College admissions with tuition transfers

Official URL: https://dx.doi.org/10.1016/j.geb.2022.01.006

We introduce a college admission with tuition transfers problem. In this novel formulation, students' payments are not necessarily equal to their respective tuition fees. However, the total requested tuition fees must be equal to the total payment burden on students. We introduce two mechanism classes — the first is efficient, and the second is stable and constrained efficient. Because of general incompatibilities, neither of them is strategy-proof. Next, under certain suppositions, we introduce a mechanism that is stable, strategy-proof, and Pareto dominates the deferred-acceptance mechanism, which is the best stable rule in the absence of tuition transfers. Lastly, we provide a welfare analysis to see how colleges are affected by tuition transfers.