Parallel markets in school choice

Afacan, Mustafa Oğuz and Evdokimov, Piotr and Hakimov, Rustamdjan and Turhan, Bertan (2022) Parallel markets in school choice. Games and Economic Behavior, 133 . pp. 181-201. ISSN 0899-8256 (Print) 1090-2473 (Online)

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When applying to schools, students often submit applications to distinct school systems that operate independently, which leads to waste and distortions of stability due to miscoordination. To alleviate this issue, Manjunath and Turhan (2016) introduce the Iterative Deferred Acceptance mechanism (IDA). We design an experiment to compare the performance of this mechanism under parallel markets (DecDA2) to the classic Deferred Acceptance mechanism with both divided (DecDA) and unified markets (DA). Consistent with the theory, we find that both stability and efficiency are highest under DA, intermediate under DecDA2, and lowest under DecDA. While IDA is not strategy-proof, we show theoretically that strategic reporting can only lead to improved efficiency for all market participants. The experimental results are consistent with this prediction. Our findings cast doubt on whether strategy-proofness should be perceived as a universal constraint to market mechanisms.
Item Type: Article
Uncontrolled Keywords: Deferred acceptance; Game theory; Information acquisition; Lab experiment; Matching markets
Divisions: Faculty of Arts and Social Sciences
Depositing User: Mustafa Oğuz Afacan
Date Deposited: 23 Aug 2022 16:08
Last Modified: 23 Aug 2022 16:08

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