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The cost of strategy-proofness in school choice

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  • Ortega, Josué
  • Klein, Thilo

Abstract

We compare the outcomes of the most prominent strategy-proof and stable algorithm (Deferred Acceptance, DA) and the most prominent strategy-proof and Pareto optimal algorithm (Top Trading Cycles, TTC) to the allocation generated by the rank-minimizing mechanism (RM). While one would expect that RM improves upon both DA and TTC in terms of rank efficiency, the size of the improvement is nonetheless surprising. Moreover, while it is not explicitly designed to do so, RM also significantly improves the placement of the worst-off student. Furthermore, RM generates less justified envy than TTC. We corroborate our findings using data on school admissions in Budapest.

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  • Ortega, Josué & Klein, Thilo, 2023. "The cost of strategy-proofness in school choice," Games and Economic Behavior, Elsevier, vol. 141(C), pages 515-528.
    • Handle: RePEc:eee:gamebe:v:141:y:2023:i:c:p:515-528
    DOI: 10.1016/j.geb.2023.07.008
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    Cited by:

    1. Estelle Cantillon & Li Chen & Juan S. Pereyra, 2022. "Respecting priorities versus respecting preferences in school choice: When is there a trade-off?," Papers 2212.02881, arXiv.org, revised Sep 2024.
    2. Troyan, Peter, 2024. "(Non-)obvious manipulability of rank-minimizing mechanisms," Journal of Mathematical Economics, Elsevier, vol. 113(C).
    3. Yasunori Okumura, 2024. "Strategic Analysis of Fair Rank-Minimizing Mechanisms with Agent Refusal Option," Papers 2408.01673, arXiv.org, revised Dec 2024.
    4. Kento Yoshida & Kei Kimura & Taiki Todo & Makoto Yokoo, 2024. "Analyzing Incentives and Fairness in Ordered Weighted Average for Facility Location Games," Papers 2410.12884, arXiv.org.
    5. Peter Troyan, 2022. "Non-Obvious Manipulability of the Rank-Minimizing Mechanism," Papers 2206.11359, arXiv.org, revised Jun 2024.
    6. Estelle Cantillon & Li Chen & Juan Sebastian Pereyra Barreiro, 2022. "Respecting priorities versus respecting preferences in school choice: When is there a trade-off ?," Working Papers ECARES 2022-39, ULB -- Universite Libre de Bruxelles.
    7. Morrill, Thayer & Roth, Alvin E., 2024. "Top trading cycles," Journal of Mathematical Economics, Elsevier, vol. 112(C).

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    More about this item

    Keywords

    School choice; Rank-minimizing; Random matching markets;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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