Abstract

Matching markets, unlike commodity markets, involve transactions where participants not only choose but also need to be chosen by others. Multiple mechanisms have been designed to address matching problems. However, their practical implementation often diverges from the theoretical ideal due to various constraints. This dissertation explores inefficiencies in centralized markets due to strategic advantages given to certain participants, frictions that constrain participants' matches, and limitations on how preferences can be reported. It also proposes policies or interventions to improve market welfare and efficiency. The first chapter examines the distortions introduced by heterogeneous outside options and test scores in school choice assignments, particularly when students have incentives to misreport their preferences to a planner. The second chapter investigates two-sided matching markets in which participants can rank only a subset of potential partners, exploring the consequences of this restriction on market stability. In the third chapter, I analyze the efficiency consequences of a practical implementation of the serial dictatorship mechanism with manual assignment interventions. In the first chapter, I study the centralized allocation of students into majors under a constrained Boston mechanism, where priorities are determined by a placement test taken after students submit their preference reports to the clearinghouse. I find that, conditional on test scores, high socioeconomic status students are 50\% more likely to top-rank highly selective majors. Additionally, wealthier students are 20\% more likely to top-rank their most preferred major compared to their less-affluent counterparts. While various sources of heterogeneity between high- and low-socioeconomic students can explain these patterns, I show that if both groups had access to similar outside options, low- and high-socioeconomic students would be equally likely to top-rank their most preferred major. Moreover, if their test scores were similar, both groups would be equally likely to top-rank highly selective programs. These findings suggest that outside options and test scores provide strategic advantages to wealthier students. Therefore, I argue that policies aimed at subsidizing test scores or improving outside options for lower-income students could help reduce these strategic advantages. In the second chapter, I study the U.S. residency market. In this setting, doctors and hospitals interview with a subset of potential partners and submit preference lists to a clearinghouse, which then finds a stable matching based on those submissions. However, since agents only rank potential partners with whom they have interviewed, the resulting matching may not be stable with respect to their true preferences. This chapter investigates wasteful interviews—interviews scheduled that will not lead to a match between the participants involved. I propose an intervention by the clearinghouse during the interview stage to help participants identify these wasteful interviews. I theoretically show that, in small markets where hospitals have identical preferences, this intervention improves stability for most possible preference profiles. Additionally, I use simulations to provide evidence of this improvement in larger markets. The third chapter, co-authored with George-Levi Gayle, Peter-John Gordon, and Nadine McCloud-Rose, evaluates a modified version of the serial dictatorship mechanism implemented in Jamaica to allocate students to secondary schools nationwide. In this mechanism, students submit a constrained ranked list of schools and then take a placement test that determines the order in which they will be assigned. Each student is assigned to the highest-ranked school available on their list. However, if all the schools they ranked are at capacity, an administrator manually assigns the student to a school with an available vacancy. In this setting, some efficiency loss arises from the fact that students do not know their priorities and from the constraint on their ranked lists. We evaluate whether the administrator’s role in the system restores the efficiency lost due to constraining the ranking list length. However, we find that it does not. Instead, the administrator's intervention leads to the underuse of seats at more desirable schools, compared to a scenario where an unconstrained serial dictatorship mechanism is implemented. We also find that the current mechanism is less meritocratic than the latter, in the sense that high performers are often allocated to less-preferred schools.

Committee Chair

Brent R. Hickman (co-chair), George-Levi Gayle (co-chair)

Committee Members

Mariagiovanna Baccara SangMok Lee Ismael Y. Mourifié

Degree

Doctor of Philosophy (PhD)

Author's Department

Economics

Author's School

Graduate School of Arts and Sciences

Document Type

Dissertation

Date of Award

5-5-2025

Language

English (en)

Author's ORCID

https://orcid.org/0000-0002-6861-7950

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Available for download on Wednesday, May 08, 2030

Included in

Economics Commons

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