Assignment mechanisms: common preferences and information acquisition
Theoretical Economics
2021-10-22 v2
Abstract
I study costly information acquisition in a two-sided matching problem, such as matching applicants to schools. An applicant's utility is a sum of common and idiosyncratic components. The idiosyncratic component is unknown to the applicant but can be learned at a cost. When applicants are assigned using an ordinal strategy-proof mechanism, too few acquire information, generating a significant welfare loss. Affirmative action and other realistic policies may lead to a Pareto improvement. As incentives to acquire information differ across mechanisms, ignoring such incentives may lead to incorrect welfare assessments, for example, in comparing a popular Immediate Assignment and an ordinal strategy-proof mechanism.
Cite
@article{arxiv.2101.06885,
title = {Assignment mechanisms: common preferences and information acquisition},
author = {Georgy Artemov},
journal= {arXiv preprint arXiv:2101.06885},
year = {2021}
}