Report-dependent utility and strategy-proofness
24 Pages Posted: 19 Jul 2021 Last revised: 1 Dec 2021
Date Written: July 16, 2021
Abstract
Despite the truthful dominant strategy, participants in strategy-proof mechanisms submit manipulated preferences. In our model, participants dislike rejections and enjoy the confirmation from getting what they declared most desirable. Formally, the payoff from a match decreases in its position in the submitted ranking such that a strategic trade-off between preference intensity and match probability arises. This trade-off can trigger the commonly observed self-selection strategies. We show that misrepresentations can persist for arbitrarily small report-dependent components. However, honesty is guaranteed to be optimal if and only if there is no conflict between the quality and feasibility of a match.
Keywords: Market Design, matching, strategyproof mechanisms
JEL Classification: D47, D78, D81, D91
Suggested Citation: Suggested Citation