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Promoting School Competition Through School Choice: A Market Design Approach

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  • John William Hatfield

    (Graduate School of Business Stanford University)

  • Fuhito Kojima

    (Department of Economics Stanford University)

  • Yusuke Narita

    (Department of Economics MIT)

Abstract

We study the effect of different school choice mechanisms on schools' incentives for quality improvement. To do so, we introduce the following criterion: A mechanism respects improvements of school quality if each school becomes weakly better whenever that school improves and thereby becomes more preferred by students. We first show that no stable mechanism, or mechanism that is Pareto efficient for students (such as the Boston and top trading cycles mechanisms), respects improvements of school quality. Nevertheless, for large school districts, we demonstrate that any stable mechanism approximately respects improvements of school quality; by contrast, the Boston and top trading cycles mechanisms fail to do so. Thus a stable mechanism may provide better incentives for schools to improve themselves than the Boston and top trading cycles mechanisms.

Suggested Citation

  • John William Hatfield & Fuhito Kojima & Yusuke Narita, 2012. "Promoting School Competition Through School Choice: A Market Design Approach," Discussion Papers 12-036, Stanford Institute for Economic Policy Research.
    • Handle: RePEc:sip:dpaper:12-036
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    Cited by:

    1. Chen, Yan & Jiang, Ming & Kesten, Onur & Robin, Stéphane & Zhu, Min, 2018. "Matching in the large: An experimental study," Games and Economic Behavior, Elsevier, vol. 110(C), pages 295-317.
    2. Kojima, Fuhito, 2013. "Efficient resource allocation under multi-unit demand," Games and Economic Behavior, Elsevier, vol. 82(C), pages 1-14.
    3. Claudia Herresthal, 2015. "Inferring School Quality from Rankings: The Impact of School Choice," Economics Series Working Papers 747, University of Oxford, Department of Economics.
    4. Alexis Le Chapelain, 2014. "Market for education and student achievement [Marché de l’éducation et réussite scolaire]," SciencePo Working papers Main tel-03510563, HAL.
    5. Kominers, Scott Duke & Sönmez, Tayfun, 2016. "Matching with slot-specific priorities: theory," Theoretical Economics, Econometric Society, vol. 11(2), May.
    6. Mustafa Afacan, 2014. "Fictitious students creation incentives in school choice problems," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(3), pages 493-514, August.
    7. MacLeod, W. Bentley & Urquiola, Miguel, 2012. "Anti-Lemons: School Reputation, Relative Diversity, and Educational Quality," IZA Discussion Papers 6805, Institute of Labor Economics (IZA).
    8. Kumano, Taro, 2013. "Strategy-proofness and stability of the Boston mechanism: An almost impossibility result," Journal of Public Economics, Elsevier, vol. 105(C), pages 23-29.
    9. Herresthal, C., 2017. "Performance-Based Rankings and School Quality," Cambridge Working Papers in Economics 1754, Faculty of Economics, University of Cambridge.
    10. Afacan, Mustafa Oǧuz, 2016. "Enrollment manipulations in school choice," Journal of Mathematical Economics, Elsevier, vol. 63(C), pages 119-125.
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    12. Alexis Le Chapelain, 2014. "Market for education and student achievement [Marché de l’éducation et réussite scolaire]," SciencePo Working papers tel-03510563, HAL.
    13. repec:hal:spmain:info:hdl:2441/1jgbspo1909q48svne93o55rca is not listed on IDEAS
    14. Scott Duke Kominers & Tayfun Sönmez, 2012. "Designing for Diversity: Matching with Slot-Specific Priorities," Boston College Working Papers in Economics 806, Boston College Department of Economics.

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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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