Tommy Andersson (), Umut Dur (), Sinan Ertemel () and Onur Kesten ()
Tommy Andersson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Umut Dur: Department of Economics, North Carolina State University, Postal: Nelson Hall, 2801 Founders Drive, Raleigh, NC 27695, USA,
Sinan Ertemel: Department of Economics, Istanbul Technical University, Postal: Maçka 34367, Istanbul, Turkey
Onur Kesten: Tepper School of Business, Carnegie Mellon University, Postal: 5000 Forbes Avenue, Pittsburgh, PA 15213, USA
Abstract: Motivated by school admission systems used in, e.g., Turkey and Sweden, this paper investigates a sequential two-stage admission system with public and private schools. To perform the analysis, relevant axioms and equilibrium notions need to be tailored for the considered dynamic setting. In particular, a notion of truthfulness, referred to as straightforwardness, is introduced. In sharp contrast to classic one-stage admission systems, sequentiality leads to a trade-off between the existence of a straightforward (i.e., truthful) equilibrium and non-wastefulness. Given this insight, we identify the unique set of rules for two-stage admission systems that guarantees the existence of a straightforward equilibrium and, at the same time, reduces the number of wasted school seats. Several existing admission systems are also theoretically analyzed within our general framework and empirically evaluated using school choice data from Sweden. The latter analysis allows us to quantify various trade-offs in sequential admission systems.
41 pages, December 10, 2018
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