Report-Dependent Utility and Strategy-Proofness

Vincent Meisner ()
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Vincent Meisner: Technical University Berlin, 10623 Berlin, Germany

Management Science, 2023, vol. 69, issue 5, 2733-2745

Abstract: Despite the truthful dominant strategy, participants in strategy-proof mechanisms submit manipulated preferences. In our model, participants dislike rejections and enjoy the confirmation from getting what they declare desirable. Formally, the payoff from a match decreases in its position in the submitted ranking such that a strategic trade-off between preference intensity and match probability arises. This trade-off can trigger the commonly observed self-selection strategies. We show that misrepresentations can persist for arbitrarily small report-dependent components. However, honesty is guaranteed to be optimal if and only if there is no conflict between the quality and feasibility of a match. We substantiate the theory with already existing evidence and provide novel testable predictions.

Keywords: market design; matching; school choice; self-regarding preferences; strategy-proof mechanisms (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:5:p:2733-2745

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