Hyoeun Park, Postdoc at NYU Abu Dhabi, visits our faculty to present her work on "Decentralizing School Choice" in Q4.245.
Here is the abstract:
We study two mechanisms for matching K–12 students with schools: the well-known Top Trading Cycles (TTC) mechanism and a new market-based mechanism inspired by Leshno and Lo (2021), which we refer to as the competitive equilibrium (CE) mechanism. While TTC is strategy-proof and Pareto efficient, students may fail to recognize that truthful reporting is optimal, resulting in welfare losses. Leshno and Lo (2021) develop a method to calculate priority cutoffs in a student-school market, ensuring that demand equals supply at each school, and show that the resulting allocation in a finite model coincides with the TTC outcome. Our CE mechanism builds on this approach, with a key modification in how priority cutoffs are determined. We conjecture that the CE mechanism is cognitively simpler than the TTC mechanism, as students only need to select one school from a set of schools of which they are eligible to apply, rather than providing a ranking of all the schools. We conduct an online experiment to assess whether the CE mechanism yields a higher rate of truth-telling (defined as students choosing their best eligible school), yields more social surplus, and more closely implements the allocation that would result if subjects were to report their preferences truthfully in the TTC mechanism.