The cost of strategy-proofness in school choice

Josué Ortega*, Thilo Klein

*Corresponding author for this work

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We compare the outcomes of the most prominent strategy-proof and stable algorithm (Deferred Acceptance, DA) and the most prominent strategy-proof and Pareto optimal algorithm (Top Trading Cycles, TTC) to the allocation generated by the rank-minimizing mechanism (RM). While one would expect that RM improves upon both DA and TTC in terms of rank efficiency, the size of the improvement is nonetheless surprising. Moreover, while it is not explicitly designed to do so, RM also significantly improves the placement of the worst-off student. Furthermore, RM generates less justified envy than TTC. We corroborate our findings using data on school admissions in Budapest.
Original languageEnglish
Pages (from-to)515-528
Number of pages14
JournalGames and Economic Behavior
Early online date04 Aug 2023
Publication statusPublished - Sep 2023

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