It is well-known that no school choice mechanism can achieve both the elimination of justified envy and Pareto efficiency in equilibrium. The two most prominent strategy-proof mechanisms, Top-Trading-Cycles and Deferred Acceptance, provide a fundamental tradeoff in property realization. We provide a novel approach to measure their welfare tradeoffs. Using an experimental design that randomly varies whether subjects learn about others’ allocations in a school choice game, we measure discontentment through galvanic skin response and eye-tracking when subjects experience envy with and without justification. We find increased discontentment due to justified-envy only when such information is accentuated with explicit messages. A separate study shows how eye-tracking reveals the use of certain levels of sophisticated play in the Boston mechanism, further supporting the agenda of biometrically-informed mechanism design for school choice problems.
In choosing between lotteries, Bordalo, Gennaioli, and Shleifer (2012) postulate agents overweight states that are more salient. We manipulate the correlation between lotteries to test if changes in behavior predicted by salience obtain. Under highly controlled experimental conditions, and contrary to salience theory, we find mixed evidence that correlation affects choice behavior. The evidence in favor of salience improves when we manipulate the choice architecture to make the correlation more apparent.