Behavioral Economics in Education Market Design: A Forward-Looking Review

Abstract

The rational choice framework for modeling matching markets has been tremendously useful in guiding the design of school-assignment systems. Despite this success, a large body of work documents deviations from the predictions of this framework that appear influenced by behavioral economic phenomena. We review these findings and the body of behavioral theories that have been presented as possible explanations. Motivated by this literature, we lay out paths for behavioral economists to be directly useful to education market design.