Incentives in Matching Markets: Counting and Comparing Manipulating Agents

Abstract

Vulnerability to manipulation is a threat to successful matching market design. However, some manipulation is often inevitable and the mechanism designer wants to compare manipulable mechanisms and pick the best. Real-life examples include reforms in the entry-level medical labor market in the US (1998), school admissions systems in New York (2004), Chicago (2009-2010), Denver (2012), some cities in Ghana (2007-2008), and England (2005-2010). We provide a useful criterion for these design decisions: we count the number of agents with an incentive to manipulate each mechanism under consideration during these reforms, and show that this number decreased as a result of the reforms. Our conclusion is robust to further additional strategic assumptions.

Keywords: Vulnerability to manipulation is a threat to successful matching market design. However, some manipulation is often inevitable and the mechanism designer wants to compare manipulable mechanisms and pick the best. Real-life examples include reforms in the entry-level medical labor market in the US (1

JEL Classification: C78, D47, D78, D82