Deferred Acceptance with News Utility

Bnaya Dreyfuss, Ofer Glicksohn, Ori Heffetz and Assaf Romm

No 30635, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Can incorporating expectations-based-reference-dependence (EBRD) considerations reduce seemingly dominated choices in the Deferred Acceptance (DA) mechanism? We run two experiments (total N = 500) where participants are randomly assigned into one of four DA variants—{static, dynamic} × {student proposing, student receiving}—and play ten simulated large-market school-assignment problems. While a standard, reference-independent model predicts the same straightforward behavior across all problems and variants, a news-utility EBRD model predicts stark differences across variants and problems. As the EBRD model predicts, we find that (i) across variants, dynamic student receiving leads to significantly fewer deviations from straightforward behavior, (ii) across problems, deviations increase with competitiveness, and (iii) within specific problems, the specific deviations predicted by the EBRD model are indeed those commonly observed in the data.

JEL-codes: D47 D82 D84 D91 (search for similar items in EconPapers)
Date: 2022-11
New Economics Papers: this item is included in nep-des, nep-exp and nep-upt
Note: ED PE
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Citations: View citations in EconPapers (3)

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