Tie-breaking and efficiency in the laboratory school choice

Wonki Jo Cho, Isa E. Hafalir, Wooyoung Lim

Research output: Contribution to journalArticlepeer-review

Abstract

In school choice problems with weak priorities, the deferred acceptance (DA) mechanism may produce inefficient stable matchings due to tie-breaking. The stable-improvement-cycles (SIC) and choice-augmented deferred acceptance (CADA) mechanisms were proposed to remedy inefficiencies but they are manipulable. In a simple environment, we theoretically and experimentally analyze students' strategic behavior when DA, SIC, and CADA are implemented. We show that obtaining the efficiency gain relative to DA crucially depends on whether students report their preferences truthfully in SIC and whether they play a particular equilibrium strategy in CADA. Our laboratory experiment reveals that (i) non-negligible degrees of untruthful reporting are observed but they are not a major drawback for practical efficiency improvements of the mechanisms we consider; (ii) SIC achieves gains from trade whenever they exist, both on and off the equilibrium paths; and (iii) the additional layer of equilibrium coordination required by CADA makes it harder for CADA to fully produce the promised welfare advantage relative to DA. These findings are robust to various environments.

Original languageEnglish
Article number105546
JournalJournal of Economic Theory
Volume205
DOIs
Publication statusPublished - 2022 Oct

Bibliographical note

Funding Information:
This study is supported by a grant from the Research Grants Council of Hong Kong (Grant No. GRF16506019). We are grateful to Yan Chen, Battal Dogan, Rustamdjan Hakimov, Jiangtao Li, Joel Sobel, Utku Ünver, Qinggong Wu, and two anonymous referees and the editor for their helpful comments and suggestions. We thank Shiyu (Jake) Zhang for his excellent research assistance. We have benefitted from comments by conference participants at the ALETS 2021, International Workshop for Lab and Field Experiments at Osaka University, 2021 Hong Kong Microeconomic Theory Workshop at University of Hong Kong, and seminar participants at Boston College, Carnegie Mellon University, Concordia University, Kyungpook National University, Seoul National University, and Yonsei University.

Funding Information:
This study is supported by a grant from the Research Grants Council of Hong Kong (Grant No. GRF16506019 ). We are grateful to Yan Chen, Battal Dogan, Rustamdjan Hakimov, Jiangtao Li, Joel Sobel, Utku Ünver, Qinggong Wu, and two anonymous referees and the editor for their helpful comments and suggestions. We thank Shiyu (Jake) Zhang for his excellent research assistance. We have benefitted from comments by conference participants at the ALETS 2021, International Workshop for Lab and Field Experiments at Osaka University, 2021 Hong Kong Microeconomic Theory Workshop at University of Hong Kong, and seminar participants at Boston College, Carnegie Mellon University, Concordia University, Kyungpook National University, Seoul National University, and Yonsei University.

Publisher Copyright:
© 2022 Elsevier Inc.

Keywords

  • Choice-augmented deferred acceptance
  • Deferred acceptance
  • Efficiency
  • Stable improvement cycles
  • Tie-breaking
  • Weak priority

ASJC Scopus subject areas

  • Economics and Econometrics

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