Correlation Neglect in Student-to-School Matching

Shorrer, Ran I.; Tergiman, Chloe

doi:10.2139/ssrn.3434662

Cited by 5 publications

(2 citation statements)

References 52 publications

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“…A safety school is a school that would definitely accept the participant, i.e., where she has a high priority. Rees-Jones et al (2020) show that correlation neglect can explain the failure of participants to include the safety school in the list. This is because participants fail to account for the correlation of preferences of schools and thus fail to understand that the rejection from a competitive school is informative about their chances at another highly competitive school.…”

Section: Correlation Neglectmentioning

confidence: 95%

Experiments on centralized school choice and college admissions: a survey

Hakimov

Kübler

2020

Exp Econ

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The paper surveys the experimental literature on centralized matching markets, covering school choice and college admissions models. In the school choice model, one side of the market (schools) is not strategic, and rules (priorities) guide the acceptance decisions. The model covers applications such as school choice programs, centralized university admissions in many countries, and the centralized assignment of teachers to schools. In the college admissions model, both sides of the market are strategic. It applies to college and university admissions in countries where universities can select students, and centralized labor markets such as the assignment of doctors to hospitals. The survey discusses, among other things, the comparison of various centralized mechanisms, the optimality of participants' strategies, learning by applicants and their behavioral biases, as well as the role of communication, information, and advice. The main experimental findings considered in the survey concern truth-telling and strategic manipulations by the agents, as well as the stability and efficiency of the matching outcome.

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Section: Correlation Neglectmentioning

confidence: 95%

Experiments on centralized school choice and college admissions: a survey

Hakimov

Kübler

2020

Exp Econ

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“…This simplifies the decision process as only marginal distributions need to be considered. Experimental evidence of correlation neglect has been found in various setups including belief formation (Enke and Zimmermann, 2019), portfolio allocation (Eyster andWeizsacker, 2016, Kallir andSonsino, 2009) and school choice (Rees-Jones, Shorrer, and Tergiman, 2020). It is also an important element in many behavioral models.…”

Section: Introductionmentioning

confidence: 99%

A Theory of Choice Bracketing under Risk

Zhang¹

2021

Preprint

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Aggregating risks from multiple sources can be complex and demanding, and decision makers usually adopt heuristics to simplify the decision process. This paper axiomatizes two such heuristics, narrow bracketing and correlation neglect, by relaxing the standard independence axiom in the expected utility benchmark. Our representation theorem allows for either narrow bracketing, or correlation neglect, or both of them. The flexibility of our framework allows for applications in various setups.For example, we accommodate the experimental evidence on narrow bracketing and risk aversion over small gambles with background risk. In intertemporal choices, we show how our framework unifies three seemingly distinct models in the literature and introduce a new model that can satisfy many desirable normative properties in time preferences simultaneously, including indifference to temporal resolution of uncertainty, dynamic consistency and separation of time and risk preferences. One special class of the model shares the same predictions as Epstein and Zin (1989) in macroeconomics and finance applications, and is immune to the critique in Epstein, Farhi, and Strzalecki (2014). * I am deeply indebted to Faruk Gul, Wolfgang Pesendorfer and Pietro Ortoleva for their invaluable advice, encouragement and support throughout this project. I have greatly benefited from discussions with Xiaosheng Mu and Rui Tang. I also thank

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Expectations-Based Loss Aversion May Help Explain Seemingly Dominated Choices in Strategy-Proof Mechanisms

Dreyfuss

Heffetz

Rabin

2022

American Economic Journal: Microeconomics

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Deferred acceptance (DA), a widely implemented algorithm, is meant to improve allocations: under classical preferences, it induces preference-concordant rankings. However, recent evidence shows that—in both real, large-stakes applications and experiments—participants frequently play seemingly dominated, significantly costly strategies that avoid small chances of good outcomes. We show theoretically why, with expectations-based loss aversion, this behavior may be partly intentional. Reanalyzing existing experimental data on random serial dictatorship (a restriction of DA), we show that such reference-dependent preferences, with a degree and distribution of loss aversion that explain common levels of risk aversion elsewhere, fit the data better than no-loss-aversion preferences. (JEL D11, D82, D91)

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Correlation Neglect in Student-to-School Matching

Cited by 5 publications

References 52 publications

Experiments on centralized school choice and college admissions: a survey

Experiments on centralized school choice and college admissions: a survey

A Theory of Choice Bracketing under Risk

Expectations-Based Loss Aversion May Help Explain Seemingly Dominated Choices in Strategy-Proof Mechanisms

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