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Strategic Experimentation with Random Serial Dictatorship

42 Pages Posted: 22 Apr 2017 Last revised: 11 May 2017

Shunya Noda

Stanford University, Department of Economics, Students

Date Written: May 10, 2017

Abstract

We consider one-sided matching problems in which agents can endogenously acquire information about objects to evaluate their values more precisely. In such situations, whether agents acquire information or not crucially depends on their beliefs about their choice set, i.e., the set of objects each agent can obtain by changing his report. In this paper, we fix the assignment rule to the random serial dictatorship, and study the efficiency of each disclosure policy of choice sets. With a stylized environment where there is only one object that has ex ante unobservable private-value component, we demonstrate that the full disclosure policy, which always discloses each agent's choice set, is typically inefficient, because it fails to internalize the positive externality of information acquisition. Then, we illustrate that obscuring the information about the best available fixed-valued objects, we can induce more efficient information acquisition. We also show that in the worst case, the loss of the full disclosure policy relative to the optimal one is large.

Keywords: One-sided matching, Information Acquisition, Bayesian persuasion, Strategic experimentation

JEL Classification: C78, D47, D83

Suggested Citation

Noda, Shunya, Strategic Experimentation with Random Serial Dictatorship (May 10, 2017). Available at SSRN: https://ssrn.com/abstract=2956548

Shunya Noda (Contact Author)

Stanford University, Department of Economics, Students ( email )

Stanford, CA
United States

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