Preference Learning in School Choice Problems

Many school districts in the U.S. have replaced the Boston mechanism with deferred acceptance (DA) due to manipulability and unfairness. Nonetheless, the Boston mechanism Pareto dominates the DA in ex-ante welfare, especially when students have similar ordinal preferences and schools have coarse priorities. We show that the DA's inefficiency relative to the Boston worsens if students have to acquire information about preferences at a cost before submitting rank-order lists to a given mechanism. Under the DA, greater homogeneity in rank-order reports and less information acquisition reinforce each other. A higher information cost intensifies this reinforcement and exacerbates the DA's inefficiency