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Bringing Real Market Participants' Real Preferences into the Lab: An Experiment that Changed the Course Allocation Mechanism at Wharton

Author

Listed:
  • Eric Budish
  • Judd Kessler

Abstract

This paper reports on an experimental test of a new market design that is attractive in theory but makes the common and potentially unrealistic assumption that “agents report their type†; that is, that market participants can perfectly report their preferences to the mechanism. Concerns about preference reporting led to a novel experimental design that brought real market participants’ real preferences into the lab, as opposed to endowing experimental subjects with artificial preferences as is typical in market design. The experiment found that market participants were able to report their preferences “accurately enough†to realize efficiency and fairness benefits of the mechanism even while preference-reporting mistakes meaningfully harmed mechanism performance. [Working Paper 22448]

Suggested Citation

  • Eric Budish & Judd Kessler, 2016. "Bringing Real Market Participants' Real Preferences into the Lab: An Experiment that Changed the Course Allocation Mechanism at Wharton," Working Papers id:11135, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:11135
    Note: Institutional Papers
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    Citations

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    Cited by:

    1. Shengwu Li, 2017. "Ethics and market design," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(4), pages 705-720.
    2. Scott Duke Kominers & Alexander Teytelboym & Vincent P Crawford, 2017. "An invitation to market design," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(4), pages 541-571.
    3. Trifunović Dejan, 2019. "The Review of Methods for Assignment of Elective Courses at Universities," Economic Themes, Sciendo, vol. 57(4), pages 511-526, December.

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