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American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Crowding in School Choice

  • William Phan
  • Ryan Tierney
  • Yu Zhou
American Economic Review
vol. 114, no. 8, August 2024
(pp. 2526–52)
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Abstract

We consider the market design problem of matching students to schools in the presence of crowding effects. These effects are salient in parents' decision-making and the empirical literature; however, they cause difficulties in the design of satisfactory mechanisms and, as such, are not currently considered. We propose a new framework and an equilibrium notion that accommodates crowding, no-envy, and respect for priorities. The equilibrium has a student-optimal element that induces an incentive-compatible mechanism and is implementable via a novel algorithm. Moreover, analogs of fundamental structural results of the matching literature (the rural hospitals theorem, welfare lattice, etc.) survive.

Citation

Phan, William, Ryan Tierney, and Yu Zhou. 2024. "Crowding in School Choice." American Economic Review, 114 (8): 2526–52. DOI: 10.1257/aer.20220626

Additional Materials

JEL Classification

  • D47 Market Design
  • H75 State and Local Government: Health; Education; Welfare; Public Pensions
  • I21 Analysis of Education
  • I28 Education: Government Policy