and thereby affect the composition of the college population. Though the personal characteristics needed for selection are often described in a scholarship application, the exact nature of the decision making process is sometimes unknown to the institution providing the scholarship. As in the case of the particular contest to be described later, an independent panel is sometimes estab lished, which has full discretion concerning the award of scholarships. Hence, when a scholar ship competition is announced, there is rarely a clear production process that leads from an individual's characteristics to the probability that the individual would be successful in winning an award. A process does, nevertheless, emerge as awards are determined. It would be most helpful for those applying for awards, and for those making awards, if this process could be better understood. The purpose of this paper is to increase our understanding of the awards process in general by engaging in a detailed analysis of a particular scholarship competition. Before turning to the specific scholarship competition, we develop a theoretical model of the contestant's problem when entering a competition that offers uncertain returns to the contestant's expenditures on activities that contribute to the profits from winning.