Heterogeneous Beliefs and School Choice Assignment Mechanisms

Abstract

Many school districts in the United States and abroad offer students a choice of schools, with seats at highly demanded schools apportioned using a centralized mechanism with random rationing. This paper studies how welfare and academic outcomes depend on the assignment mechanism when school choice participants are not fully informed of their admissions chances. We estimate an empirical model of school choice that incorporates heterogeneity in preferences, strategic behavior, and subjective beliefs about admissions chances. To do so, we combine survey data on beliefs and preferences for school choice participants with administrative records of the school choice process in New Haven, Connecticut. We use the estimated model to evaluate the individual and equilibrium effects of counterfactual policies such as a) improving households information about the lottery mechanism, and b) switching to the strategy-proof student-proposing deferred acceptance algorithm on the distribution of welfare and test scores. Survey results show that beliefs about admissions probabilities associated with actual and hypothetical application portfolios are correctly centered around zero but have a large mean absolute error, with larger absolute errors for families from poorer neighborhoods. Our model estimates suggest that, given households' observed strategic sophistication and beliefs about admissions chances, switching to a deferred acceptance algorithm would raise total welfare, with bigger gains for families from poorer neighborhoods.

Article Appendix
  • Coauthors: Adam Kapor, Seth Zimmerman
  • Published: American Economic Review
  • Date: 2018
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