Bidding for Army Career Specialties: Improving the ROTC Branching Mechanism

Motivated by the low retention rates of US Military Academy and Reserve Officer Training Corps graduates, the Army recently introduced incentives programs in which cadets could bid 3 years of additional service obligation to obtain higher priority for their desired branches. The full potential of this incentives program is not utilized because of the ROTC’s deficient matching mechanism. I propose a design that eliminates these shortcomings and mitigates several policy problems the Army has identified. In contrast to the ROTC mechanism, my design utilizes market principles more extensively, and it is a hybrid between a market mechanism and a priority-based allocation mechanism.