Truncation strategies in two sided matching markets: Theory and experiment
We investigate strategic behavior in a centralized matching clearinghouse based on the Gale Shapley deferred acceptance algorithm. To do so, we conduct a laboratory experiment to test the degree to which agents strategically misrepresent their preferences by submitting a "truncation" of their true preferences. Our experimental design uses a restricted environment in which a particular form of truncation is always a best response. We find that subjects do not truncate their preferences more often when truncation is profitable. They do, however, truncate their preferences less often when truncation is dangerous that is, when there is a risk of "over truncating" and remaining unmatched. Our findings suggest that behavioral insights can play an important role in the field of market design.
Games Econ. Behav.