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Heterogeneous Beliefs and School Choice Mechanisms

Adam Kapor, Christopher Neilson () and Seth Zimmerman
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Adam Kapor: Columbia University

Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: 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. Allowing for belief errors reverses the welfare comparison to favor the deferred acceptance algorithm.

JEL-codes: I21 I28 (search for similar items in EconPapers)
Date: 2017-04
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Working Paper: Heterogeneous Beliefs and School Choice Mechanisms (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pri:indrel:612

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