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Voluntary Information Disclosure in Centralized Matching: Efficiency Gains and Strategic Properties

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  • Andreas Bjerre-Nielsen
  • Emil Chrisander

Abstract

Information frictions can harm the welfare of participants in two-sided matching markets. Consider a centralized admission, where colleges cannot observe students' preparedness for success in a particular major or degree program. Colleges choose between using simple, cheap admission criteria, e.g., high school grades as a proxy for preparedness, or screening all applications, which is time-consuming for both students and colleges. To address issues of fairness and welfare, we introduce two novel mechanisms that allow students to disclose private information voluntarily and thus only require partial screening. The mechanisms are based on Deferred Acceptance and preserve its core strategic properties of credible preference revelation, particularly ordinal strategy-proofness. In addition, we demonstrate conditions for which cardinal welfare improves for market participants compared to not screening. Intuitively, students and colleges benefit from voluntary information disclosure if public information about students correlates weakly with students' private information and the cost of processing disclosed information is sufficiently low. Finally, we present empirical evidence from the Danish higher education system that supports critical features of our model. Our work has policy implications for the mechanism design of large two-sided markets where information frictions are inherent.

Suggested Citation

  • Andreas Bjerre-Nielsen & Emil Chrisander, 2022. "Voluntary Information Disclosure in Centralized Matching: Efficiency Gains and Strategic Properties," Papers 2206.15096, arXiv.org.
  • Handle: RePEc:arx:papers:2206.15096
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    References listed on IDEAS

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    1. Caterina Calsamiglia & Guillaume Haeringer & Flip Klijn, 2010. "Constrained School Choice: An Experimental Study," American Economic Review, American Economic Association, vol. 100(4), pages 1860-1874, September.
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    3. Gabrielle Fack & Julien Grenet & Yinghua He, 2019. "Beyond Truth-Telling: Preference Estimation with Centralized School Choice and College Admissions," American Economic Review, American Economic Association, vol. 109(4), pages 1486-1529, April.
    4. Heidrun C. Hoppe & Benny Moldovanu & Aner Sela, 2009. "The Theory of Assortative Matching Based on Costly Signals," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 253-281.
    5. , & , J. & ,, 2011. "Von Neumann-Morgenstern farsightedly stable sets in two-sided matching," Theoretical Economics, Econometric Society, vol. 6(3), September.
    6. Hafalir, Isa E. & Hakimov, Rustamdjan & Kübler, Dorothea & Kurino, Morimitsu, 2018. "College admissions with entrance exams: Centralized versus decentralized," Journal of Economic Theory, Elsevier, vol. 176(C), pages 886-934.
    7. YingHua He & Thierry Magnac, 2022. "Application Costs and Congestion in Matching Markets," The Economic Journal, Royal Economic Society, vol. 132(648), pages 2918-2950.
    8. Peter Coles & Alexey Kushnir & Muriel Niederle, 2013. "Preference Signaling in Matching Markets," American Economic Journal: Microeconomics, American Economic Association, vol. 5(2), pages 99-134, May.
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    Cited by:

    1. Bjerre-Nielsen, Andreas & Christensen, Lykke Sterll & Gandil, Mikkel Høst & Sievertsen, Hans Henrik, 2023. "Playing the System: Address Manipulation and Access to Schools," IZA Discussion Papers 16197, Institute of Labor Economics (IZA).
    2. Andreas Bjerre-Nielsen & Lykke Sterll Christensen & Mikkel H{o}st Gandil & Hans Henrik Sievertsen, 2023. "Playing the system: address manipulation and access to schools," Papers 2305.18949, arXiv.org.

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