Too smart for their own good: Trading truthfulness for efficiency in the Israeli medical internship market, by Ariel Rosenfeld and Avinatan Hassidim, Judgment and Decision Making, Vol. 15, No. 5, September 2020
Abstract: The two most fundamental notions in mechanism design are truthfulness and efficiency. In many market settings, such as the classic one-sided matching/assignment setting, these two properties partially conflict, creating a trade-off which is rarely examined in the real-world. In this article, we investigate this trade-off through the high-stakes Israeli medical internship market. This market used to employ a standard truthful yet sub-optimal mechanism and it has recently transitioned to an “almost” truthful, more efficient mechanism. Through this in-the-field study, spanning over two years, we study the interns’ behavior using both official data and targeted surveys. We first identify that substantial strategic behaviors are exercised by the participants, virtually eliminating any efficiency gains from the transition. In order to mitigate the above, we performed an intervention in which conclusive evidence was provided showing that, for most of the interns, reporting truthfully was much better than what they actually did. Unfortunately, a re-examination of the market reveals that our intervention had only minor effects. These results combine to question the practical benefits of “almost” truthfulness in real-world market settings and shed new light on the typical truthfulness-efficiency trade-off."
Here's their description of the prior, inefficient random serial dictatorship rule:
"For about two and a half decades, until 2014, each intern was asked to submit her ranking of the hospitals relevant for her graduation class, and the assignment itself was decided by the RSD mechanism (with a few minor house rules aimed at providing special treatment for special intern groups such as PhD students and parents of young children), which has come to be known as the Internship Lottery. Up until a few years ago when the system was finally computerized, interns physically gathered in a large auditorium and ID numbers were drawn out of a hat. The RSDT mechanism has been deployed since 2014 in an attempt to increase efficiency (Bronfman et al., 2015) (see (Roth & Shorrer, 2015) for a review and discussion on the transition choice)."
And here (out of the sequence in the paper) is a quick description of the new, efficient mechanism.
"To mitigate the fact that the probability vectors induced by the RSD mechanism may be far from optimal, the RSDT mechanism was proposed: First, after each intern submits a ranked list of hospitals, a large number of RSD simulations is performed to approximate the true probability vector for each intern. Then, using a fitted utility function over probability vectors (learned through structured surveys), probabilities are automatically traded between the interns though a Linear Program (LP) which optimizes social welfare. The LP guarantees that each intern’s expected utility (given the utility function) is no-worse than what she had before the trade."
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