Affirmative Action in India with Hierarchical Reservations

TL;DR

This paper analyzes India's complex affirmative action system with hierarchical reservations, introducing a hierarchical choice rule and a stable, strategy-proof matching mechanism that ensures fair resource allocation.

Contribution

It introduces a hierarchical choice rule and a stable matching mechanism tailored for India's hierarchical reservation system, advancing resource allocation theory.

Findings

Hierarchical choice rule selects the most meritorious applicants.

The generalized deferred acceptance mechanism is unique, stable, and strategy-proof.

The mechanism eliminates justified envy in resource allocation.

Abstract

India implements the world's most complex affirmative action program through vertical and horizontal reservations. Although applicants can belong to at most one vertical category, they can qualify for multiple horizontal reservation categories simultaneously. We examine resource allocation problems in India, where horizontal reservations follow a hierarchical structure within a one-to-all horizontal matching framework. We introduce the hierarchical choice rule and show that it selects the most meritorious set of applicants. We thoroughly analyze the properties of the aggregate choice rule, which comprises hierarchical choice rules across all vertical categories. We show that the generalized deferred acceptance mechanism, when coupled with this aggregate choice rule, is the unique stable and strategy-proof mechanism that eliminates justified envy.