Adaptive Priority Mechanisms

98 Pages Posted: 8 Apr 2020 Last revised: 11 Apr 2024

See all articles by Oguzhan Celebi

Oguzhan Celebi

Stanford University - Department of Economics

Joel P. Flynn

Yale University

Date Written: April 10, 2024

Abstract

How should authorities that care about match quality and diversity allocate resources when they are uncertain about the market? We introduce adaptive priority mechanisms (APM) that prioritize agents based on their scores and characteristics. We derive an APM that is optimal and show that the ubiquitous priority and quota mechanisms are optimal if and only if the authority is risk-neutral or extremely risk-averse over diversity, respectively. Deferred Acceptance implements the unique stable matching when all authorities use the optimal APM. We provide a practical roadmap for implementing APM as a market-design solution and illustrate this using Chicago Public Schools data.

Keywords: Matching Theory, Market Design, Allocative Efficiency, Affirmative Action, Instrument Choice

JEL Classification: C78, D47, D61

Suggested Citation

Celebi, Oguzhan and Flynn, Joel P., Adaptive Priority Mechanisms (April 10, 2024). Available at SSRN: https://ssrn.com/abstract=3562665 or http://dx.doi.org/10.2139/ssrn.3562665

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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