Lying through Their Teeth: Third Party Advice and Truth Telling in a Strategy Proof Mechanism

Pablo Guillen and Alexander Hing

No 2013-11, Working Papers from University of Sydney, School of Economics

Abstract: We test the effect of advice on the well known top trading cycles (TTC) matching algorithm in a school choice frame work. We compare three treatments involving third party advice [right advice (R), wrong advice (W), and both right and wrong advice (RW)] to a no-advice baseline (B). In line with previous literature the truth telling rate is higher than 80% in the baseline, but it becomes as low as 35% in the W treatment. Truth telling rates are also significantly lower in R than in B, and much lower in RW than in B. This evidence suggests that a vast majority of participants in our experiment were confused. Truth telling seems to work only as a default strategy, and participants can be heavily influenced by advice. The real life implementation of matching mechanisms may have been misguided by some laboratory experimentation.

Date: 2013-07
New Economics Papers: this item is included in nep-cbe and nep-exp
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Journal Article: Lying through their teeth: Third party advice and truth telling in a strategy proof mechanism (2014)
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