Centralized School choice with unequal outside options

We study how market design choices exacerbate or mitigate pre-existing inequalities among participants. introduce outside options in a well-known school choice model, and show that students always prefer manipulable over strategy-proof mechanisms if only they have an option. test for the proposed relationship between manipulability setting where we can identify students’ observe applications under two mechanisms. Consistent with theory, option are more likely to list popular, highly-rated schools Boston mechanism, this gap disappears after switching Deferred Acceptance mechanism.