“Information Acquisition and Provision in School Choice”
Yan Chen, University of Michigan
In school choice in the real world, providing information on school test scores to low-income families has been shown to increase the fraction of parents choosing higher-performing schools. When students do not know their preferences over schools and information acquisition is costly, we show theoretically that, while both strategy-proof and non-strategy-proof mechanisms incentivize students to acquire information on their own ordinal preferences, which improves efficiency, non-strategy-proof mechanisms also induce students to acquire information on others’ preferences, which might be welfare reducing. We propose to test our theory of endogenous information acquisition in school choice in the laboratory, using two canonical mechanisms, the Boston mechanism, which is conducive to strategic manipulation, and the Deferred Acceptance mechanism, which is strategy-proof. We expect that students’ incentives to acquire information vary across mechanisms.