Not quite the best response: truth-telling, strategy-proof matching, and the manipulation of others

• Published in: Experimental economics : a journal of the Economic Science Association Vol. 20; no. 3; pp. 670 - 686
• Main Authors: Guillen, Pablo, Hakimov, Rustamdjan
• Format: Journal Article
• Language: English
• Published: New York Springer US 01.09.2017; Springer Nature B.V
• Subjects: Behavioral/Experimental Economics; Economic models; Economic theory; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Economics and Finance; Economists; Game Theory; Manipulation; Markets; Microeconomics; Operations Research/Decision Theory; Original Paper; Partial information; School choice; Social and Behav. Sciences; Uncertainty; Matching; School choice; Strategy-proofness; Experiments; Top trading cycles
• ISSN: 1386-4157; 1573-6938
• DOI: 10.1007/s10683-016-9505-0

Following the advice of economists, school choice programs around the world have lately been adopting strategy-proof mechanisms. However, experimental evidence presents a high variation of truth-telling rates for strategy-proof mechanisms. We crash test the connection between the strategy-proofness of the mechanism and truth-telling. We employ a within-subjects design by making subjects take two simultaneous decisions: one with no strategic uncertainty and one with some uncertainty and partial information about the strategies of other players. We find that providing information about the out-of-equilibrium strategies played by others has a negative and significant effect on truth-telling rates. That is, most participants in our within-subjects design try and fail to best-respond to changes in the environment. We also find that more sophisticated subjects are more likely to play the dominant strategy (truth-telling) across all the treatments. These results have potentially important implications for the design of markets based on strategy-proof matching mechanisms.