A college admissions clearinghouse

I propose a centralized clearinghouse for college admissions where students can commit to enroll, as in early-decision programs. Furthermore, students can specify financial aid in their preferences, and they can be matched with multiple colleges simultaneously. This clearinghouse keeps the desirable properties of decentralized college admissions, like commitment and yield management, while getting rid of the undesirable aspects, such as unfairness and unraveling. To study centralized college admissions, I advance the theory of stability for many-to-many matching markets with contracts. In particular, I show that the student-proposing deferred acceptance algorithm (SPDA) produces a stable matching even when college choice rules do not satisfy path independence (or substitutability) but when they have path-independent modifications. In addition, I provide a comparative statics for SPDA and introduce a new monotonicity condition on choice rules when contracts may have different weights to study yield management. My framework opens new avenues for market-design research and raises questions about the standard assumptions made in the literature.