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  3. American Economic Review
  4. May 2017
  5. The Mechanism Is Truthful, Why Aren't You?

The Mechanism Is Truthful, Why Aren't You?

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Abstract

Honesty is the best policy in the face of a strategy-proof mechanism--irrespective of others' behavior, the best course of action is to report one's preferences truthfully. We review evidence from different markets in different countries and find that a substantial percentage of participants do not report their true preferences to the strategy-proof Deferred Acceptance mechanism. Two recurring correlates of preference misrepresentation are lower cognitive ability and the expectation of stronger competition. We evaluate possible explanations, which we hope will inform practicing market designers.

Citation

Hassidim, Avinatan, Déborah Marciano, Assaf Romm, and Ran I. Shorrer. 2017. "The Mechanism Is Truthful, Why Aren't You?" American Economic Review, 107 (5): 220-24. DOI: 10.1257/aer.p20171027

Additional Materials

JEL Classification

  • D12 Consumer Economics: Empirical Analysis
  • D47 Market Design
  • D82 Asymmetric and Private Information; Mechanism Design