Adaptive Priority Mechanisms

Oğuzhan Çelebi and Joel P. Flynn

No 34035, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: How should authorities that care about match quality and diversity allocate resources in the face of uncertainty? We introduce adaptive priority mechanisms (APM) that prioritize agents based on their scores and characteristics. We show that APM uniquely implement the ex post optimal allocation. The ubiquitous priority and quota mechanisms are optimal if and only if the authority is risk-neutral or extremely risk-averse over diversity, respectively. Deferred Acceptance implements the unique stable matching when all authorities use the optimal APM. We provide a practical roadmap for implementing APM as a market-design solution and illustrate this using Chicago Public Schools data.

JEL-codes: C78 D47 D61 (search for similar items in EconPapers)
Date: 2025-07
New Economics Papers: this item is included in nep-des and nep-mic
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