Strategic uncertainty and equilibrium selection in stable matching mechanisms: experimental evidence

Marco Castillo () and Ahrash Dianat ()
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Marco Castillo: Texas A&M University
Ahrash Dianat: University of Essex

Experimental Economics, 2021, vol. 24, issue 4, No 11, 1365-1389

Abstract: Abstract We present experimental evidence on the interplay between strategic uncertainty and equilibrium selection in stable matching mechanisms. In particular, we apply a version of risk-dominance to compare the riskiness of “truncation” against other strategies that secure against remaining unmatched. By keeping subjects’ ordinal preferences fixed while changing their cardinal representation, our experimental treatments vary the risk-dominant prediction. We find that both truth-telling and truncation are played more often when they are risk-dominant. In both treatments, however, truncation strategies are played more often in later rounds of the experiment. Our results also shed light on several open questions in market design.

Keywords: Stable matching; Equilibrium selection; Risk-dominance (search for similar items in EconPapers)
JEL-codes: C72 C78 C92 D47 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10683-021-09702-1

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