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

  • Eric Budish
  • Estelle Cantillon

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)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.102.5.2237
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 102 (2012)
Issue (Month): 5 (August)
Pages: 2237-71

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Handle: RePEc:aea:aecrev:v:102:y:2012:i:5:p:2237-71
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