Friday, October 10, 2014

Who prefers centralized to decentralized matching?

Here's a paper that looks at the question of centralized versus decentralized matching from an interesting angle:

 College Admissions with Entrance Exams: Centralized versus Decentralized
Isa E. Hafalir, Rustamdjan Hakimov, Dorothea Kübler, Morimitsu Kurino
September 2, 2014

Abstract: " We theoretically and experimentally study a college admissions problem in which colleges accept students by ranking students’ efforts in entrance exams. Students’ ability levels affect the cost of their efforts. We solve and compare equilibria of “centralized college admissions” (CCA) where students apply to all colleges, and “decentralized college admissions” (DCA)
where students only apply to one college. We show that lower ability students prefer DCA whereas higher ability students prefer CCA. The main predictions of the theory are supported by experiments, yet we find a number of differences that render DCA less attractive than CCA compared to equilibrium benchmark."

The paper begins with a description of some of the variety in college admissions around the world, before concentrating on the two extreme cases:

"In some countries, the application and admission process is centralized. For instance, in Turkey university assignment is solely determined by a national examination called YGS/LYS. After learning their scores, students can apply to a number of colleges. Applications are almost costless as all students need only to submit their rank-order of colleges to the central authority.1 On the other hand, Japan has a centralized “National Center test,” too, but all public universities including most prestigious universities require the candidate to take another, institution-specific secondary exam which takes place on the same day. This effectively prevents the students from applying to more than one public university.2 The admissions mechanism in Japan is decentralized, in the sense that colleges decide on their admissions independent of each other. In the United States, students take both centralized exams like the Scholastic Aptitude Test (SAT), and also complete college-specific requirements such as college admission essays. Students can apply to more than one college, but since the application process is costly, students typically send only a few applications (the majority being between two to six applications, see Chade, Lewis, and Smith, 2014). Hence, the United States college admissions mechanism falls in between the two extreme cases.

1. Greece, China, South Korea, and Taiwan have similar national exams that are the main criterion for the centralized mechanism of college admissions. In Hungary, the centralized admission mechanism is based on a score that combines grades from school with an entrance exam (Biro, 2012).
2. There are actually two stages where the structure of each stage is as explained in Section 4. The difference between the stages is that the capacities in the first stage are much greater than those in the second stage. Those who do not get admission to any college spend one year preparing for the next year’s exam. Moreover, the Japanese high school admissions authorities have adopted similar mechanisms in local districts. Although the mechanism adopted varies across prefectures and is changing year by year, its basic structure is that each student chooses one among a specified set of public schools and then takes an entrance exam at his or her chosen school. The exams are held on the same day. Finally, institution-specific exams that prevent students from applying to all colleges have also been used and debated in the United Kingdom, notably between the University of Cambridge and the University of Oxford. We thank Ken Binmore for pointing this out."

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