Reversing Reserves

Parag A. Pathak, Alex Rees-Jones, Tayfun Sönmez

NBER Working Paper No. 26963
Issued in April 2020
NBER Program(s):Economics of Education, Public Economics

Affirmative action policies are often implemented through reserve systems. We contend that the functioning of these systems is counterintuitive, and that the consequent misunderstanding leads individuals to support policies that ineffectively pursue their goals. We present 1,013 participants in the Understanding America Study with incentivized choices between reserve policies that vary in all decision-relevant parameters. Many choices are rationalized by a nearly correct decision rule, with errors driven solely by the incorrect belief that reversing the processing order has no effect. The prevalence of this belief helps to explain otherwise surprising decisions made in field applications of reserve systems.

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Document Object Identifier (DOI): 10.3386/w26963