We thank Péter Biró, Federico Echenique, John Hatfield, Fuhito Kojima, Scott Kominers, three anonymous referees, and seminar participants at Berkeley, Boston College, Chicago, Deakin, UNSW, 2011 NBER Market Design Workshop, ESAM 2012, GAMES 2012, Match-Up 2012, SAET 2012, and 2012 NSF/CEME Decentralization Conference for helpful comments.
Matching With (Branch-of-Choice) Contracts at the United States Military Academy
Article first published online: 20 MAR 2013
© 2013 The Econometric Society
Volume 81, Issue 2, pages 451–488, March 2013
How to Cite
Sönmez, T. and Switzer, T. B. (2013), Matching With (Branch-of-Choice) Contracts at the United States Military Academy. Econometrica, 81: 451–488. doi: 10.3982/ECTA10570
- Issue published online: 20 MAR 2013
- Article first published online: 20 MAR 2013
- Manuscript received February, 2012; final revision received August, 2012.
- Market design;
- matching with contracts;
Branch selection is a key decision in a cadet's military career. Cadets at USMA can increase their branch priorities at a fraction of slots by extending their service agreement. This real-life matching problem fills an important gap in the market design literature, providing strong empirical legitimacy to a series of elegant theoretical works on matching with contracts. Although priorities fail a key substitutes condition, the agent-optimal stable mechanism is well defined, and in contrast to the current USMA mechanism it is fair, stable, strategy-proof, and respects improvements in cadet priorities. Adoption of this mechanism benefits cadets and the Army. This new application shows that the matching with contracts model is practically relevant beyond traditional domains that satisfy the substitutes condition.