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Report-Dependent Utility and Strategy-Proofness

Author

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  • Vincent Meisner

    (Technical University Berlin, 10623 Berlin, Germany)

Abstract

Despite the truthful dominant strategy, participants in strategy-proof mechanisms submit manipulated preferences. In our model, participants dislike rejections and enjoy the confirmation from getting what they declare desirable. Formally, the payoff from a match decreases in its position in the submitted ranking such that a strategic trade-off between preference intensity and match probability arises. This trade-off can trigger the commonly observed self-selection strategies. We show that misrepresentations can persist for arbitrarily small report-dependent components. However, honesty is guaranteed to be optimal if and only if there is no conflict between the quality and feasibility of a match. We substantiate the theory with already existing evidence and provide novel testable predictions.

Suggested Citation

  • Vincent Meisner, 2023. "Report-Dependent Utility and Strategy-Proofness," Management Science, INFORMS, vol. 69(5), pages 2733-2745, May.
    • Handle: RePEc:inm:ormnsc:v:69:y:2023:i:5:p:2733-2745
    DOI: 10.1287/mnsc.2022.4504
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    References listed on IDEAS

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    1. Luo, Sha & Fang, Shu-Cherng & Zhang, Jiahua & King, Russell E., 2023. "Price competition and cost efficiency facing buyer’s bounded rationality," International Journal of Production Economics, Elsevier, vol. 266(C).
    2. Moscariello, Paola, 2024. "Information avoidance in school choice," Games and Economic Behavior, Elsevier, vol. 145(C), pages 339-355.

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