Stable Matching with Mistaken Agents

59 Pages Posted: 3 Aug 2022 Last revised: 11 Oct 2022

See all articles by Georgy Artemov

Georgy Artemov

University of Melbourne - Department of Economics

Yeon-Koo Che

Columbia University

Yinghua He

University of Toulouse 1 - Toulouse School of Economics (TSE)

Date Written: July 27, 2022

Abstract

Motivated by growing evidence of agents' mistakes in strategically simple environments, we propose a solution concept---robust equilibrium---that requires only an asymptotically optimal behavior. We use it to study large random matching markets operated by the applicant-proposing Deferred Acceptance (DA). Although truth-telling is a dominant strategy, almost all applicants may be non-truthful in robust equilibrium; however, the outcome must be arbitrarily close to the stable matching. Our results imply that one can assume truthful agents to study DA outcomes, theoretically or counterfactually. However, to estimate the preferences of mistaken agents, one should assume stable matching but not truth-telling.

Keywords: Strategic mistakes, payoff relevance of mistakes, robust equilibria, truth-telling, stable-response strategy, stable matching

JEL Classification: C70, D47, D61, D63

Suggested Citation

Artemov, Georgy and Che, Yeon-Koo and He, Yinghua, Stable Matching with Mistaken Agents (July 27, 2022). Available at SSRN: https://ssrn.com/abstract=4174767 or http://dx.doi.org/10.2139/ssrn.4174767

Georgy Artemov (Contact Author)

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

Yeon-Koo Che

Columbia University ( email )

420 W. 118th Street
New York, NY 10027

Yinghua He

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

21 allée de Brienne
Toulouse, 31015
France

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