Optimal student allocation with peer effects

Roberto Sarkisian () and Takuro Yamashita
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Roberto Sarkisian: Sao Paulo School of Economics - FGV

Review of Economic Design, 2024, vol. 28, issue 3, No 3, 571 pages

Abstract: Abstract This paper studies an optimal assignment problem of heterogenous students to schools with a particular kind of preference complementarity: peer effects, defined by the average ability of those in the same school. The tractability of the problem allows us to characterize the optimal assignment mechanism, which has a simple “(stochastic) pass-fail” structure. Its shape is mainly determined by the convexity/concavity of the attainment function, interpreted as the preference for/against having diverse-ability students in different schools. We also provide comparative statics as to when more or less mixture of heterogenous ability types would be desirable.

Keywords: Mechanism design; Externality; Student allocation (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10058-024-00349-x

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