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On the basis of theory alone, it is hard to advise school districts which school assignment mechanism to adopt. While the Deferred Acceptance (DA) mechanism has some desirable properties (strategy proofness and stability) that the Boston mechanism lacks, Boston may outperform DA in terms of welfare because it allows students to express the intensity of their preferences. We use a unique combination of administrative data and survey data to compare the two mechanisms empirically. We find that...
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Market design seeks to translate economic theory and analysis into practical solutions to real-world problems. By redesigning both the rules that guide market transactions and the infrastructure that enables those transactions to take place, market designers can address a broad range of market failures. In this paper, we illustrate the process and power of market design through three examples: the design of medical residency matching programs; a scrip system to allocate food donations to...
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Several labor markets, including the job market for new Ph.D. economists, have recently developed formal signaling mechanisms. We show that such mechanisms are harmful for some environments. While signals transmit previously unavailable information, they also facilitate information asymmetry that leads to coordination failures. In particular, we consider a two-sided matching game of incomplete information between firms and workers. Each worker has either the same ”typical” known preferences...
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The three most common school choice mechanisms are the Deferred Acceptance mechanism (DA), the classic Boston mechanism (BM), and a variant of the Boston mechanism where students automatically skip exhausted schools, which we call the adaptive Boston mechanism (ABM). Assuming truthful reporting, we compare student welfare under these mechanisms both from a conceptual and from a quantitative perspective: We first show that, BM rank dominates DA whenever they are comparable; and via limit...
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