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Report-Dependent Utility and Strategy-Proofness

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  • Vincent Meisner

    (Technical University Berlin, 10623 Berlin, Germany)

Abstract

Despite the truthful dominant strategy, participants in strategy-proof mechanisms submit manipulated preferences. In our model, participants dislike rejections and enjoy the confirmation from getting what they declare desirable. Formally, the payoff from a match decreases in its position in the submitted ranking such that a strategic trade-off between preference intensity and match probability arises. This trade-off can trigger the commonly observed self-selection strategies. We show that misrepresentations can persist for arbitrarily small report-dependent components. However, honesty is guaranteed to be optimal if and only if there is no conflict between the quality and feasibility of a match. We substantiate the theory with already existing evidence and provide novel testable predictions.

Suggested Citation

  • Vincent Meisner, 2023. "Report-Dependent Utility and Strategy-Proofness," Management Science, INFORMS, vol. 69(5), pages 2733-2745, May.
    • Handle: RePEc:inm:ormnsc:v:69:y:2023:i:5:p:2733-2745
    DOI: 10.1287/mnsc.2022.4504
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    References listed on IDEAS

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