The Cutoff Structure of Top Trading Cycles in School Choice

The Welfare Effects of Coordinated Assignment: Evidence from the New York City High School Match

Jacob D Leshno and Irene Lo

The Review of Economic Studies, 2021, vol. 88, issue 4, 1582-1623

Abstract: This article develops a tractable theoretical framework for the Top Trading Cycles (TTC) mechanism for school choice that allows quantifying welfare and optimizing policy decisions. We compute welfare for TTC and Deferred Acceptance (DA) under different priority structures and find that the choice of priorities can have larger welfare implications than the choice of mechanism. We solve for the welfare-maximizing distributions of school quality for parametrized economies and find that optimal investment decisions can be very different under TTC and DA. Our framework relies on a novel characterization of the TTC assignment in terms of a cutoff for each pair of schools. These cutoffs parallel prices in competitive equilibrium, with students’ priorities serving the role of endowments. We show that these cutoffs can be computed directly from the distribution of preferences and priorities in a continuum model and derive closed-form solutions and comparative statics for parameterized settings. The TTC cutoffs not only clarify the role of priorities in determining the TTC assignment but also demonstrate that TTC is more complicated than DA.

Keywords: Top trading cycles; School choice; Matching; Cutoffs; Continuum markets; D47; D61; C78 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:88:y:2021:i:4:p:1582-1623.

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