nep-des New Economics Papers
on Economic Design
Issue of 2020‒12‒14
four papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Classification of Priorities Such That Deferred Acceptance is Obviously Strategyproof By Clayton Thomas
  2. The net effect of advice on strategy-proof mechanisms: An experiment for the Vickrey auction By Takehito Masuda; Ryo Mikami; Toyotaka Sakai; Shigehiro Serizawa; Takuma Wakayama
  3. Interim Rationalizable Implementation of Functions By Takashi Kunimoto; Rene Saran; Roberto Serrano
  4. Dynamic Decision Making Under Rolling Admissions: Evidence from U.S. Law School Applications By Yao Luo; Yu Wang

  1. By: Clayton Thomas
    Abstract: We study the strategic simplicity of stable matching mechanisms where one side has fixed preferences, termed priorities. Specifically, we ask which priorities are such that the strategyproofness of deferred acceptance (DA) can be recognized by agents unable to perform contingency reasoning, that is, when is DA obviously strategyproof [Li17]? We answer this question by completely characterizing those priorities which make DA obviously strategyproof (OSP). This answers an open question of [AG18]. We find that when DA is OSP, priorities are either acyclic [Erg02], or contain an extremely limited cyclic pattern where all priority lists are identical except for exactly two. We conclude that, for stable matching mechanisms, the tension between understandability (in the sense of OSP) and expressiveness of priorities is very high.
    Date: 2020–11
  2. By: Takehito Masuda; Ryo Mikami; Toyotaka Sakai; Shigehiro Serizawa; Takuma Wakayama
    Abstract: We conducted laboratory experiments for the multi-unit Vickrey auction with and without advice to subjects on strategy-proofness. The rate of truth-telling among the subjects without advice was 20%, whereas the rate increased to 47% among those who received advice. By conducting similar experiments for the pay-your-bid auction, which is not strategy-proof, we confirm that the increase in truth-telling owes significantly to the net advice effect, i.e., the effect beyond the so-called experimenter demand effect. Moreover, providing advice improves efficiency in the Vickrey auction, particularly in the early periods, when subjects are less experienced. It is well known that subjects tend to overbid in Vickrey auction experiments. Our results indicate the possibility that providing a piece of simple advice decreases such overbidding by promoting a better understanding of the strategy-proofness property in the Vickrey auction. Strategy-proof mechanisms are sometimes criticized because players often fail to find the benefit in telling the truth; however, our observations show that introducing advice on the property of strategy-proofness helps them behave “correctly."
    Date: 2020–12
  3. By: Takashi Kunimoto; Rene Saran; Roberto Serrano
    Abstract: This paper investigates rationalizable implementation of social choice functions (SCFs) in incomplete information environments. We identify weak interim rationalizable monotonicity (weak IRM) as a novel condition and show that weak IRM is a necessary and almost sufficient condition for rationalizable implementation. We show by means of an example that interim rationalizable monotonicity (IRM), found in the literature, is strictly stronger than weak IRM as its name suggests, and that IRM is not necessary for rationalizable implementation, as had been previously claimed. The same example also demonstrates that Bayesian monotonicity, the key condition for full Bayesian implementation, is not necessary for rationalizable implementation. This implies that rationalizable implementation can be more permissive than Bayesian implementation: one can exploit the fact that there are no mixed Bayesian equilibria in the implementing mechanism.
    Date: 2020
  4. By: Yao Luo; Yu Wang
    Abstract: Admission processes in many higher education markets are inherently dynamic. We study timing of student application and school admission under rolling admissions using a unique U.S. law school market dataset. Our results show that law schools employ non-stationary admission standards within application cycles: applications submitted earlier enjoy a considerable admission advantage relative to later applications. We rationalize such strategies in a simple yield management model and provide evidence for three types of frictions that constrain applicants from applying earlier.
    Keywords: Matching; Decentralized; Timing; Frictions; Higher Education
    JEL: I23 I28
    Date: 2020–12–03

This nep-des issue is ©2020 by Guillaume Haeringer and Alex Teytelboym. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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