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The cost of strategy-proofness in school choice

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  • Josue Ortega
  • Thilo Klein

Abstract

We compare the outcomes of the most prominent strategy-proof and stable algorithm (Deferred Acceptance, DA) and the most prominent strategy-proof and Pareto optimal algorithm (Top Trading Cycles, TTC) to the allocation generated by the rank-minimizing mechanism (RM). While one would expect that RM improves upon both DA and TTC in terms of rank efficiency, the size of the improvement is nonetheless surprising. Moreover, while it is not explicitly designed to do so, RM also significantly improves the placement of the worst-off student. Furthermore, RM generates less justified envy than TTC. We corroborate our findings using data on school admissions in Budapest.

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  • Josue Ortega & Thilo Klein, 2022. "The cost of strategy-proofness in school choice," Papers 2204.07255, arXiv.org, revised Jul 2023.
    • Handle: RePEc:arx:papers:2204.07255
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    Cited by:

    1. Peter Troyan, 2022. "Non-Obvious Manipulability of the Rank-Minimizing Mechanism," Papers 2206.11359, arXiv.org.
    2. Estelle Cantillon & Li Chen & Juan S. Pereyra, 2022. "Respecting priorities versus respecting preferences in school choice: When is there a trade-off?," Papers 2212.02881, arXiv.org, revised Jan 2024.
    3. Estelle Cantillon & Li Chen & Juan Sebastian Pereyra Barreiro, 2022. "Respecting priorities versus respecting preferences in school choice: When is there a trade-off ?," Working Papers ECARES 2022-39, ULB -- Universite Libre de Bruxelles.

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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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