Theoretical Economics 15 (2020), 1095–1133
Tweet
School choice with asymmetric information: priority design and the curse of acceptance
Andrew Kloosterman, Peter Troyan
Abstract
We generalize standard school choice models to allow for interdependent
preferences and differentially-informed students. We show that in
general, the commonly-used deferred acceptance mechanism is no longer
strategy-proof, the outcome is not stable, and may make less informed
students worse off. We attribute these results to curse of
acceptance. However, we also show that if priorities are designed
appropriately, positive results are recovered: equilibrium strategies
are simple, the outcome is stable, and less informed students are
protected from the curse of acceptance. Our results have implications
for the current debate over priority design in school choice.
Keywords: Matching, stability, asymmetric information
JEL classification: C78, D47
Full Text: PRINT VIEW