The Cost of Strategic Play in Centralized School Choice Mechanisms

49 Pages Posted: 16 Jun 2022

See all articles by Sepehr Ekbatani

Sepehr Ekbatani

Tehran Institute for Advanced Studies

Date Written: June 11, 2022

Abstract

This paper evaluates the welfare consequences of limiting the number of choices in deferred acceptance mechanisms. I show that when the number of choices is capped, some agents must be strategic and that increasing the size of the submittable list can result in better matches, and therefore lead to welfare improvement. I use the Iranian college entrance dataset, in which students are allowed to list up to 100 choices, to estimate a novel discrete choice model for centralized university systems, while relaxing the independence of unobserved preference shocks assumption. I validate the model with out-of-sample data from a quasi-experimental policy change, in which the list cap was increased by 50 percent. In my counterfactual analysis, I calculate that a list cap of 10 choices would incur a 14.2 percent welfare loss. This is equivalent to a 453 km increase in home-university distance, which is 2.6 times the average distance traveled by Iranian students. I also show that a more restrictive list cap would generate heterogeneous effects. While a more restrictive list cap does not affect students at the top or bottom of the ranking, it hurts students with average scores and benefits students in the lower quartile.

Keywords: Matching, School Choice, Deferred Acceptance, Strategy-proof

JEL Classification: D47, D82, I23

Suggested Citation

Ekbatani, Sepehr, The Cost of Strategic Play in Centralized School Choice Mechanisms (June 11, 2022). Available at SSRN: https://ssrn.com/abstract=4134065 or http://dx.doi.org/10.2139/ssrn.4134065

Sepehr Ekbatani (Contact Author)

Tehran Institute for Advanced Studies ( email )

Iran
+982189174612 (Phone)

HOME PAGE: http://sepehrekbatani.com

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