 Costly information acquisition in centralized matching marketsRustamdjan Hakimov, Dorothea Kübler and Siqi Pan Quantitative Economics, 2023, vol. 14, issue 4, 1447-1490 Abstract: When applying to a university, students and their parents devote considerable time acquiring information about university programs in order to form preferences. We explore ways to reduce wasteful information acquisition, that is, to help students avoid acquiring information about out‐of‐reach schools or universities, using a market design approach. Focusing on markets where students are ranked by universities based on exam scores, we find that, both theoretically and experimentally, a sequential serial dictatorship mechanism leads to higher student welfare than a direct serial dictatorship mechanism. This is because the sequential mechanism informs students about which universities are willing to admit them, thereby directing their search. Our experiments also show that the sequential mechanism has behavioral advantages because subjects deviate from the optimal search strategy less frequently than under the direct mechanism. Furthermore, providing historical cutoff scores under the direct mechanism can increase student welfare, especially when the information costs are high, although the observed effect is weaker than that of a sequential mechanism. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wly:quante:v:14:y:2023:i:4:p:1447-1490 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in Quantitative Economics from Econometric Society Contact information at EDIRC. |
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