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Pareto Dominance of Deferred Acceptance through Early Decision

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  • Somouaoga BONKOUNGOU

Abstract

An early decision market is governed by rules that allow each student to apply to (at most) one college and require the student to attend this college if admitted. This market is ubiquitous in college admissions in the United States. We model this market as an extensive-form game of perfect information and study a refinement of subgame perfect equilibrium (SPE) that induces undominated Nash equilibria in every subgame (SPUE). Our main result shows that this game can be used to define a decentralized matching mechanism that weakly Pareto dominates student-proposing deferred acceptance.

Suggested Citation

  • Somouaoga BONKOUNGOU, 2016. "Pareto Dominance of Deferred Acceptance through Early Decision," Cahiers de recherche 11-2016, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    • Handle: RePEc:mtl:montec:11-2016
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    early decision; Pareto dominance; decentralized market; subgame perfect equilibrium; subgame perfect undominated Nash equilibrium; costly application;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • I29 - Health, Education, and Welfare - - Education - - - Other

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