Welfare and Incentives in Partitioned School Choice Markets

This paper examines the effects of partition structure of schools on students' welfare and on incentives students face under the iterative student optimal stable mechanism (I-SOSM), introduced by Manjunath and Turhan (2016), in divided school enrollment systems. I find that when school partition gets coarser students' welfare weakly increases under the I-SOSM for any number of iterations. I also show that under coarser school partitions the I-SOSM becomes weakly less manipulable for students (when iterated sufficiently many times to reach a stable assignment) according to the “as strongly manipulable as” criteria defined by Pathak and Sonmez (2013). These results suggest that when full integration is not possible keeping school partition as coarse as possible benefits students with respect to their welfare and incentives they face if stability is a concern for policymakers.