Transparency in Centralised Allocation

Abstract

Non-transparency in public allocation can be costly if participants doubt the legitimacy of their assignments. We provide practical ways to increase transparency in admissions, auctions and house allocation. We model transparency in terms of the information acquired by participants through both their first-hand experience of the mechanism and from direct communication from the designer. Our approach unites the use of both dynamic mechanisms as well as of published cutoffs and dropout prices. In a school admissions laboratory experiment, we vary the degree of transparency of deferred acceptance environments and use the correctness of subjects' appeal decisions as a novel experimental measure of transparency.

Keywords: Mechanism design, information, transparency, dynamic mechanisms, cutoffs, experiment

JEL Classification: C78, C73, D78, D82