Sönmez, Tayfun. “Bidding for Army Career Specialties”. Boston College Working Papers in Economics 783, 2011.
Motivated by historically low retention rates of graduates at USMA and ROTC, the Army recently introduced branch-for-service incentives programs where cadets could bid an additional three years of active duty service obligation to obtain higher priority for their desired career specialties. The full potential of this highly innovative program is not utilized, due to the ROTC's choice of a poorly behaved cadet-branch matching mechanism. Not only does the ROTC mechanism effectively block the access of a large fraction of moderately high-skilled cadets to key career branches, but it is also highly vulnerable to preference manipulation and encourages effort reduction, potentially compromising human capital accumulation of the Army. Building on recent advances in matching markets, we propose a design that eliminates each of these deficiencies and also benefits the Army by mitigating several policy problems that the Army has identified. In contrast to the ROTC mechanism, our design utilizes market principles more elaborately, and it can be interpreted as a hybrid between a market mechanism and a priority-based allocation mechanism.