Causal Effects in Matching Mechanisms with Strategically Reported Preferences

TL;DR

This paper develops a method to identify causal effects in school assignment mechanisms despite students strategically misreporting preferences, using bounds and data from Chile's university allocation system.

Contribution

It introduces a robust identification approach and sharp bounds for causal effects in matching mechanisms with strategic preference reporting.

Findings

Students behave strategically due to constraints and prior information.

Bounds reveal significant heterogeneity in graduation success.

Method applies to placement rules with scores and cutoffs.

Abstract

A growing number of authorities use mechanisms to allocate students to schools in a way that reflects student preferences and school priorities. However, most real-world mechanisms incentivize students to strategically misreport their preferences. Misreporting complicates the identification of causal parameters that depend on true preferences, which are necessary inputs for a broad class of counterfactual analyses. We provide an identification approach robust to misreporting and derive sharp bounds on causal effects of school assignment. Our approach applies to allocation rules characterized by placement scores and cutoffs. We use data from a deferred acceptance mechanism that assigns students to university programs in Chile. Matching theory predicts and empirical evidence shows that students behave strategically in Chile because they face constraints on preference submission and have good prior information about school accessibility. Our bounds are informative enough to reveal significant heterogeneity in graduation success with respect to preferences and school assignment.