The Mechanism Is Truthful, Why Aren't You?

Abstract

Traditionally, strategy-proofness is considered an extreme form of strategic simplicity. When a strategy-proof mechanism is in place, honesty is the best policy: no matter what actions others are taking, the best course of action is to report one's true preferences. For this reason, such mechanisms are often referred to as truthful, and the preferences that are reported to them are interpreted at face value.Truthfulness is thought to reduce the costs of strategizing, promote equity (by not giving advantage to more sophisticated players), provide robustness, eliminate the costs associated with the collection of information on others, and simplify the interpretation of reported preferences. 1 These desirable features led many centralized markets, especially in education and entry-level labor markets, to adopt truthful mechanisms. More specifically, the mechanisms in use are often based on the applicant-proposing version of the Deferred Acceptance (DA) algorithm, which is strategy-proof for applicants.But do truthful mechanisms actually induce truthful reporting? Recent evidence that emerged from the Israeli Psychology Master's Match (IPMM) strongly indicates that the assumption of truthful reporting is false. Additional evidence from the field and from the lab suggests that this phenomenon of preference misrepresentation is pervasive. A recurring finding is that misinterpretation rates are higher in weaker segments of markets. This motivates us to further investigate who are the individuals that misrepresent their preferences under DA and what drives this behavior.Our hope is that our findings will inform market designers and policy makers about the prevalence of misrepresentation and its systematic nature. A better understanding of when and why individuals misrepresent their preferences can guide these practitioners in designing specific and targeted interventions to promote truthful reporting. For example, if members of particular groups are more likely to (err and) misrepresent their preferences, then this behavior may have * Hassidim: Bar-Ilan

Fair Cake-Cutting in Practice

“…Strategic behavior was studied extensively in other markets besides fair division, particularly in matching markets [15]. A remarkable finding in such experiments is that people try to manipulate even when the mechanism is truthful and thus manipulation cannot help [1,34,35,48,52]. In our experiment this finding is even more pronounced: about 80% of all subjects tried at least one manipulation that is strictly dominated and obviously results in a smaller payoff for them.…”

Strategy-Proofness of Stochastic Assignment Mechanisms

“…Several explanations for preference misrepresentation are discussed in the matching literature (see Hassidim et al, 2017). In my experiment, the most prevalent form of preference misrepresentation is to place the second-best object at the top of the list; even more frequently in TTC than in SP-RSD.…”

Fair Cake-Cutting in Practice

“…Strategic behavior was studied extensively in other markets besides fair division, particularly in matching markets (Castillo and Dianat, 2016). A remarkable finding in such experiments is that people try to manipulate even when the mechanism is truthful and thus manipulation cannot help (Artemov et al, 2017;Hassidim et al, 2016Hassidim et al, , 2017Rees-Jones, 2017;Parco and Rapoport, 2004).…”