Sophistication and Cautiousness in College Applications
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AbstractIn many school choice and college admissions markets, matching mechanisms have
been reformed from the Immediate Acceptance (IA) mechanism to some variants of
the Deferred Acceptance (DA) mechanism. In order to evaluate these policy reforms,
it is essential to investigate what (behavioral) models could explain the major impact
of the reforms. In this article, we provide an answer to this question in the context
of Chinese college admissions reforms, where the IA mechanism has been replaced by
the Chinese parallel mechanisms (Chen and Kesten, 2017). First, we show that the
reforms would not affect the matching outcome if students played the equilibrium, but
our data exhibit a clear pattern that the matching became more assortative under
the parallel mechanisms. Motivated by this observation, we extend the model in two
dimensions: (i) heterogeneous beliefs and (ii) strategic sophistication. We identify and
estimate the fractions of the student behavioral types, and show that both dimensions
are important in explaining the patterns of the data. In our simulation, we show that
the distributional effects of the reforms on the student welfare differ from what they
could have obtained from introducing the DA mechanism.
Acceptance Date27/06/2019
All Author(s) ListYan Song, Kentaro Tomoeda, Xiaoyu Xia
Name of Conference2019 North American Meeting of the Econometric Society
Start Date of Conference27/06/2019
End Date of Conference30/06/2019
Place of ConferenceSeattle
Country/Region of ConferenceUnited States of America
Year2019
Month6
LanguagesEnglish-United States

Last updated on 2020-09-04 at 17:16