NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Adam Kapor

Department of Economics
Princeton University
280 Julis Romo Rabinowitz Building
Princeton, NJ 08544
Tel: 203/710-0527

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NBER Program Affiliations: IO
NBER Affiliation: Faculty Research Fellow

NBER Working Papers and Publications

September 2018Heterogeneous Beliefs and School Choice Mechanisms
with Christopher A. Neilson, Seth D. Zimmerman: w25096
This paper studies how welfare outcomes in centralized school choice depend on the assignment mechanism when participants are not fully informed. Using a survey of school choice participants in a strategic setting, we show that beliefs about admissions chances differ from rational expectations values and predict choice behavior. To quantify the welfare costs of belief errors, we estimate a model of school choice that incorporates subjective beliefs. We evaluate the equilibrium effects of switching to a strategy-proof deferred acceptance algorithm, and of improving households’ belief accuracy. Allowing for belief errors reverses the welfare comparison to favor the deferred acceptance algorithm.
 
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