TY - JOUR
T1 - Heterogeneous beliefs and school choice mechanisms†
AU - Kapor, Adam J.
AU - Neilson, Christopher A.
AU - Zimmerman, Seth D.
N1 - Funding Information:
* Kapor: Princeton University and NBER (email: akapor@princeton.edu); Neilson: Princeton University and NBER (email: cneilson@princeton.edu); Zimmerman: University of Chicago Booth School of Business and NBER (email: seth.zimmerman@chicagobooth.edu). Pinelopi Koujianou Goldberg was the coeditor for this article. We thank Parag Pathak, Maria Marta Ferreyra, Nikhil Agarwal, Eric Budish, Chao Fu, and numerous seminar participants for their helpful comments. We thank numerous staff and administrators in the New Haven Public School district for their invaluable assistance. We thank Fabiola Alba, Alejandra Aponte, Felipe Arteaga Ossa, James Brand, Kevin DeLuca, Manuel Martinez, Gonzalo Oyanedel, Jordan Rosenthal-Kay, and Julia Wagner for their excellent research assistance. This material is based upon work supported by the National Science Foundation under grant SES-1629226. We gratefully acknowledge additional financial support from the Cowles Foundation, the Yale Program in Applied Economics and Policy, and the Princeton University Industrial Relations Section. Zimmerman gratefully acknowledges support from the Richard N. Rosett Faculty Fellowship, IGM, and the Stigler Center at the University of Chicago Booth School of Business. This research received approval from IRBs at NBER and Princeton University. All errors are our own.
Publisher Copyright:
© 2020 American Economic Association. All rights reserved.
PY - 2020/5
Y1 - 2020/5
N2 - This paper studies how welfare outcomes in centralized school choice depend on the assignment mechanism when participants are not fully informed. Using a survey of school choice participants in a strategic setting, we show that beliefs about admissions chances differ from rational expectations values and predict choice behavior. To quantify the welfare costs of belief errors, we estimate a model of school choice that incorporates subjective beliefs. We evaluate the equilibrium effects of switching to a strategy-proof deferred acceptance algorithm, and of improving households’ belief accuracy. We find that a switch to truthful reporting in the DA mechanism offers welfare improvements over the baseline given the belief errors we observe in the data, but that an analyst who assumed families had accurate beliefs would have reached the opposite conclusion.
AB - This paper studies how welfare outcomes in centralized school choice depend on the assignment mechanism when participants are not fully informed. Using a survey of school choice participants in a strategic setting, we show that beliefs about admissions chances differ from rational expectations values and predict choice behavior. To quantify the welfare costs of belief errors, we estimate a model of school choice that incorporates subjective beliefs. We evaluate the equilibrium effects of switching to a strategy-proof deferred acceptance algorithm, and of improving households’ belief accuracy. We find that a switch to truthful reporting in the DA mechanism offers welfare improvements over the baseline given the belief errors we observe in the data, but that an analyst who assumed families had accurate beliefs would have reached the opposite conclusion.
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U2 - 10.1257/aer.20170129
DO - 10.1257/aer.20170129
M3 - Article
AN - SCOPUS:85085283968
SN - 0002-8282
VL - 110
SP - 1274
EP - 1315
JO - American Economic Review
JF - American Economic Review
IS - 5
ER -