'Strategic' Behavior in a Strategy-Proof Environment

Abstract

We present direct field evidence of preference misrepresentation under deferred acceptance. A large fraction of highly educated participants, who had been informed about the strategy-proof nature of the mechanism in numerous ways, failed to play truthfully: they ranked a non-funded position above a funded position in the same program. This is despite being assured that rank-order lists are never made public, that funding is a positive signal of ability, and that funding comes with no strings attached. Surveys indicate that other kinds of preference misrepresentation are also prevalent. Preference misrepresentation in the field is associated with weaker applicants. A laboratory experiment shows that the same individual is much more likely to misrepresent her preferences when she expects to be ranked low relative to others. Our findings have important implications for the study and design of matching marketplaces.