Preference Intensities and Risk Aversion in School Choice: A Laboratory Experiment

• Authors: Flip Klijn.
• BSE Working Paper: 110918 | September 15
• Keywords: Risk Aversion , stability , laboratory experiment , efficiency , school choice , preference intensities , Gale-Shapleymechanism , Bostonmechanism , constrained choice
• JEL codes: C78, C91, C92, D78, I20
• Risk Aversion
• stability
• laboratory experiment
• efficiency
• school choice
• preference intensities
• Gale-Shapleymechanism
• Bostonmechanism
• constrained choice

We experimentally investigate in the laboratory two prominent mechanisms that are employed in school choice programs to assign students to public schools. We study how individual behavior is influenced by preference intensities and risk aversion. Our main results show that (a) the Gale-Shapley mechanism is more robust to changes in cardinal preferences than the Boston mechanism independently of whether individuals can submit a complete or only a restricted ranking of the schools and (b) subjects with a higher degree of risk aversion are more likely to play “safer” strategies under the Gale-Shapley but not under the Boston mechanism. Both results have important implications for the efficiency and the stability of the mechanisms.