Deduction Dilemmas: The Taiwan Assignment Mechanism
This paper analyzes the properties of the Taiwan mechanism, used for high school placement nationwide starting in 2014. In the Taiwan mechanism, points are deducted from an applicant's score with larger penalties for lower ranked choices. Deduction makes the mechanism a new hybrid between the well-known Boston and deferred acceptance mechanisms. Our analysis sheds light on why Taiwan's new mechanism has led to massive nationwide demonstrations and why it nonetheless still remains in use.
We are grateful to Ming-Jen Lin for superb comments and help understanding recent reforms in Taiwan. Glenn Ellison, Indira Puri, Joseph Shayani, Alex Wolitzky, and seminar participants at MIT provided helpful feedback. Pathak and Sonmez acknowledge support of National Science Foundation grant SES-1426566. Sonmez also acknowledges support from the Goldman Sachs Gives via Dalinc Ariburnu - Goldman Sachs Faculty Research Fund. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.