Constrained School Choice under the Immediate Acceptance Mechanism: An Experimental QRE Analysis

Abstract

The theoretical literature on public school choice proposes centralized mechanisms that assign children to schools on the basis of parents' preferences and the priorities children have for different schools. The related experimental literature analyzes in detail how various mechanisms fare in terms of welfare and stability of the resulting matchings, yet often provides only aggregate statistics of the individual behavior that leads to these outcomes (i.e., the degree to which subjects tell the truth in the induced simultaneous move game). In this paper, we show that the quantal response equilibrium adequately describes individual behavior and the resulting matching in a laboratory experiment on the (constrained) immediate acceptance mechanism. Specifically, the comparative statics of the quantal response equilibrium capture the directional changes of subject behavior and the prevalence of the different stable matchings when cardinal payoffs (i.e., relative preference intensities) are modified in the experiment.