Choosing the Right Pond: Status vs. Prestige in School Choice & Party Formation
Xinyang Wang (ITAM, Center for Economic Research)
Choosing the Right Pond: Status vs. Prestige in School Choice & Party Formation
Xinyang Wang (ITAM, Center for Economic Research)
We study partitions of agents into groups in a model in which each agent cares about his rank within his group and the rank of his group relative to other groups. We characterize stable partitions when agents can form small blocking coalitions to exchange group assignments. When agents can block by freely moving to existing groups or establishing new groups, no partition is stable. We discuss applications to school choice and political-party formation.