Heterogeneous Beliefs and School Choice Mechanisms
Christopher Neilson () and
No 25096, NBER Working Papers from National Bureau of Economic Research, Inc
This paper studies how welfare outcomes in centralized school choice depend on the assignment mechanism when participants are not fully informed. Using a survey of school choice participants in a strategic setting, we show that beliefs about admissions chances differ from rational expectations values and predict choice behavior. To quantify the welfare costs of belief errors, we estimate a model of school choice that incorporates subjective beliefs. We evaluate the equilibrium effects of switching to a strategy-proof deferred acceptance algorithm, and of improving households’ belief accuracy. We find that a switch to truthful reporting in the DA mechanism offers welfare improvements over the baseline given the belief errors we observe in the data, but that an analyst who assumed families had accurate beliefs would have reached the opposite conclusion.
JEL-codes: D47 I20 (search for similar items in EconPapers)
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Published as Adam J. Kapor & Christopher A. Neilson & Seth D. Zimmerman, 2020. "Heterogeneous Beliefs and School Choice Mechanisms," American Economic Review, vol 110(5), pages 1274-1315.
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Journal Article: Heterogeneous Beliefs and School Choice Mechanisms (2020)
Working Paper: Heterogeneous Beliefs and School Choice Mechanisms (2017)
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