Heterogeneous Beliefs and School Choice Mechanisms
Christopher Neilson () and
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Adam Kapor: Columbia University
Working Papers from Princeton University, Department of Economics, Industrial Relations Section.
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)
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Working Paper: Heterogeneous Beliefs and School Choice Mechanisms (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:indrel:612
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