American Economic Review Vol. 114 No. 8 2024
Crowding in School Choice
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.
- DOI
- 10.1257/aer.20220626
- Volume
- 114
- Issue
- 8
- Pages
- 2526-2552
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref