Designing the markets that allocate public school seats is an important policy consideration. In “Designing School Choice Mechanisms: A Structural Model and Demand Estimation,” Manager Zhiyi (Alicia) Xu and co-author Robert G. Hammond compare the design of school choice mechanisms in terms of economic efficiency, stability, and strategic behavior. Using data from a large US public school system with novel indicators of whether a student acted strategically in the application process, they estimate demand for schools and find benefits to reserving a set of seats to be assigned by a pure lottery. In settings that share features in common with the school system in this study, these findings suggest that non-selective criteria such as lotteries would encourage applicants to submit their true preferences in the application.
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