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Strategic Experimentation with Random Serial Dictatorship

44 Pages Posted: 22 Apr 2017 Last revised: 25 Sep 2017

Shunya Noda

Stanford University, Department of Economics, Students

Date Written: September 24, 2017

Abstract

We consider one-sided matching problems in which agents can endogenously acquire information about objects in order to evaluate their values more precisely. In such situations, 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 paper, we fix the assignment rule to be the random serial dictatorship, and study the efficiency of each disclosure policy of choice sets. With a stylized environment where only one object has an ex ante unobservable private-value component, we demonstrate that the full-disclosure policy, which perfectly discloses each agent's choice set, is typically inefficient, because it fails to internalize the positive externality of information acquisition. Then, we illustrate that by obscuring the information about the best available fixed-value 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 (September 24, 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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