Not quite the best response: truth-telling, strategy-proof matching, and the manipulation of others
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Following the advice of economists, school choice programs around the world have lately been adopting strategy-proof mechanisms. However, experimental evidence presents a high variation of truth-telling rates for strategy-proof mechanisms. We crash test the connection between the strategy-proofness of the mechanism and truth-telling. We employ a within-subjects design by making subjects take two simultaneous decisions: one with no strategic uncertainty and one with some uncertainty and partial information about the strategies of other players. We find that providing information about the out-of-equilibrium strategies played by others has a negative and significant effect on truth-telling rates. That is, most participants in our within-subjects design try and fail to best-respond to changes in the environment. We also find that more sophisticated subjects are more likely to play the dominant strategy (truth-telling) across all the treatments. These results have potentially important implications for the design of markets based on strategy-proof matching mechanisms.
KeywordsSchool choice Top trading cycles Strategy-proofness Experiments Matching
We are grateful to Dorothea Kübler, Frank Heinemann, Bettina Klaus and Glenn Harrison for their kind comments and support; to Nina Bonge for helping us programming the experiments and conducting the sessions; and to Jennifer Rontganger for the copy editing.
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