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The instability of matching with overconfident agents

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  • Pan, Siqi

Abstract

Many centralized college admissions markets allocate seats to students based on their performance on a single standardized exam. The exam's measurement error can cause the exam-derived priorities to deviate from colleges' aptitude-based preferences. Previous literature proposes to combine pre-exam preference submission with a Boston algorithm (a PreExam-BOS mechanism). This paper examines the proposed mechanism in an experiment where students are not fully informed of their relative aptitudes. The results show pre-exam preference submission is distorted by overconfidence and PreExam-BOS fails to achieve stable matching with respect to aptitudes. Compared to a post-score Serial Dictatorship mechanism, which is robust to overconfidence but more prone to the exam's measurement error, PreExam-BOS creates more mismatches and a greater variance in the extent of mismatches: some students receive a large advantage while others are hurt considerably. Moreover, PreExam-BOS rewards overconfidence and punishes underconfidence. The observed overconfidence cannot be mitigated with an improved information condition.

Suggested Citation

  • Pan, Siqi, 2019. "The instability of matching with overconfident agents," Games and Economic Behavior, Elsevier, vol. 113(C), pages 396-415.
    • Handle: RePEc:eee:gamebe:v:113:y:2019:i:c:p:396-415
    DOI: 10.1016/j.geb.2018.10.001
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    Cited by:

    1. Chen, Yiqiu & Möller, Markus, 2024. "Regret-free truth-telling in school choice with consent," Theoretical Economics, Econometric Society, vol. 19(2), May.
    2. Rustamdjan Hakimov & Dorothea Kübler & Siqi Pan, 2023. "Costly information acquisition in centralized matching markets," Quantitative Economics, Econometric Society, vol. 14(4), pages 1447-1490, November.
    3. Rustamdjan Hakimov & Renke Schmacker & Camille Terrier, 2023. "Confidence and College Applications: Evidence from a Randomized Intervention," Working Papers 962, Queen Mary University of London, School of Economics and Finance.
    4. Hakimov, Rustamdjan & Schmacker, Renke & Terrier, Camille, 2022. "Confidence and college applications: Evidence from a randomized intervention," Discussion Papers, Research Unit: Market Behavior SP II 2022-209, WZB Berlin Social Science Center.
    5. Tong Wang & Congyi Zhou, 2020. "High school admission reform in China: a welfare analysis," Review of Economic Design, Springer;Society for Economic Design, vol. 24(3), pages 215-269, December.
    6. Ha, Wei & Kang, Le & Song, Yang, 2020. "College matching mechanisms and matching stability: Evidence from a natural experiment in China," Journal of Economic Behavior & Organization, Elsevier, vol. 175(C), pages 206-226.
    7. Hakimov, Rustamdjan & Kübler, Dorothea, 2021. "Experiments on centralized school choice and college admissions: a survey," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 24(2), pages 434-488.
    8. Wu, Binzhen & Zhong, Xiaohan, 2020. "Matching inequality and strategic behavior under the Boston mechanism: Evidence from China's college admissions," Games and Economic Behavior, Elsevier, vol. 123(C), pages 1-21.
    9. Wang, Zhihong & Li, Yangyang & Gu, Fu & Guo, Jianfeng & Wu, Xiaojun, 2020. "Two-sided matching and strategic selection on freight resource sharing platforms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 559(C).
    10. Alex Rees-Jones & Ran Shorrer & Chloe J. Tergiman, 2020. "Correlation Neglect in Student-to-School Matching," NBER Working Papers 26734, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    School choice matching; College admission; Overconfidence; Gender;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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