Optimal information structures in school choice problem

Brown Bag Research Series

Online via Zoom

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fbe-wcla@unimelb.edu.au

In the school-choice problem, students are allocated to schools based on priority orderings of schools and their own preferences. However, students often cannot determine, a priori, how effective each school would be for them, because they do not have enough information about the schools and their own fit with each school. In this context, I try to answer the question: How should a principal optimally reveal information to the agents (students) to maximize welfare, in an environment where agents have no private information to start with? I theoretically show that when agents' a priori relative preferences over the objects are "not too strong", a simple information revelation policy I call the Object Recommendation Signal, used together with any of standard school choice mechanisms, not only maximizes welfare, but achieves first-best, i.e. the unconstrained maximum total ex-ante welfare.

Applications such as the above show how information design – a relatively new and advanced field of theoretical economics – can be tractable and useful in practice.  Hence, I would also like to use the above research as an example to highlight pedagogical approaches to introducing information design to graduate level students of both economics and more applied fields like business.

This is a research project in progress. So I hope to get your valuable feedback on both substantive aspects of the project as well as next steps like journals for publication.

Presenters: Sulagna Dasgupta. Sulagna is a 3rd year PhD student at the Department of Economics at the University of Chicago. Her main field of interest is microeconomics theory, in particular, mechanism design and information design, with a secondary interest in experimental economics.