Do Peer Preferences Matter in School Choice Market Design? Theory and Evidence

89 Pages Posted: 22 Sep 2021 Last revised: 4 Feb 2022

See all articles by Natalie Bachas

Natalie Bachas

Princeton University - Department of Economics

Ricardo Fonseca

Brown University

Bobak Pakzad-Hurson

Brown University - Department of Economics

Date Written: September 2021

Abstract

Can a centralized school choice clearinghouse generate a stable matching if it does not allow

students to express their preferences over both programs and peers? Theoretically, we show

that a stable matching exists with peer preferences under mild conditions, but finding one via

canonical mechanisms is unlikely. We show that increasing transparency about the previous

cohort of students enrolling at each program induces a t√ɬĘtonnement process wherein the distributions

of former student types play the role of prices. We theoretically model this process

and develop a test for match stability. We implement this test empirically in the college admissions

market in New SouthWales (NSW), Australia, where we find evidence of preferences

over relative peer ability. We show that the NSW market fails to converge to stability over time.

We propose a new mechanism that improves upon the current design, and we show that this

mechanism generates a stable matching in the NSW market.

Keywords: College Admissions, market design, Peer Preferences

JEL Classification: C78, D47, I21

Suggested Citation

Bachas, Natalie and Fonseca, Ricardo and Pakzad-Hurson, Bobak, Do Peer Preferences Matter in School Choice Market Design? Theory and Evidence (September 2021). CEPR Discussion Paper No. DP16544, Available at SSRN: https://ssrn.com/abstract=3928856

Natalie Bachas (Contact Author)

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

Ricardo Fonseca

Brown University ( email )

Box 1860
Providence, RI 02912
United States

Bobak Pakzad-Hurson

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
81
PlumX Metrics