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The Multi-unit Assignment Problem: Theory and Evidence from Course Allocation at Harvard

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  • Eric Budish
  • Estelle Cantillon

Abstract

We use theory and field data to study the draft mechanism used to allocate courses at Harvard Business School. We show that the draft is manipulable in theory, manipulated in practice, and that these manipulations cause significant welfare loss. Nevertheless, we find that welfare is higher than under its widely studied strategyproof alternative. We identify a new link between fairness and welfare that explains why the draft performs well despite the costs of strategic behavior, and then design a new draft that reduces these costs. We draw several broader lessons for market design, regarding Pareto efficiency, fairness, and strategyproofness. (JEL D63, D82, I23)

Suggested Citation

  • Eric Budish & Estelle Cantillon, 2012. "The Multi-unit Assignment Problem: Theory and Evidence from Course Allocation at Harvard," American Economic Review, American Economic Association, vol. 102(5), pages 2237-2271, August.
  • Handle: RePEc:aea:aecrev:v:102:y:2012:i:5:p:2237-71
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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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