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The Cutoff Structure of Top Trading Cycles in School Choice
[The Welfare Effects of Coordinated Assignment: Evidence from the New York City High School Match]

Author

Listed:
  • Jacob D Leshno
  • Irene Lo

Abstract

This article develops a tractable theoretical framework for the Top Trading Cycles (TTC) mechanism for school choice that allows quantifying welfare and optimizing policy decisions. We compute welfare for TTC and Deferred Acceptance (DA) under different priority structures and find that the choice of priorities can have larger welfare implications than the choice of mechanism. We solve for the welfare-maximizing distributions of school quality for parametrized economies and find that optimal investment decisions can be very different under TTC and DA. Our framework relies on a novel characterization of the TTC assignment in terms of a cutoff for each pair of schools. These cutoffs parallel prices in competitive equilibrium, with students’ priorities serving the role of endowments. We show that these cutoffs can be computed directly from the distribution of preferences and priorities in a continuum model and derive closed-form solutions and comparative statics for parameterized settings. The TTC cutoffs not only clarify the role of priorities in determining the TTC assignment but also demonstrate that TTC is more complicated than DA.

Suggested Citation

  • Jacob D Leshno & Irene Lo, 2021. "The Cutoff Structure of Top Trading Cycles in School Choice [The Welfare Effects of Coordinated Assignment: Evidence from the New York City High School Match]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(4), pages 1582-1623.
  • Handle: RePEc:oup:restud:v:88:y:2021:i:4:p:1582-1623.
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    File URL: http://hdl.handle.net/10.1093/restud/rdaa071
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    Citations

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    Cited by:

    1. Allende, Claudio & Luksic, Juan Diego & Navarrete H, Nicolas, 2024. "Better together? Student's benefits of educational market integration," Journal of Development Economics, Elsevier, vol. 167(C).
    2. SangMok Lee, 2022. "Preference Learning in School Choice Problems," Papers 2202.08366, arXiv.org, revised Mar 2023.
    3. Battal Doğan & Kemal Yildiz, 2023. "Choice with Affirmative Action," Management Science, INFORMS, vol. 69(4), pages 2284-2296, April.
    4. Nikhil Agarwal & Eric Budish, 2021. "Market Design," NBER Working Papers 29367, National Bureau of Economic Research, Inc.
    5. Yannai A. Gonczarowski & Clayton Thomas, 2022. "Structural Complexities of Matching Mechanisms," Papers 2212.08709, arXiv.org, revised Mar 2024.
    6. Caterina Calsamiglia & Antonio Miralles, 2023. "Catchment Areas, Stratification, And Access To Better Schools," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(4), pages 1469-1492, November.
    7. Jiafeng Chen, 2021. "Nonparametric Treatment Effect Identification in School Choice," Papers 2112.03872, arXiv.org, revised Oct 2023.
    8. Yannai A. Gonczarowski & Ori Heffetz & Clayton Thomas, 2022. "Strategyproofness-Exposing Mechanism Descriptions," Papers 2209.13148, arXiv.org, revised Jul 2023.
    9. Eduardo Duque & Juan Pablo Torres-Martinez, 2022. "The Strong Effects of Weak Externalities on School Choice," Working Papers wp542, University of Chile, Department of Economics.

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