Strategic Experimentation with Random Serial Dictatorship
26 Pages Posted: 22 Apr 2017 Last revised: 11 Mar 2022
Date Written: April 7, 2021
We consider matching-mechanism design in an environment in which agents acquire information about their preferences endogenously. Information is costly; thus, agents acquire information only if it is relevant to their decision-making. Agents' beliefs about their choice set (i.e., the set of objects each agent can obtain) are therefore crucial for incentives in information acquisition. This study demonstrates that the implementation of matching mechanisms changes the equilibrium consequence because it influences agents' beliefs about choice sets. We analyze the behavior of the random serial dictatorship mechanism in a stylized environment. We construct a family of economies in which agents have independent and private values but information disclosure about choice sets leads to inefficient outcome. We induce more efficient information acquisition through information design.
Keywords: One-sided matching, Information acquisition, Bayesian persuasion, Strategic experimentation
JEL Classification: C78, D47, D83
Suggested Citation: Suggested Citation