Abstract

China implements reforms to improve access to quality education for students fromunderperforming schools by warding bonus-points to a select group of students. Suchprivilege systems are hybrids between reserve-based and priority-based systems. They provide administrators with “filtering flexibility”. We reveal significant flaws in prac-tice due to challenges in distribution of bonuses. We search for ideal privilege systemsand propose choice rule that “endogenously” identifies bonus-recipients. This is theunique acceptant and fair rule efficiently assigning bonuses. Embedded in the deferred acceptance, it ensures stability, strategy-proofness, and constrained-optimality.Empirical analysis shows that our proposal significantly improves representation forunderperforming schools.