The cost of strategy-proofness in school choice

Josue Ortega and Thilo Klein

Games and Economic Behavior, 2023, vol. 141, issue C, 515-528

Abstract: We compare the outcomes of the most prominent strategy-proof and stable algorithm (Deferred Acceptance, DA) and the most prominent strategy-proof and Pareto optimal algorithm (Top Trading Cycles, TTC) to the allocation generated by the rank-minimizing mechanism (RM). While one would expect that RM improves upon both DA and TTC in terms of rank efficiency, the size of the improvement is nonetheless surprising. Moreover, while it is not explicitly designed to do so, RM also significantly improves the placement of the worst-off student. Furthermore, RM generates less justified envy than TTC. We corroborate our findings using data on school admissions in Budapest.

Keywords: School choice; Rank-minimizing; Random matching markets (search for similar items in EconPapers)
JEL-codes: C78 D73 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:141:y:2023:i:c:p:515-528

DOI: 10.1016/j.geb.2023.07.008

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