Strategic Experimentation with Random Serial Dictatorship

49 Pages Posted: 22 Apr 2017 Last revised: 13 Sep 2019

See all articles by Shunya Noda

Shunya Noda

Vancouver School of Economics, University of British Columbia

Date Written: April 17, 2018

Abstract

We consider one-sided matching problems with costly information acquisition about preferences. As information is costly, agents are willing to acquire information only if it is relevant to their decision making. Hence, whether agents acquire information crucially depends on their beliefs about their choice set (i.e., the set of objects each agent can obtain through some type reports). In this study, we fix the assignment rule to be the random serial dictatorship, and investigate the information design for choice-set disclosure policies. In a stylized environment, we demonstrate that the full-disclosure policy, which perfectly discloses each agent's choice set, is typically ex ante Pareto inefficient, because it fails to exploit the positive externality effect of information acquisition. Then, we illustrate that by disclosing less information about choice sets, we can induce more efficient information acquisition. Finally, we 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 (April 17, 2018). Available at SSRN: https://ssrn.com/abstract=2956548 or http://dx.doi.org/10.2139/ssrn.2956548

Shunya Noda (Contact Author)

Vancouver School of Economics, University of British Columbia ( email )

6000 Iona Dr
Vancouver, British Columbia V6T 1L4
Canada

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