Consistent Pareto Improvement Over the Student-Optimal Stable Mechanism

Abstract

We show that there is no consistent Pareto improvement over any stable mechanism. To overcome this impossibility, we introduce the following weak consistency requirement: Whenever a set of students, each of whom is assigned to a school that is under-demanded at the student-optimal stable matching, are removed with their assigned seats, then the assignments of the remaining students should not change. We show that EADA (Kesten, 2010) is the unique mechanism that is weakly consistent and Pareto improves over the student-optimal stable mechanism.

Keywords: Market Design, School Choice, Consistency, Weak Consistency, EADA

JEL Classification: C78, D47, D71, D78