Can the university matching mechanism in Malaysia do better? An experimental evaluation of three matching mechanisms

In Malaysia, the Immediate Acceptance Mechanism (IAM) is used to match the preferences of eligible students to the limited places available in public universities every year. Preference manipulation by students often results in places being offered to less academically qualified applicants over their better-qualified counterparts. We conducted laboratory experiments to evaluate the performance of IAM with two other popular mechanisms for centralized college admissions: the deferred acceptance mechanism (DAM), and the top trading cycle mechanism (TTC). In doing so, we broadened existing research by incorporating two features. First, we assumed a competitive environment with excess demand for college seats, as is the case in Malaysia. Second, we examined the impact of offering different amounts of information varying from just the stated minimum entry requirements (as is the current practice in Malaysia) to giving additional information on the number of seats available and the past average grades used to admit students in each university. Incorporating excess demand departs from the existing literature that has explored only examples where the student-seat ratio is 1:1, or very close to it. Our results suggest that in the prevailing Malaysian situation the DAM will perform better than the IAM because students are likely to express their true preferences which also increases its matching stability. However, if the availability of places in private universities results in a less congested market, either the DAM or TTC will perform better-provided students are given information on the number of places available and the minimum entry requirements of each university.