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Heterogeneous Beliefs and School Choice Mechanisms

Author

Listed:
  • Adam Kapor

    (Columbia University)

  • Christopher A. Neilson

    (Princeton University)

  • Seth D. Zimmerman

    (University of Chicago Booth School of Business)

Abstract

This paper studies how welfare outcomes in centralized school choice depend on the assignment mechanism when participants are not fully informed. Using a survey of school choice participants in a strategic setting, we show that beliefs about admissions chances differ from rational expectations values and predict choice behavior. To quantify the welfare costs of belief errors, we estimate a model of school choice that incorporates subjective beliefs. We evaluate the equilibrium effects of switching to a strategy-proof deferred acceptance algorithm, and of improving households' belief accuracy. Allowing for belief errors reverses the welfare comparison to favor the deferred acceptance algorithm.

Suggested Citation

  • Adam Kapor & Christopher A. Neilson & Seth D. Zimmerman, 2017. "Heterogeneous Beliefs and School Choice Mechanisms," Working Papers 612, Princeton University, Department of Economics, Industrial Relations Section..
  • Handle: RePEc:pri:indrel:612
    as

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    References listed on IDEAS

    as
    1. Thomas J. Kane & Douglas O. Staiger, 2008. "Estimating Teacher Impacts on Student Achievement: An Experimental Evaluation," NBER Working Papers 14607, National Bureau of Economic Research, Inc.
    2. Joshua D. Angrist & Peter D. Hull & Parag A. Pathak & Christopher R. Walters, 2017. "Leveraging Lotteries for School Value-Added: Testing and Estimation," The Quarterly Journal of Economics, Oxford University Press, vol. 132(2), pages 871-919.
    3. Atila Abdulkadiroğlu & Joshua D. Angrist & Yusuke Narita & Parag A. Pathak, 2017. "Research Design Meets Market Design: Using Centralized Assignment for Impact Evaluation," Econometrica, Econometric Society, vol. 85, pages 1373-1432, September.
    4. Gabrielle Fack & Julien Grenet & Yinghua He, 2017. "Beyond Truth-Telling: Preference Estimation with Centralized School Choice and College Admissions," PSE Working Papers halshs-01215998, HAL.
    5. de Haan, Monique & Gautier, Pieter A. & Oosterbeek, Hessel & van der Klaauw, Bas, 2015. "The Performance of School Assignment Mechanisms in Practice," IZA Discussion Papers 9118, Institute of Labor Economics (IZA).
    6. McCulloch, Robert & Rossi, Peter E., 1994. "An exact likelihood analysis of the multinomial probit model," Journal of Econometrics, Elsevier, vol. 64(1-2), pages 207-240.
    7. repec:hrv:faseco:30749073 is not listed on IDEAS
    8. Raj Chetty & John N. Friedman & Jonah E. Rockoff, 2014. "Measuring the Impacts of Teachers I: Evaluating Bias in Teacher Value-Added Estimates," American Economic Review, American Economic Association, vol. 104(9), pages 2593-2632, September.
    9. Atila Abdulkadiroglu & Yeon-Koo Che & Yosuke Yasuda, 2011. "Resolving Conflicting Preferences in School Choice: The "Boston Mechanism" Reconsidered," American Economic Review, American Economic Association, vol. 101(1), pages 399-410, February.
    10. Nikhil Agarwal & Paulo Somaini, 2018. "Demand Analysis Using Strategic Reports: An Application to a School Choice Mechanism," Econometrica, Econometric Society, vol. 86(2), pages 391-444, March.
    11. Michael Dinerstein & Troy Smith, 2015. "Quantifying the Supply Response of Private Schools to Public Policies," Discussion Papers 15-019, Stanford Institute for Economic Policy Research.
    12. Eduardo M. Azevedo & Jacob D. Leshno, 2016. "A Supply and Demand Framework for Two-Sided Matching Markets," Journal of Political Economy, University of Chicago Press, vol. 124(5), pages 1235-1268.
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    14. Gabrielle Fack & Julien Grenet & Yinghua He, 2019. "Beyond Truth-Telling: Preference Estimation with Centralized School Choice and College Admissions," American Economic Review, American Economic Association, vol. 109(4), pages 1486-1529, April.
    15. He, Yinghua, 2012. "Gaming the Boston School Choice Mechanism in Beijing," TSE Working Papers 12-345, Toulouse School of Economics (TSE).
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    Citations

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    Cited by:

    1. Thierry Magnac, 2018. "Quels étudiants pour quelles universités ? Analyses empiriques de mécanismes d’allocation centralisée," Revue économique, Presses de Sciences-Po, vol. 69(5), pages 683-708.
    2. Bo, Shiyu & Liu, Jing & Shiu, Ji-Liang & Song, Yan & Zhou, Sen, 2019. "Admission mechanisms and the mismatch between colleges and students: Evidence from a large administrative dataset from China," Economics of Education Review, Elsevier, vol. 68(C), pages 27-37.
    3. Andrabi, Tahir & Das, Jishnu & Khwaja, Asim Ijaz & Ozyurt, Selcuk & Singh, Niharika, 2018. "Upping the Ante: The Equilibrium Effects of Unconditional Grants to Private Schools," Working Paper Series rwp18-019, Harvard University, John F. Kennedy School of Government.
    4. Xavier D'Haultfoeuille & Christophe Gaillac & Arnaud Maurel, 2018. "Rationalizing Rational Expectations? Tests and Deviations," NBER Working Papers 25274, National Bureau of Economic Research, Inc.
    5. Macartney, Hugh & Singleton, John D., 2018. "School boards and student segregation," Journal of Public Economics, Elsevier, vol. 164(C), pages 165-182.
    6. De Groote, Olivier, 2019. "A dynamic model of effort choice in high school," TSE Working Papers 19-1002, Toulouse School of Economics (TSE), revised Nov 2019.
    7. Chen, Li & Sebastián Pereyra, Juan, 2019. "Self-selection in school choice," Games and Economic Behavior, Elsevier, vol. 117(C), pages 59-81.

    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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