Assignment mechanisms: Common preferences and information acquisition
Journal of Economic Theory, 2021, vol. 198, issue C
I study costly information acquisition in a two-sided matching problem, such as matching applicants to schools. An applicant's utility is a sum of common and idiosyncratic components. The idiosyncratic component is unknown to the applicant but can be learned at a cost. As applicants learn, their preferences over schools become more heterogeneous, improving match quality. In my stylized environment, too few applicants acquire information in an ordinal strategy-proof mechanism. Subsidies, disclosure of applicants' priorities, and affirmative action-like policies lead to higher information acquisition and Pareto improvements. Learning may also decrease when an ordinal strategy-proof mechanism replaces an Immediate Acceptance mechanism.
Keywords: School choice; Information acquisition; Deferred Acceptance; Immediate Acceptance (search for similar items in EconPapers)
JEL-codes: D47 D82 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:198:y:2021:i:c:s0022053121001873
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