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Parallel markets in school choice

Mustafa Oğuz Afacan, Piotr Evdokimov, Rustamdjan Hakimov and Bertan Turhan

Games and Economic Behavior, 2022, vol. 133, issue C, 181-201

Abstract: 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.

Keywords: Matching markets; Deferred acceptance; Information acquisition; Game theory; Lab experiment (search for similar items in EconPapers)
JEL-codes: C92 D47 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:133:y:2022:i:c:p:181-201

DOI: 10.1016/j.geb.2022.03.003

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