Tuesday, January 25, 2022

Multiple offer mechanisms in school choice, when information gathering is costly

 When it's costly to gather information needed to inform yourself about your own preferences, having a guaranteed offer in hand may justify the effort to gather necessary information.  Here's a paper that considers that as a first order issue:

The Case for Dynamic Multi-offer Mechanisms, by Julien Grenet YingHua He Dorothea Kübler

January 2022, (Forthcoming: The Journal of Political Economy)

Abstract: We document quasi-experimental evidence against the common assumption in the matching literature that agents have full information on their own preferences. In Germany’s university admissions, the first stages of the Gale-Shapley algorithm are implemented in real time, allowing for multiple offers per student. We demonstrate that non-exploding early offers are accepted more often than later offers, despite not being more desirable. These results, together with survey evidence and a theoretical model, are consistent with students’ costly discovery of preferences. A novel dynamic multi-offer mechanism that batches early offers improves matching efficiency by informing students of offer availability before preference discovery.

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Update: the paper appears as

Grenet, Julien, YingHua He, and Dorothea Kübler. "Preference Discovery in University Admissions: The Case for Dynamic Multi-offer Mechanisms." Journal of Political Economy, volume 130, number 6, June 2022, 1427-1476,  https://www.journals.uchicago.edu/doi/epdf/10.1086/718983


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