I am currently applying for a mid-range private school that teaches the career I want primarily (software engineering) and a prestigious public school for computer science (it doesn't have software engineering). So if I make it into the public university, I would evaluate between the specific career of the private one and the economic help of the public one, and choose the most appropriate one.
However, reading their entrance rules, I saw that if I decline the offer of admission in the public one, I could not apply to it again for the next two admission cycles (at two per year, that means a year and a half). What is the philosophy behind this? Applying to several schools benefits students, giving them more schools to choose from. And it also raises the funding because of the payment that is done to give the entrance exam (which is not one of the things public schools in my country can brag about). And it doesn't harm anyone, because the next one in the list would enter. The only collateral damage I can think of is extra administrative effort, but a year and a half vetted from applying to the university because of that seems too much for me. So, why? Is there some extra side effect that they are accounting for?
The information @Pete L. Clark requested: I am living in Peru, and here the admission process in public universities is pretty simple: You just present your legal and education papers, pay for the entrace exam, take it, and see if you are admitted or not. So, everything boils down to that 3-days exam. But once it is finished, you are in.
