nep-des 2018-03-19 papers

on Economic Design

Issue of 2018‒03‒19
two papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

Competitive screening and information transmission By Bó, Inácio Guerberoff Lanari; Ko, Chiu Yu
Assignment maximization By Afacan, Mustafa Oğuz; Bó, Inácio Guerberoff Lanari; Turhan, Bertan

Competitive screening and information transmission

By:	Bó, Inácio Guerberoff Lanari; Ko, Chiu Yu
Abstract:	We consider a simple model of the competitive screening of students by schools and colleges. Students apply to schools which then perform costly screening procedures of the applicants to select those with high ability. Students who receive more than one offer may choose among those. Colleges select students and can observe the school which they attended. We show a channel through which students' preferences affect schools' screening decisions and outcomes: as schools increase the screening for high-ability students, a greater proportion of them is identified as such by multiple schools and are able to select one among them to attend. Schools' marginal gains from screening therefore depend on other schools' screenings and students' preferences. By focusing on the schools' screening choices (instead of the students' application decisions), we show how the competition for students between schools and colleges affect outcomes and students' welfare. We also show that, simply by observing which school a candidate attended, colleges can "free-ride" on the information produced by a fierce competition between schools for those students. Finally, we show that although colleges make full use of the information contained in the school a student attended, the extent to which students can improve the college that they are matched to by going to a (less desired) high-ranked school is fairly limited.
Keywords:	information transmission,college admissions,screening,rankings
JEL:	C78 D61 D83
Date:	2018
URL:	http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2018202&r=des

Assignment maximization

By:	Afacan, Mustafa Oğuz; Bó, Inácio Guerberoff Lanari; Turhan, Bertan
Abstract:	We evaluate the goal of maximizing the number of individually rational assignments. We show that it implies incentive, fairness, and implementation impossibilities. Despite that, we present two classes of mechanisms that maximize assignments. The first are Pareto efficient, and undominated - in terms of number of assignments - in equilibrium. The second are fair for unassigned students and assign weakly more students than stable mechanisms in equilibrium. We provide comparisons with well-known mechanisms through computer simulations. Those show that the difference in number of matched agents between the proposed mechanisms and others in the literature is large and significant.
Keywords:	market design,matching,maximal matching,fairness,object allocation,school choice
JEL:	C78 D63
Date:	2018
URL:	http://d.repec.org/n?u=RePEc:zbw:wzbmbh:spii2018201&r=des

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