Information avoidance in school choice

Abstract

I explain puzzles in the school assignment literature using a many-to-one matching model in which participants on one side of the market, the students, are endowed with ego-utilities à la Köszegi (2006). Ego concerns generate a form of information avoidance that results in non-truthful participation in DA matching mechanisms. In particular, students' best replies may be non-monotonic in school ranks. I show that truthful reporting can be restored by imposing a limit on the measure of students that a school can deem acceptable. Furthermore, students may be sensitive to signal garbling, in the sense of Blackwell (1953). In terms of policy, the results imply that admission committees' reliance on application dimensions that are seemingly weak proxies of academic performance may be beneficial. Other implications suggest that affirmative action policies might be beneficial. However, when students' best replies exhibit non-monotonicity in schools' selectivity, such policies might backfire.