|Housing Search Frictions: Evidence from Detailed Search Data and a Field Experiment|
with , : w27209
We randomized school quality information onto the listings of a nationwide housing website for low-income families. We use this variation and data on families' search and location choices to estimate a model of housing search and neighborhood choice that incorporates imperfect information and potentially biased beliefs. We find that imperfect information and biased beliefs cause families to live in neighborhoods with lower-performing, more segregated schools. Families underestimate school quality conditional on neighborhood characteristics. If we had ignored this information problem, we would have estimated that families value school quality relative to their commute downtown by half that of the truth.
|Heterogeneous Beliefs and School Choice Mechanisms|
with , : w25096
This paper studies how welfare outcomes in centralized school choice depend on the assignment mechanism when participants are not fully informed. Using a survey of school choice participants in a strategic setting, we show that beliefs about admissions chances differ from rational expectations values and predict choice behavior. To quantify the welfare costs of belief errors, we estimate a model of school choice that incorporates subjective beliefs. We evaluate the equilibrium effects of switching to a strategy-proof deferred acceptance algorithm, and of improving households’ belief accuracy. We find that a switch to truthful reporting in the DA mechanism offers welfare improvements over the baseline given the belief errors we observe in the data, but that an analyst who assumed families h...
Published: Adam J. Kapor & Christopher A. Neilson & Seth D. Zimmerman, 2020. "Heterogeneous Beliefs and School Choice Mechanisms," American Economic Review, vol 110(5), pages 1274-1315. citation courtesy of