Report-Dependent Utility and Strategy-Proofness

Vincent Meisner
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Vincent Meisner: TU Berlin

No 289, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

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 declared most 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.

Keywords: market design; matching; school choice; self-regarding preferences; strategy-proof mechanisms (search for similar items in EconPapers)
JEL-codes: D47 D78 D81 D91 (search for similar items in EconPapers)
Date: 2021-10-21
New Economics Papers: this item is included in nep-des, nep-mic and nep-upt
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