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Strategic Hedging Mechanism Immunity in First-Year Choice Plans

In first-choice-maximizer lottery systems, families facing poor default neighborhood options may strategically misrepresent preferences by picking less-preferred schools with higher admission odds to avoid returning to low-quality default schools. However, information frictions and uncertain district capacity adjustments in new programs can prevent families from strategizing.

Picture this

Consider an applicant bidding on job offers under a rule where missing their top pick sends them to an undesirable factory job. A strategic applicant might bid on a mediocre desk job instead to avoid the factory, but if the rules are brand new and the employer expands seating at popular spots, applicants simply report their true dream jobs.

What the evidence says

Estimated preference parameters for school academic test scores were statistically indistinguishable between families receiving positive versus negative shocks to default home-school quality (joint p-values ranging from 0.491 to 0.896 across subgroups), demonstrating that strategic hedging did not significantly bias estimated parental preference parameters during initial plan rollout.

Who
N = 36,887 human students entering grades 4–8 in Charlotte-Mecklenburg Schools, North Carolina, including a subsample of 7,162 students in redistricted assignment zones.
How
Quasi-experimental comparison of estimated choice parameters between families experiencing exogenous positive versus negative quality shocks to guaranteed home-schools following boundary redistricting.

What to do

Evaluate preference parameters from initial policy implementation years to obtain un-strategic baseline demand estimates before gaming behaviors emerge among participants.

From the source

"We tested for the presence of strategic behavior in the first year of choice by exploiting the redrawing of school boundaries... We did not, however, find significant differences in the exploded-logit parameters (particularly for the coefficients relating to school test scores) across families experiencing positive and negative shocks to their guaranteed school"

Heterogeneous Preferences and the Efficacy of Public School Choice

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