Many public school choice programs use centralized mechanisms to match
students with schools in the absence of market-clearing prices. Among
them, the Boston mechanism is one of the most widely used. It is
well-known that truth-telling may not be optimal under the Boston
mechanism, which raises the concern that the mechanism may create a
disadvantage to parents who do not strategize or do not strategize
well. Using a data set from Beijing, this paper investigates parents’
strategic behaviors under the Boston mechanism and its welfare
implications. School choice is modeled as a simultaneous game with
parents’ preferences being private information. The paper derives
restrictions on parents’ behavior under various assumptions on their
sophistication, or ability to predict others’ behavior, and the model
is estimated using simulated maximum likelihood. The results suggest
that parents’ sophistication is heterogeneous; when parents have a
greater incentive to behave strategically, they pay more attention to
uncertainty and strategize better. There is also evidence, although
not robust, that wealthier and/or more educated parents strategize
worse. If the Boston mechanism is replaced by the Deferred-Acceptance
mechanism under which truth-telling is always optimal, the majority of
the sophisticated parents who always play a best response are worse
off. The reform benefits about half of the naive parents who are
always truth-telling under the Boston mechanism, while it also hurts a
non-negligible portion of them.
Labor Seminars Amsterdam
- Speaker(s)
- Yinghua He (Toulouse)
- Date
- 2012-03-27
- Location
- Amsterdam