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Lying through Their Teeth: Third Party Advice and Truth Telling in a Strategy Proof Mechanism

  • Guillén, Pablo
  • Hing, Alexander

We test the effect of advice on the well known top trading cycles (TTC) matching algorithm in a school choice frame work. We compare three treatments involving third party advice [right advice (R), wrong advice (W), and both right and wrong advice (RW)] to a no-advice baseline (B). In line with previous literature the truth telling rate is higher than 80% in the baseline, but it becomes as low as 35% in the W treatment. Truth telling rates are also significantly lower in R than in B, and much lower in RW than in B. This evidence suggests that a vast majority of participants in our experiment were confused. Truth telling seems to work only as a default strategy, and participants can be heavily influenced by advice. The real life implementation of matching mechanisms may have been misguided by some laboratory experimentation.

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File URL: http://hdl.handle.net/2123/9255
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Paper provided by University of Sydney, School of Economics in its series Working Papers with number 2013-11.

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Date of creation: Jul 2013
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Handle: RePEc:syd:wpaper:2123/9255
Contact details of provider: Postal: Sydney, NSW 2006
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