Adaptive Priority Mechanisms
How should authorities that care about match quality and diversity allocate resources in the face of uncertainty? We introduce adaptive priority mechanisms (APM) that prioritize agents based on their scores and characteristics. We show that APM uniquely implement the ex post optimal allocation. The ubiquitous priority and quota mechanisms are optimal if and only if the authority is risk-neutral or extremely risk-averse over diversity, respectively. Deferred Acceptance implements the unique stable matching when all authorities use the optimal APM. We provide a practical roadmap for implementing APM as a market-design solution and illustrate this using Chicago Public Schools data.
Related
Programs
Working Groups
More from NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, the Bulletin on Health, and the Bulletin on Entrepreneurship — as well as online conference reports, video lectures, and interviews.
