Pareto Dominance of Deferred Acceptance through Early Decision

Somouaoga Bonkoungou

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: An early decision market is governed by rules that allow each student to apply to (at most) one college and require the student to attend this college if admitted. This market is ubiquitous in college admissions in the United States. We model this market as an extensive-form game of perfect information and study a refinement of subgame perfect equilibrium (SPE) that induces undominated Nash equilibria in every subgame (SPUE). Our main result shows that this game can be used to define a decentralized matching mechanism that weakly Pareto dominates student-proposing deferred acceptance.

Keywords: early decision; Pareto dominance; decentralized market; subgame perfect equilibrium; subgame perfect undominated Nash equilibrium; costly application (search for similar items in EconPapers)
JEL-codes: C72 C73 C78 I29 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2016
New Economics Papers: this item is included in nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montec:11-2016

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