Mistaken Play in the Deferred Acceptance Algorithm: Implications for Positive Assortative Matching
American Economic Review · 2017 · Volume 107 · Issue 5
Abstract
Recent literature has documented failures of truthful preference reporting in the strategy-proof deferred acceptance algorithm. I consider the implications of these strategic mistakes for a common welfare consideration: the ability of the mechanism to sort the best students to the best schools. I find that these mistakes have the potential to significantly help or significantly hinder sorting. Through this channel, the presence of mistaken play may have widely varying welfare effects. I discuss related considerations in the welfare evaluation of mistaken play in the deferred acceptance algorithm and the implications for "nudges" that correct these mistakes.
Keywords
Bargaining Theory, Matching Theory, Consumer Economics: Empirical Analysis, Market Design, Asymmetric and Private Information, Mechanism Design, Analysis of Education
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