The Boston mechanism is criticized for its poor incentive and welfare performance compared to the Gale-Shapley deferred-acceptance mechanism (DA). Using school choice data from Beijing, I investigate parents’ behavior under the Boston mechanism, taking into account parents’ possible mistakes when they strategize. Evidence shows that parents are overcautious as they play "safe" strategies too often. Wealthier/more educated parents are less overcautious and perform slightly better because they have better outside options while not being any more adept at strategizing. Parents who are always truth-telling experience a utility gain in switching from the Boston mechanism to the DA, equivalent to a 7.1% decrease in the distance to a school. Among them, 44.2% are better off under the DA, while 35.5% are worse off.
Yinghua He, “Gaming the Boston School Choice Mechanism in Beijing”, TSE Working Paper, n. 12-345, May 2012.
TSE Working Paper, n. 12-345, May 2012