17th Matching in Practice workshop, May 10-11, 2021
Policy Table "Centralized job market for Economists" (May 10, 2021)
Abstract: We introduce a general class of simplicity standards that vary the foresight abilities required of agents in extensive-form games. Rather than planning for the entire future of a game, agents are presumed to be able to plan only for those histories they view as simple from their current perspective. Agents may update their so-called strategic plan as the game progresses, and, at any point, for the called-for action to be simply dominant, it must lead to unambiguously better outcomes, no matter what occurs at non-simple histories. We use our approach to simplicity to provide characterizations of simple mechanisms in general social choice environments both with and without transfers, including canonical mechanisms such as ascending auctions, posted prices, and serial dictatorship-style mechanisms. As a final application, we explain the widespread popularity of the well-known Random Priority mechanism by characterizing it as the unique mechanism that is efficient, fair, and simple to play.
Christian Basteck (WZB Berlin Social Science Center): Strategy-Proof and Envyfree Random Assignment
Abstract: We study the random assignment of indivisible objects among a set of agents with strict preferences. We show that there exists no mechanism which is strategy-proof, envyfree and unanimous. Then we weaken the latter requirement to q-unanimity: when each agent ranks a different object at the top, then any agent shall receive his most preferred object with probability of at least q. We show that if a mechanism satisfies strategy-proofness, envyfreeness, ex-post weak non-wastefulness, ex-post weak efficiency and q-unanimity, then q must be smaller than or equal to 2|N|(where |N| is the number of agents). We introduce a new mechanism called random careless dictator (RCD) and show that RCD achieves this maximal bound. In addition, for three agents, RCD is characterized by the first four properties.
Alexander Nesterov (HSE University): Incentives in Matching Markets: Counting and Comparing the Number of Manipulating Agents
Abstract: Many real-life matching markets are vulnerable to preference and capacity misreports. Various policy goals and constraints make such \enquote{manipulations} inevitable, but a large amount of them is a serious threat to the success of these markets. To address this issue, numerous matching systems have recently reformed their matching rules. Examples include the entry-level medical labor market in the US, school admissions systems in New York City, Chicago, Denver, Ghana, and England. We count and compare the number of all relevant manipulating agents and show that each of these reforms made the systems less manipulable.
Tomás Larroucau (University of Pennsylvania): Dynamic College Admissions and the Determinants of Students’ College Retention
Abstract: We analyze the relevance of incorporating dynamic incentives and eliciting private information about students’ preferences to improve their welfare and outcomes in dynamic centralized assignment systems. We show that the most common assignment mechanism, the Deferred Acceptance (DA) algorithm, can result in significant inefficiencies as it fails to elicit cardinal information on students’ preferences. We collect novel data about students’ preferences, their beliefs on admission chances, and their college outcomes for the Chilean college system. We analyze two main behavioral channels that explain students’ dynamic decisions. First, by exploiting discontinuities on admission cutoffs, we show that not being assigned to ones’ top-reported preference has a positive causal effect on the probability of re-applying to the centralized system and switching one’s major/college, suggesting that students switch to more preferred programs due to initial mismatches. Second, we find that a significant fraction of students change their preferences during their college progression, and that these changes are correlated with their grades, suggesting that students may learn about their match-quality. Based on these facts, we build and estimate a structural model of students’ college progression in the presence of a centralized admission system, allowing students to learn about their match-quality over time and re-apply to the system. We use the estimated model to disentangle how much of students’ switching behavior is due to initial mismatches and learning, and we analyze the impact of changing the assignment mechanism and the re-application rules on the efficiency of the system. Our counterfactual results show that policies that provide score bonuses that elicit information on students’ cardinal preferences and leverage dynamic incentives can significantly decrease switchings, dropouts, and increase students’ overall welfare.
Rustamdjan Hakimov (University of Lausanne): Costly Information Acquisition in Centralized Matching Markets
Abstract: Every year during school and college admissions, students and their parents devote considerable time and effort to acquiring costly information about their own preferences. In a market where students are ranked by universities based on exam scores, we explore ways to reduce wasteful information acquisition that is, to help students avoid acquiring information about their out-of-reach schools or universities using a market design approach. We find that, both theoretically and experimentally, a sequential serial dictatorship mechanism leads to less wasteful information acquisition and higher student welfare than a direct serial dictatorship mechanism. This is because the sequential mechanism informs students about which universities are willing to admit them, thereby directing their search. Additionally, our experiments show that the sequential mechanism has behavioral advantages because subjects deviate from the optimal search strategy less frequently under the sequential than under the direct mechanism. We also investigate the effects of providing historical cutoff scores under the direct mechanism. We find that the cutoff provision can increase student welfare, especially when the information costs are high, although the effect is weaker than that of a sequential mechanism.
Jonathan Davis (University of Oregon): Labor Market Design Can Improve Match Outcomes: Evidence from Matching Teach For America Teachers to Schools
Abstract: I worked with Teach For America (TFA) to match high school teachers to schools in Chicago using the deferred acceptance algorithm (DA), while keeping its original mechanism unchanged for elementary teachers. Comparing actual matches under DA to simulated counterfactual matches suggests half of teachers strictly prefer their matches under DA and very few teachers are worse off. This improved matching yields longer-run benefits: matching with DA increased teachers retention through their two-year commitment to TFA by between 6 and 12 percent. This provides empirical support for the hypothesis that economic design can improve match outcomes in labor markets without negotiable wages.
Ashutosh Thakur (Graduate School of Business Stanford University): Combining Social Choice and Matching Theory to Understand Institutional Stability
Abstract: In many organizations, members need to be assigned to certain positions, whether these are legislators to committees, executives to roles, or workers to teams. I show that these assignment problems lead to novel questions about institutional stability. Will the set of agents being assigned prefer or vote in favor of some alternative allocation over their current allocation thereby lobbying to reform the institution? I explore questions of institutional stability where the choice of the institution (i.e., the matching mechanism) is chosen and agreed upon by the very people who are assigned by the assignment procedure. I endogenize an institution's choice of assignment procedures by analyzing an important sub-case of social choice that I call a social allocation choice problem. I discuss a variety of voting rules (plurality, majority, and unanimity) and their institutional stability counterparts in matching theory (popular matching, majority stability, and pareto efficiency). The novel property of majority stability is introduced and its existence and robustness to correlated preferences and interdependent preferences are analyzed. Chains of envy are necessary to overcome the packing problem that arises in reallocating a majority to a new set of assignments under an alternative allocation. This makes majority stability, in sharp contrast to plurality rule, strikingly robust to correlated preferences.
Nick Arnosti (Columbia University): Parallel Lotteries: Insights from Alaskan Hunting Permit Allocation
Abstract: We analyze the parallel lottery which is used to allocate hunting permits in the state of Alaska. Each participant is given tickets to distribute among lotteries for different types of items. Participants who win multiple items receive their favorite, and new winners are drawn from the lotteries with unclaimed items. When supply is scarce, equilibrium outcomes of parallel lotteries approximate a competitive equilibrium from equal incomes (CEEI), which is Pareto efficient. When supply is moderate, parallel lotteries exhibit two sources of inefficiency. First, some agents may benefit from trading probability shares. Second, outcomes may be “wasteful”: agents may receive nothing even if acceptable items remain unallocated. We bound both sources of inefficiency, and show that each is eliminated by giving applicants a suitable number of tickets k: trades are never beneficial when k = 1, and waste is eliminated as k → ∞. In addition, we show that the wastefulness of the k-ticket parallel lottery has some benefits: agents with strong preferences may prefer parallel lottery outcomes to those of any nonwasteful envy-free mechanism. These agents prefer small values of k, while agents with weak preferences prefer large values of k. Together, these results suggest that the k-ticket parallel lottery performs well under most circumstances, and may be suitable for other settings where items are rationed.
Antonio Miralles (University of Messina and Barcelona Graduate School of Economics): Fairness and Efficiency for Allocations with Participation Constraints
Abstract: We propose a notion of fairness for allocation problems in which different agents may have different reservation utilities, stemming from different outside options, or property rights. Fairness is usually understood as the absence of envy, but this can be incompatible with reservation utilities. It is possible that Alice’s envy of Bob’s assignment cannot be remedied without violating Bob’s participation constraint. Instead, we seek to rule out justified envy, defined as envy for which a remedy would not violate any agent’s participation constraint. We show that fairness, meaning the absence of justified envy, can be achieved together with efficiency and individual rationality. We introduce a competitive equilibrium approach with price-dependent incomes obtaining the desired properties.
Flip Klijn (Barcelona Graduate School of Economics): Shapley-Scarf Housing Markets: Respecting Improvement, Integer Programming, and Kidney Exchange
Abstract: In a housing market of Shapley and Scarf (1974), each agent is endowed with one indivisible object and has preferences over all objects. An allocation of the objects is in the (strong) core if there exists no (weakly) blocking coalition. In this paper we show that in the case of strict preferences the unique strong core allocation (or competitive allocation) "respects improvement": if an agent's object becomes more attractive for some other agents, then the agent's allotment in the unique strong core allocation weakly improves. We obtain a general result in case of ties in the preferences and provide new integer programming formulations for computing (strong) core and competitive allocations. Finally, we conduct computer simulations to compare the game-theoretical solutions with maximum size and maximum weight exchanges for markets that resemble the pools of kidney exchange programmes.
Juan Pereyra (University of the Republic): Optimal Assignment Mechanisms with Imperfect Verification
Abstract : Objects of different quality are to be assigned to agents. Agents can be assigned at most one object and there are not enough high-quality objects for every agent. The social planner is unable to use transfers to give incentives for agents to convey their private information; instead, she is able to imperfectly verify their reports. We characterize the set of mechanisms that maximize welfare and then apply our results to the case of colleges’ admissions. We find that optimal mechanisms are, in general, ex-post inefficient and do strictly better than the standard mechanisms that are studied in the matching literature.
Renke Schmacker (University of Lausanne): Fairness in Matching Markets: Experimental Evidence
Abstract: We experimentally investigate fairness preferences over matching mechanisms. Participants vote between the envy-free assortative matching and the Boston mechanism where some subjects are sincere while others can submit their rank-order lists strategically, leading to justified envy. To assess fairness preferences, we rely on veil-of-ignorance and spectator designs. We find that individuals have an aversion to justified envy, mainly in environments where school priorities are based on earned entitlements. However, a persistently high share of individuals accepts justified envy by voting for the Boston mechanism. Our findings indicate that many individuals believe that clever strategic behavior creates entitlements of its own.
Bobby Pakzad-Hurson (Brown University): Do Peer Preferences Matter in School Choice Market Design? Theory and Evidence
Abstract: Can a clearinghouse generate a stable matching–one in which no student wants to leave her university program for another program willing to accept her–if it does not allow students to express their preferences over both programs and peers? Application data from Australia’s centralized college admissions system show that students have preferences over the academic abilities of their peers, and that the effect of peer preferences is large; we estimate 20% of students would have matched with a different program in the counterfactual world without peer references. However, the matching mechanism used only allows students to express preferences over programs, not over peers. Theoretically, we show that a stable matching exists with peer preferences under mild conditions, but finding one via canonical mechanisms is unlikely. We show that increasing transparency about the previous cohort of students enrolling at each program, analogously to the process in the Australian market, induces a tâtonnement wherein the distributions of former students play the role of prices. We theoretically model this process and develop a test for match stability. We implement this test empirically to show that the Australian market fails to converge to stability over time, and that this instability especially affects low socioeconomic status students. To address these issues, we propose a new mechanism that improves upon the current design, and we show that this mechanism generates a stable matching in the Australian market.
David Delacretaz (University of Oxford): Processing Reserves Simultaneously
Abstract: Policymakers frequently use reserve categories to combine competing objectives in allocating scarce resources based on priority. For example, schools may prioritize students from underprivileged backgrounds for some of their seats while allocating the rest of them based solely on academic merit. The order in which different categories are processed has been shown to have an important, yet subtle impact on allocative outcomes—and has led to unintended consequences in practice. I introduce a new, more transparent way of processing reserves, which handles all categories simultaneously. I provide an axiomatic characterization of my solution, showing that it satisfies basic desiderata as well as category neutrality: if an agent qualifies for n categories, she takes 1/n units from each of them. A practical advantage of this approach is that the relative importance of categories is entirely captured by their quotas.
Bertan Turhan (Iowa State University): How to De-Reserve Reserves
Abstract: Reserve systems have been designed and implemented for numerous real-world resource allocation problems. Often, de-reservation policies accompany reserve systems to prevent waste in instances of low demand for exclusive reserve categories. De-reservation policies must be executed carefully so that allocation mechanisms have desired properties. We evaluate the de-reservation policy that has been implemented in admissions to technical universities in India and reveal its shortcomings. We introduce two families of choice procedures—backward and forward transfers choice rules—and deferred acceptance mechanisms with respect to these choice rules to retrieve these shortcomings. We introduce a framework to compare choice rules on the basis of merit and show that forward transfers choice rules select more meritorious sets than backward transfers choice rules.
Juan Escobar (University of Chile): School Choice and Segregation
Abstract: Segregation in schools is prevalent in many cities around the world. In this paper, we analyze the impact on segregation and efficiency of affirmative action policies in school choice programs. In a large market model, we show that minority reserves–that guarantee a number of seats to minority students–are an effective tool to reduce segregation in schools. More subtle, minority reserves increase the number of students assigned to their first preferences and improve efficiency. The main cost of increasing minority reserves is leaving more students unassigned. Each of these predictions from the stylized model is confirmed by field evidence from school choice programs in the largest urban centers in Chile. In our data, minority reserves can reduce the Duncan segregation index in more than 20% and improve the efficiency of the system.
VENUE
3A Kantemirovskaya st, St Petersburg, Russia & Zoom
CONTACT
Elena Kusharina, Lab's manager (ekusharina@hse.ru)
Transcript of the roundtable (PDF, 192 Kb)
See more videos from the workshop:
YouTube Channel
Google Drive
On May 10-11, the Game Theory Lab and MiP Network the 17th Matching in Practice workshop in St. Petersburg.
The workshop virtually occurred in Saint Petersburg, the place that should have hosted the regular workshop a year ago. The event was held on May 10 and 11, in a Virtual Chair space.
For more information about the space please walk around the Virtual Chair Self-Demo Site and see this guide.
PROGRAM
MiP 2021 Program (PDF, 266 Kb)
This time we devoted a bit longer slot of time for the policy roundtable. We discussed the idea of a centralized job market for economists. Andrew Johnston (University of California at Merced), Itai Ashlagi (Stanford University), Laura Doval (Columbia Business School), Alex Teytelboym (University of Oxford), and Dorothea Kübler (WZB Berlin Social Science Center) nicely agreed to participate in the round table. As we have some academic perspective on the topic and participated in the market on either side, we conducted a fruitful and dynamic discussion.
We also were excited to have Utku Ünver (Boston College) as our plenary speaker in the keynote talk: Blood Allocation with Replacement Donors: A Theory of Multi-unit Exchange with Compatibility-based Preferences.
Abstract: In 56 developing and developed countries, blood component donations by volunteer non-remunerated donors can only meet less than 50% of the demand. In these countries, blood banks heavily rely on replacement donor programs that provide blood to patients in return for donations made by their close relatives or friends. These programs appear to be disorganized, non-transparent, and inefficient. We introduce the design of replacement donor programs and blood allocation schemes as a new application of market design. We formulate a general blood allocation and replacement donation model. Within this framework, we introduce optimal blood allocation mechanisms that accommodate fairness, efficiency, and other allocation objectives together with endogenous exchange rates between donated and received blood units beyond the classical one-for-one exchange. They also provide correct incentives for the patients to bring forward as many replacement donors as possible. This framework and the mechanism class also apply to general applications of multi-unit exchange for indivisible goods with compatibility-based preferences beyond blood allocation.
Our speakers:
Abstract: We introduce a general class of simplicity standards that vary the foresight abilities required of agents in extensive-form games. Rather than planning for the entire future of a game, agents are presumed to be able to plan only for those histories they view as simple from their current perspective. Agents may update their so-called strategic plan as the game progresses, and, at any point, for the called-for action to be simply dominant, it must lead to unambiguously better outcomes, no matter what occurs at non-simple histories. We use our approach to simplicity to provide characterizations of simple mechanisms in general social choice environments both with and without transfers, including canonical mechanisms such as ascending auctions, posted prices, and serial dictatorship-style mechanisms. As a final application, we explain the widespread popularity of the well-known Random Priority mechanism by characterizing it as the unique mechanism that is efficient, fair, and simple to play.
Christian Basteck (WZB Berlin Social Science Center): Strategy-Proof and Envyfree Random Assignment
Abstract: We study the random assignment of indivisible objects among a set of agents with strict preferences. We show that there exists no mechanism which is strategy-proof, envyfree and unanimous. Then we weaken the latter requirement to q-unanimity: when each agent ranks a different object at the top, then any agent shall receive his most preferred object with probability of at least q. We show that if a mechanism satisfies strategy-proofness, envyfreeness, ex-post weak non-wastefulness, ex-post weak efficiency and q-unanimity, then q must be smaller than or equal to 2|N|(where |N| is the number of agents). We introduce a new mechanism called random careless dictator (RCD) and show that RCD achieves this maximal bound. In addition, for three agents, RCD is characterized by the first four properties.
Alexander Nesterov (HSE University): Incentives in Matching Markets: Counting and Comparing the Number of Manipulating Agents
Abstract: Many real-life matching markets are vulnerable to preference and capacity misreports. Various policy goals and constraints make such \enquote{manipulations} inevitable, but a large amount of them is a serious threat to the success of these markets. To address this issue, numerous matching systems have recently reformed their matching rules. Examples include the entry-level medical labor market in the US, school admissions systems in New York City, Chicago, Denver, Ghana, and England. We count and compare the number of all relevant manipulating agents and show that each of these reforms made the systems less manipulable.
Tomás Larroucau (University of Pennsylvania): Dynamic College Admissions and the Determinants of Students’ College Retention
Abstract: We analyze the relevance of incorporating dynamic incentives and eliciting private information about students’ preferences to improve their welfare and outcomes in dynamic centralized assignment systems. We show that the most common assignment mechanism, the Deferred Acceptance (DA) algorithm, can result in significant inefficiencies as it fails to elicit cardinal information on students’ preferences. We collect novel data about students’ preferences, their beliefs on admission chances, and their college outcomes for the Chilean college system. We analyze two main behavioral channels that explain students’ dynamic decisions. First, by exploiting discontinuities on admission cutoffs, we show that not being assigned to ones’ top-reported preference has a positive causal effect on the probability of re-applying to the centralized system and switching one’s major/college, suggesting that students switch to more preferred programs due to initial mismatches. Second, we find that a significant fraction of students change their preferences during their college progression, and that these changes are correlated with their grades, suggesting that students may learn about their match-quality. Based on these facts, we build and estimate a structural model of students’ college progression in the presence of a centralized admission system, allowing students to learn about their match-quality over time and re-apply to the system. We use the estimated model to disentangle how much of students’ switching behavior is due to initial mismatches and learning, and we analyze the impact of changing the assignment mechanism and the re-application rules on the efficiency of the system. Our counterfactual results show that policies that provide score bonuses that elicit information on students’ cardinal preferences and leverage dynamic incentives can significantly decrease switchings, dropouts, and increase students’ overall welfare.
Rustamdjan Hakimov (University of Lausanne): Costly Information Acquisition in Centralized Matching Markets
Abstract: Every year during school and college admissions, students and their parents devote considerable time and effort to acquiring costly information about their own preferences. In a market where students are ranked by universities based on exam scores, we explore ways to reduce wasteful information acquisition that is, to help students avoid acquiring information about their out-of-reach schools or universities using a market design approach. We find that, both theoretically and experimentally, a sequential serial dictatorship mechanism leads to less wasteful information acquisition and higher student welfare than a direct serial dictatorship mechanism. This is because the sequential mechanism informs students about which universities are willing to admit them, thereby directing their search. Additionally, our experiments show that the sequential mechanism has behavioral advantages because subjects deviate from the optimal search strategy less frequently under the sequential than under the direct mechanism. We also investigate the effects of providing historical cutoff scores under the direct mechanism. We find that the cutoff provision can increase student welfare, especially when the information costs are high, although the effect is weaker than that of a sequential mechanism.
Jonathan Davis (University of Oregon): Labor Market Design Can Improve Match Outcomes: Evidence from Matching Teach For America Teachers to Schools
Abstract: I worked with Teach For America (TFA) to match high school teachers to schools in Chicago using the deferred acceptance algorithm (DA), while keeping its original mechanism unchanged for elementary teachers. Comparing actual matches under DA to simulated counterfactual matches suggests half of teachers strictly prefer their matches under DA and very few teachers are worse off. This improved matching yields longer-run benefits: matching with DA increased teachers retention through their two-year commitment to TFA by between 6 and 12 percent. This provides empirical support for the hypothesis that economic design can improve match outcomes in labor markets without negotiable wages.
Ashutosh Thakur (Graduate School of Business Stanford University): Combining Social Choice and Matching Theory to Understand Institutional Stability
Abstract: In many organizations, members need to be assigned to certain positions, whether these are legislators to committees, executives to roles, or workers to teams. I show that these assignment problems lead to novel questions about institutional stability. Will the set of agents being assigned prefer or vote in favor of some alternative allocation over their current allocation thereby lobbying to reform the institution? I explore questions of institutional stability where the choice of the institution (i.e., the matching mechanism) is chosen and agreed upon by the very people who are assigned by the assignment procedure. I endogenize an institution's choice of assignment procedures by analyzing an important sub-case of social choice that I call a social allocation choice problem. I discuss a variety of voting rules (plurality, majority, and unanimity) and their institutional stability counterparts in matching theory (popular matching, majority stability, and pareto efficiency). The novel property of majority stability is introduced and its existence and robustness to correlated preferences and interdependent preferences are analyzed. Chains of envy are necessary to overcome the packing problem that arises in reallocating a majority to a new set of assignments under an alternative allocation. This makes majority stability, in sharp contrast to plurality rule, strikingly robust to correlated preferences.
Nick Arnosti (Columbia University): Parallel Lotteries: Insights from Alaskan Hunting Permit Allocation
Abstract: We analyze the parallel lottery which is used to allocate hunting permits in the state of Alaska. Each participant is given tickets to distribute among lotteries for different types of items. Participants who win multiple items receive their favorite, and new winners are drawn from the lotteries with unclaimed items. When supply is scarce, equilibrium outcomes of parallel lotteries approximate a competitive equilibrium from equal incomes (CEEI), which is Pareto efficient. When supply is moderate, parallel lotteries exhibit two sources of inefficiency. First, some agents may benefit from trading probability shares. Second, outcomes may be “wasteful”: agents may receive nothing even if acceptable items remain unallocated. We bound both sources of inefficiency, and show that each is eliminated by giving applicants a suitable number of tickets k: trades are never beneficial when k = 1, and waste is eliminated as k → ∞. In addition, we show that the wastefulness of the k-ticket parallel lottery has some benefits: agents with strong preferences may prefer parallel lottery outcomes to those of any nonwasteful envy-free mechanism. These agents prefer small values of k, while agents with weak preferences prefer large values of k. Together, these results suggest that the k-ticket parallel lottery performs well under most circumstances, and may be suitable for other settings where items are rationed.
Antonio Miralles (University of Messina and Barcelona Graduate School of Economics): Fairness and Efficiency for Allocations with Participation Constraints
Abstract: We propose a notion of fairness for allocation problems in which different agents may have different reservation utilities, stemming from different outside options, or property rights. Fairness is usually understood as the absence of envy, but this can be incompatible with reservation utilities. It is possible that Alice’s envy of Bob’s assignment cannot be remedied without violating Bob’s participation constraint. Instead, we seek to rule out justified envy, defined as envy for which a remedy would not violate any agent’s participation constraint. We show that fairness, meaning the absence of justified envy, can be achieved together with efficiency and individual rationality. We introduce a competitive equilibrium approach with price-dependent incomes obtaining the desired properties.
Flip Klijn (Barcelona Graduate School of Economics): Shapley-Scarf Housing Markets: Respecting Improvement, Integer Programming, and Kidney Exchange
Abstract: In a housing market of Shapley and Scarf (1974), each agent is endowed with one indivisible object and has preferences over all objects. An allocation of the objects is in the (strong) core if there exists no (weakly) blocking coalition. In this paper we show that in the case of strict preferences the unique strong core allocation (or competitive allocation) "respects improvement": if an agent's object becomes more attractive for some other agents, then the agent's allotment in the unique strong core allocation weakly improves. We obtain a general result in case of ties in the preferences and provide new integer programming formulations for computing (strong) core and competitive allocations. Finally, we conduct computer simulations to compare the game-theoretical solutions with maximum size and maximum weight exchanges for markets that resemble the pools of kidney exchange programmes.
Juan Pereyra (University of the Republic): Optimal Assignment Mechanisms with Imperfect Verification
Abstract : Objects of different quality are to be assigned to agents. Agents can be assigned at most one object and there are not enough high-quality objects for every agent. The social planner is unable to use transfers to give incentives for agents to convey their private information; instead, she is able to imperfectly verify their reports. We characterize the set of mechanisms that maximize welfare and then apply our results to the case of colleges’ admissions. We find that optimal mechanisms are, in general, ex-post inefficient and do strictly better than the standard mechanisms that are studied in the matching literature.
Renke Schmacker (University of Lausanne): Fairness in Matching Markets: Experimental Evidence
Abstract: We experimentally investigate fairness preferences over matching mechanisms. Participants vote between the envy-free assortative matching and the Boston mechanism where some subjects are sincere while others can submit their rank-order lists strategically, leading to justified envy. To assess fairness preferences, we rely on veil-of-ignorance and spectator designs. We find that individuals have an aversion to justified envy, mainly in environments where school priorities are based on earned entitlements. However, a persistently high share of individuals accepts justified envy by voting for the Boston mechanism. Our findings indicate that many individuals believe that clever strategic behavior creates entitlements of its own.
Bobby Pakzad-Hurson (Brown University): Do Peer Preferences Matter in School Choice Market Design? Theory and Evidence
Abstract: Can a clearinghouse generate a stable matching–one in which no student wants to leave her university program for another program willing to accept her–if it does not allow students to express their preferences over both programs and peers? Application data from Australia’s centralized college admissions system show that students have preferences over the academic abilities of their peers, and that the effect of peer preferences is large; we estimate 20% of students would have matched with a different program in the counterfactual world without peer references. However, the matching mechanism used only allows students to express preferences over programs, not over peers. Theoretically, we show that a stable matching exists with peer preferences under mild conditions, but finding one via canonical mechanisms is unlikely. We show that increasing transparency about the previous cohort of students enrolling at each program, analogously to the process in the Australian market, induces a tâtonnement wherein the distributions of former students play the role of prices. We theoretically model this process and develop a test for match stability. We implement this test empirically to show that the Australian market fails to converge to stability over time, and that this instability especially affects low socioeconomic status students. To address these issues, we propose a new mechanism that improves upon the current design, and we show that this mechanism generates a stable matching in the Australian market.
David Delacretaz (University of Oxford): Processing Reserves Simultaneously
Abstract: Policymakers frequently use reserve categories to combine competing objectives in allocating scarce resources based on priority. For example, schools may prioritize students from underprivileged backgrounds for some of their seats while allocating the rest of them based solely on academic merit. The order in which different categories are processed has been shown to have an important, yet subtle impact on allocative outcomes—and has led to unintended consequences in practice. I introduce a new, more transparent way of processing reserves, which handles all categories simultaneously. I provide an axiomatic characterization of my solution, showing that it satisfies basic desiderata as well as category neutrality: if an agent qualifies for n categories, she takes 1/n units from each of them. A practical advantage of this approach is that the relative importance of categories is entirely captured by their quotas.
Bertan Turhan (Iowa State University): How to De-Reserve Reserves
Abstract: Reserve systems have been designed and implemented for numerous real-world resource allocation problems. Often, de-reservation policies accompany reserve systems to prevent waste in instances of low demand for exclusive reserve categories. De-reservation policies must be executed carefully so that allocation mechanisms have desired properties. We evaluate the de-reservation policy that has been implemented in admissions to technical universities in India and reveal its shortcomings. We introduce two families of choice procedures—backward and forward transfers choice rules—and deferred acceptance mechanisms with respect to these choice rules to retrieve these shortcomings. We introduce a framework to compare choice rules on the basis of merit and show that forward transfers choice rules select more meritorious sets than backward transfers choice rules.
Juan Escobar (University of Chile): School Choice and Segregation
Abstract: Segregation in schools is prevalent in many cities around the world. In this paper, we analyze the impact on segregation and efficiency of affirmative action policies in school choice programs. In a large market model, we show that minority reserves–that guarantee a number of seats to minority students–are an effective tool to reduce segregation in schools. More subtle, minority reserves increase the number of students assigned to their first preferences and improve efficiency. The main cost of increasing minority reserves is leaving more students unassigned. Each of these predictions from the stylized model is confirmed by field evidence from school choice programs in the largest urban centers in Chile. In our data, minority reserves can reduce the Duncan segregation index in more than 20% and improve the efficiency of the system.
VENUE
3A Kantemirovskaya st, St Petersburg, Russia & Zoom
CONTACT
Elena Kusharina, Lab's manager (ekusharina@hse.ru)
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