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Strategic uncertainty and equilibrium selection in stable matching mechanisms: experimental evidence

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  • Marco Castillo

    (Texas A&M University)

  • Ahrash Dianat

    (University of Essex)

Abstract

We present experimental evidence on the interplay between strategic uncertainty and equilibrium selection in stable matching mechanisms. In particular, we apply a version of risk-dominance to compare the riskiness of “truncation” against other strategies that secure against remaining unmatched. By keeping subjects’ ordinal preferences fixed while changing their cardinal representation, our experimental treatments vary the risk-dominant prediction. We find that both truth-telling and truncation are played more often when they are risk-dominant. In both treatments, however, truncation strategies are played more often in later rounds of the experiment. Our results also shed light on several open questions in market design.

Suggested Citation

  • Marco Castillo & Ahrash Dianat, 2021. "Strategic uncertainty and equilibrium selection in stable matching mechanisms: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 24(4), pages 1365-1389, December.
    • Handle: RePEc:kap:expeco:v:24:y:2021:i:4:d:10.1007_s10683-021-09702-1
    DOI: 10.1007/s10683-021-09702-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Stable matching; Equilibrium selection; Risk-dominance;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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