Decentralizing Centralized Matching Markets: Implications from Early Offers in University Admissions
Résumé
The matching literature often recommends market centralization under the assumption that agents know their own preferences and that their preferences are fixed. We find counterevidence to this assumption in a quasi-experiment. In Germany’s university admissions, a clearinghouse implements the early stages of the Gale-Shapley algorithm in real time. We show that early offers made in this decentralized phase, although not
more desirable, are accepted more often than later ones. These results, together with survey evidence and a theoretical model, are consistent with students’ costly learning about universities. We propose a hybrid mechanism to combine the advantages of decentralization and centralization.
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