New questions raised by school

choice
How to do tie breaking?
Tradeoffs between Pareto optimality, stability,
strategy proofnesswhat are the costs of
each?
Evaluating welfare from different points in
time
Restricted domains of preferences?

Matching with indifferences

When we were mostly using matching models
to think about labor markets, strict
preferences didnt seem like too costly an
assumption
Strict preferences might be generic

But that isnt the case with school choice

We already saw that one of the first NYC design
decisions we faced in 2003 was how to randomize
to break ties.
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New Theoretical Issues

Erdil, Aytek and Haluk Ergin, What's the Matter with
Tie-breaking? Improving Efficiency in School Choice ,
American Economic Review , 98(3), June 2008, 669689
Abdulkadiroglu, Atila , Parag A. Pathak , and Alvin E.
Roth, " Strategy-proofness versus Efficiency in
Matching with Indifferences: Redesigning the NYC
High School Match ,'' American Economic Review,
99(5) December 2009, 1954-1978.
Featherstone, Clayton and Muriel Niederle, EX ANTE
EFFICIENCY IN SCHOOL CHOICE MECHANISMS: AN
EXPERIMENTAL INVESTIGATION
3
http://www.nber.org/papers/w14618.pdf.

Other new issues we wont get to today

Pathak, Parag and Tayfun Snmez Leveling the Playing Field:
Sincere and Strategic Players in the Boston Mechanism , American
Economic Review, 98(4), 1636-52, 2008
Ergin, Haluk and Tayfun Sonmez, Games of School Choice under
the Boston Mechanism , Journal of Public Economics , 90: 215237, January 2006.
Kesten, Onur On Two Kinds of Manipulation for School Choice
Problems March, 2011, forthcoming in Economic Theory.
Kesten, Onur, School Choice with Consent, Quarterly Journal of
Economics 125(3), August, 2010; 1297-1348.
Abdulkadiroglu, Atila, Yeon-Koo Che, and Yosuke Yasuda, "
Resolving Conflicting Preferences in School Choice: The Boston
Mechanism Reconsidered" American Economic Review, February,
2011, 101(1): 399410.
Kesten and Unverrandom matchings--in progress...
4

Matching with indifferences

I: a finite set of students (individuals) with (strict)
preferences Pi over school places.
S: a finite set of schools with responsive weak
preferences/priorities Rs over students (i.e. can
include indifferences: Ps (s ) is the asymmetric
part of Rs).
As before:
q = (qs)sS: a vector of quotas (qs 1, integer).
A matching is a correspondence : I U S S U I satisfying:
(i) For all i I : (i) S U {i}
(ii) For all s S : |(s)| qs, and i m(s) implies (i) = s.
Well mostly concentrate on student welfare and student
strategy, and regard RS as fixed.

Matchings and student welfare

A matching is individually rational if it matches every x I S
with agent(s) that is(are) acceptable for x.
A matching is blocked by (i, s) if sPi(i), and either *|(s)| < qs
and i s s] or [i s i for some i (s)+. is stable if is
individually rational and not blocked by any student-school
pair (i, s).
A matching dominates matching if (i)Ri(i) for all i I, and
(i)Pi(i) for some i I. (Weak Pareto domination for students.)
A stable matching is a student-optimal stable matching if it is
not dominated by any other stable matching.
A not the: When school preferences arent strict, there wont
generally be a unique optimal stable match for each side,
rather there will be a non-empty set of stable matches that
are weakly Pareto optimal for agents on that side.
6

Example: multiple optimal stable matchings

Weak Pareto optimality generalizes

Proposition 1. If is a student-optimal stable
matching, there is no individually rational
matching n (stable or not) such that n(i)Pi(i)
for all i I.
(terminology: a student optimal stable matching is
weakly Pareto optimal because it cant be strictly
Pareto dominated, but the outcome of student
proposing deferred acceptance algorithm might not
be strongly Pareto optimal, i.e. might not be student
optimal, because it can be weakly Pareto dominated)
8

Tie breaking
A tie-breaker is a bijection r:IN, that breaks
ties at school s by associating Rs with a strict
preference relation Ps :
iPs j[(is j) or (is j and r(i) < r(j))].

Basic Deferred Acceptance

(Gale and Shapley 1962)
Step 0: arbitrarily break all ties in preferences
Step 1: Each student proposes to her first choice. Each
school tentatively assigns its seats to its proposers one at a
time in their priority order. Any remaining proposers are
rejected.

Step k: Each student who was rejected in the previous step

proposes to her next choice if one remains. Each school
considers the students it has been holding together with its
new proposers and tentatively assigns its seats to these
students one at a time in priority order. Any remaining
proposers are rejected.
The algorithm terminates when no student proposal is
rejected, and each student is assigned her final tentative
assignment.
10

Deferred acceptance algorithm

with tie breaking: DA
A single tie breaking rule uses the same tiebreaker rs = r at each school, while a multiple
tie breaking rule may use a different tie
breaker rs at each school s.
For a particular set of tie breakers =(rs)sS, let
the mechanism DA be the student-proposing
deferred acceptance algorithm acting on the
preferences (PI,PS), where Ps is obtained from
Rs by breaking ties using rs, for each school s.
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Single and Multiple tie breaking

The dominant strategy incentive compatibility
of the student-proposing deferred acceptance
mechanism for every student implies that DA
is strategy-proof for any .
But the outcome of DA may not be a student
optimal stable matching.
We already saw this is true even for single tie
breaking.
12

Single versus multiple tie breaking

NYC Grade 8 applicants in 2006-07
(250 random draws: simulation standard errors in parentheses)

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Proposition: For any (PI,RS), any matching that can be

produced by deferred acceptance with multiple tie
breaking, but not by deferred acceptance with single
tie breaking is not a student-optimal stable matching.

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Dominating stable matchings

Lemma: Suppose is a stable matching, and
is some matching (stable or not) that
dominates . Then the same set of students
are matched in both and

15

Proof
If there exists a student who is assigned under and
unassigned under , then (i)=iPi(i), which implies
that is not individually rational, a contradiction. So
every i assigned under is also assigned under .
Therefore |(S)||(S)|. If |(S)|>|(S)| then there
exists some sS and iI such that |(s)|>|(s)| and
(i)=s(i). This implies there is a vacancy at s under
and i is acceptable for s. Furthermore, sPi(i) since
dominates . These together imply that is not
stable, a contradiction. So |(S)|=|(S)|.
Then the same set of students are matched in both
and since |(S)|=|(S)| and every student assigned
under is also assigned under .
16

Stable Improvement Cycles (Erdil and Ergin, 08)

Fix a stable matching w.r.t. given preferences P and priorities R.
Student i desires s if sPi(i).
Let Bs = the set of highest Rs-priority students among those who
desire school s.
Definition: A stable improvement cycle C consists of distinct
students i1, . . . , in = i0 (n 2) such that
(i) (ik) S (each student in the cycle is assigned to a school),
(ii) ik desires (ik+1), and
(iii) ik B(ik+1), for any ) k = 0, . . . , n 1.
Given a stable improvement cycle define a new matching by:
m(j) = (j) if j is not one of {i1, . . . , in}
m(j) = (ik+1) if j = ik
Proposition: is stable and it (weakly) Pareto dominates .
17

Improving on DA
Theorem (Erdil and Ergin, 2008): Fix P and R,
and let be a stable matching. If is Pareto
dominated by another stable matching , then
admits a stable improvement cycle.
Algorithm for finding a student optimal
matching: start with a stable matching. Find
and implement a stable improvement cycle, as
long as one exists.
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Outline of proof
Fix P and R. Suppose is a stable matching Pareto
dominated by another stable matching n.
Simplifying assumption: Each school has one seat.
1. I := ,i I |n(i)Pi(i)- = ,i I |n(i) (i)-.
2. All students in I are matched to a school at n.
3. S := n(I)=(I).
Hence, I *S+ can be partitioned into two subsets I and
I\I *S and S \ S+ such that
Those in I \ I *S \ S+ have the same match under
and n.
The matches of those in I *S+ have been shuffled
among themselves to obtain n from .
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4. For all s S:
Is := (i I|i desires s at , and no j I desires s at
and j Ps i) is nonempty;.
5. Construct a directed graph on S:
For each s S, arbitrarily choose and fix is Is.
is Bs: i.e., is desires s at , and there is no j I
who desires s at and j Ps i. (from stability of n)
For all s, t S, let t s if t = (is).
6. The directed graph has a cycle of n 2 distinct
schools: s1 s2 sn s1
7. The students is1, is2, . . . , isn constitute a stable
improvement cycle at
20

How much room is there to

improve on deferred acceptance?
Are there costs to Pareto improvements in
welfare?

21

Strategy-proof mechanisms
A direct mechanism is a function that maps
every (PI ,RS) to a matching.
For x IS, let x(PI ;RS) denote the set of
agents that are matched to x by .
A mechanism is dominant strategy incentive
compatible (DSIC) for i I if for every (PI ,RS)
and every Pi ,
i(PI ;RS)Ri i(Pi , Pi;RS).
A mechanism will be called strategy-proof if it is
DSIC for all students.
22

Pareto improvement and strategy proofness

Fix RS.
We say that a mechanism dominates if
for all PI : i(PI ;RS)Ri i(PI ;RS) for all i I, and
for some PI : i(PI ;RS)Pi i(PI ;RS) for some i I.

Theorem (Abdulkadiroglu, Pathak, Roth): For

any tie breaking rule , there is no
mechanism that is strategy-proof and
dominates DA.

23

Proof
Suppose that there exists a strategy-proof
mechanism and tie-breaking rule r such that
dominates DA. There exists a profile PI such that
i(PI;RS)Ri DA(PI;RS) for all iI, and
i(PI;RS)Pi DA(PI;RS) for some iI.
Let si=DAi(PI;RS) and si=i(PI;RS) be i's assignment
under DA(PI;RS) and (PI;RS), respectively, where
siPisi.

24

continued
Consider profile PI=(Pi,P-i), where Pi ranks si
as the only acceptable school. Since DA is
strategy-proof, si=DAi (PI;RS)RiDAi(PI;RS), and
since DAi(PI;RS) is either si or i, we conclude
that DAi(PI;RS)=i. Then the Lemma implies
i(PI;RS)=i.
Now let (PI;RS ) be the actual preferences. In
this case, i could state Pi and be matched to
i(PI;RS)=si, which under Pi she prefers to
(PI;RS )=i.
So is not strategy-proof.
25

Lets look at some data

We cant tell what preferences would have
been submitted with a different (non strategyproof) mechanism, but we can ask, given the
preferences that were submitted, how big an
apparent welfare loss there might be due to
not producing a student optimal stable
matching.

26

Inefficiency in the NYC match

(cost of strategy-proofness)

27

Cost of stability in NYC

28

Comparison with Boston

29

Open questions
(Equilibrium) misrepresentation in stable
improvement cycles? (Can potential gains be
realized?)
It appears there will be an incentive to raise popular
schools in your preferences, since they become
tradeable endowments

Restricted domains of preference?

Manipulation will be easier on some domains than
others, and potential welfare gains greater on some
domains than others.
30

CAN WE MAKE SCHOOL CHOICE MORE EFFICIENT?

AN EXAMPLE
EDUARDO M. AZEVEDO AND JACOB D. LESHNO (2011)

31

Consider the equilibrium of (any) SOSM in which everyone

reports truthfully except the two bi who both (mis)report A>S>f
(notice that S is popular and the bis have priority there)

The outcome of the DA-STB for this profile is:

a: S, A
z: f
bi: A, S
SOSM: stable improvement cycles would allow a to
trade A for S with a bi
a: S,
z: f
bi: A, S
None of the students do better under this equilibrium,
32
and some do strictly worse.

AZEVEDO AND LESHNO

33

Ex post versus ex ante evaluation?

E.g. Boston mechanism in uncorrelated
environment, where you dont have to pay the
cost for lack of strategy
proofnessFeatherstone and Niederle 2008
Recall that DA is strategy-proof (DSIC) while
the Boston mechanism is not.
(The following slides are adapted from F&Ns)
34

Example; correlated preferences

(likely the general case)

35

Boston mechanism in the correlated

environmentcomplex eq. strategies

36

Uncorrelated preferences: (a conceptually

illuminating simple environment)
2 schools, one for Art, one for Science, each with one seat
3 students, each iid a Scientist with p=1/2 and Artist with
p=1/2. Artists prefer the art school, scientists the science
school.
The (single) tie breaking lottery is equiprobable over all
orderings of the three students.
Consider a student after he knows his own type, and
before he knows the types of the others. Then (because
the environment is uncorrelated) his type gives him no
information about the popularity of each school. So, under
the Boston mechanism, truthtelling is an equilibrium.
(Note that for some utilities this wouldnt be true e.g. of the
37
school-proposing DA, even in this environment.)

Boston can stochastically dominate DA in an

uncorrelated environment
Example: 3 students, 2 schools each with one seat

38

Things to note
The uncorrelated environment lets us look at Boston
and DA in a way that we arent likely to see them in
naturally occurring school choice.
In this environment, theres no incentive not to state
preferences truthfully in the Boston mechanism,
even though it isnt a dominant strategy. (So on this
restricted domain, theres no corresponding benefit
to compensate for the cost of strategyproofness.)
Boston stochastically dominates DA, even though it
doesnt dominate it ex-post (ex post the two
mechanisms just redistribute who is unassigned)
39

Recap: New questions raised by

school choice
How to do tie breaking?
Tradeoffs between Pareto optimality, stability,
strategy proofnesswhat are the costs of
each?
Evaluating welfare from different points in
time
Restricted domains of preferences?

40