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American Economic Review: Vol. 102 No. 5 (August 2012)

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The Multi-unit Assignment Problem: Theory and Evidence from Course Allocation at Harvard

Article Citation

Budish, Eric, and Estelle Cantillon. 2012. "The Multi-unit Assignment Problem: Theory and Evidence from Course Allocation at Harvard." American Economic Review, 102(5): 2237-71.

DOI: 10.1257/aer.102.5.2237

Abstract

We use theory and field data to study the draft mechanism used to allocate courses at Harvard Business School. We show that the draft is manipulable in theory, manipulated in practice, and that these manipulations cause significant welfare loss. Nevertheless, we find that welfare is higher than under its widely studied strategyproof alternative. We identify a new link between fairness and welfare that explains why the draft performs well despite the costs of strategic behavior, and then design a new draft that reduces these costs. We draw several broader lessons for market design, regarding Pareto efficiency, fairness, and strategyproofness. (JEL D63, D82, I23)

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Authors

Budish, Eric (U Chicago)
Cantillon, Estelle (Université libre de Bruxelles)

JEL Classifications

D63: Equity, Justice, Inequality, and Other Normative Criteria and Measurement
D82: Asymmetric and Private Information
I23: Higher Education and Research Institutions


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