Priority Design in Centralized Matching Markets

72 Pages Posted: 21 May 2019 Last revised: 24 Jul 2021

See all articles by Oguzhan Celebi

Oguzhan Celebi

Stanford University - Department of Economics

Joel P. Flynn

Yale University

Date Written: July 23, 2021

Abstract

In many centralized matching markets, agents' property rights over objects are derived from a coarse transformation of an underlying score. Prominent examples include the distance-based system employed by Boston Public Schools, where students who lived within a certain radius of each school were prioritized over all others, and the income-based system used in New York public housing allocation, where eligibility is determined by a sharp income cutoff. Motivated by this, we study how to optimally coarsen an underlying score. Our main result is that, for any continuous objective function and under stable matching mechanisms, the optimal design can be attained by splitting agents into at most three indifference classes for each object. We provide insights into this design problem in three applications: distance-based scores in Boston Public Schools, test-based scores for Chicago exam schools, and income-based scores in New York public housing allocation.

Keywords: Matching Theory, Market Design, Priority Design, Allocative Efficiency

JEL Classification: C78, D47, D61

Suggested Citation

Celebi, Oguzhan and Flynn, Joel P., Priority Design in Centralized Matching Markets (July 23, 2021). Available at SSRN: https://ssrn.com/abstract=3382580 or http://dx.doi.org/10.2139/ssrn.3382580

Oguzhan Celebi

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
STANFORD, CA 94305-6072
United States

Joel P. Flynn (Contact Author)

Yale University ( email )

493 College St
New Haven, CT CT 06520
United States

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