Reversing Reserves

Parag Pathak, Alex Rees-Jones and Tayfun Sönmez

No 26963, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Affirmative action policies are often implemented through reserve systems. In this study, we demonstrate that reserve systems face widespread misunderstanding by the public. This misunderstanding can lead individuals to support policies that ineffectively pursue their interests. To establish these claims, we present 1,013 participants in the Understanding America Study with choices between pairs of reserve systems. Participants are members of the group receiving affirmative action and are financially incentivized to choose the system that maximizes their chance of admission. Using this data, we apply a novel approach to identifying the rate of uptake of different decision rules used by participants. We find that participants rarely use a fully optimal decision rule. In contrast, we find that many choices—40% in our primary estimates—are rationalized by a nearly correct decision rule, with errors driven solely by failing to appreciate the importance of processing order. Failing to account for processing order causes individuals to fail to distinguish between two policies that achieve different degrees of affirmative action: policies that provide non-binding minimum guarantees of the number of spaces allocated and policies that provide spaces over-and-above what would be allocated absent a reserve. Confusion about the importance of processing order helps to explain otherwise surprising decisions made in field applications of reserve systems. We discuss implications for managers and policy makers who are trying to implement reserve systems and who are accountable to the public.

JEL-codes: C9 D47 D9 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-exp
Note: ED PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as Parag A. Pathak & Alex Rees-Jones & Tayfun Sönmez, 2023. "Reversing Reserves," Management Science, vol 69(11), pages 6940-6953.

Downloads: (external link)
http://www.nber.org/papers/w26963.pdf (application/pdf)

Related works:
Journal Article: Reversing Reserves (2023)
Working Paper: Reversing Reserves (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:26963

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w26963

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().