Improving Schools Through School Choice: A Market Design Approach

82 Pages Posted: 14 Jan 2012 Last revised: 28 Jul 2016

John William Hatfield

University of Texas at Austin

Fuhito Kojima

Harvard University - Department of Economics

Yusuke Narita

Yale University, Department of Economics and Cowles Foundation

Date Written: July 26, 2016

Abstract

We study the effect of different centralized public school choice mechanisms on schools’ incentives for quality improvement. To do so, we introduce the following criterion: A mechanism respects improvements of school quality if each school becomes weakly better off whenever that school improves, i.e., becomes more preferred by students. We first show that neither any stable mechanism nor mechanism that is Pareto efficient for students (such as the Boston and top trading cycles mechanisms) respects improvements of school quality. Nevertheless, for large school districts, we demonstrate that any stable mechanism approximately respects improvements of school quality; by contrast, the Boston and top trading cycles mechanisms fail to do so. Thus, a stable mechanism may provide better incentives for schools to improve themselves than the Boston and top trading cycles mechanisms.

Keywords: Matching, School Choice, School Competition, Stability, Efficiency

JEL Classification: C78, D47, D78, H75, I21

Suggested Citation

Hatfield, John William and Kojima, Fuhito and Narita, Yusuke, Improving Schools Through School Choice: A Market Design Approach (July 26, 2016). Journal of Economic Theory, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1984876 or http://dx.doi.org/10.2139/ssrn.1984876

John William Hatfield

University of Texas at Austin ( email )

Austin, TX 78712
United States

Fuhito Kojima

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

Yusuke Narita (Contact Author)

Yale University, Department of Economics and Cowles Foundation ( email )

New Haven, CT 06520
United States

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