Suboptimal behavior in strategy-proof mechanisms: Evidence from the residency match

Abstract

Strategy-proof mechanisms eliminate the possibility for gain from strategic misrepresentation of preferences. If market participants respond optimally, these mechanisms permit the observation of true preferences and avoid the implicit punishment of market participants who do not try to “game the system.” Using new data from a flagship application of the matching literature—the medical residency match—I study if these potential benefits are fully realized. I present evidence that some students pursue futile attempts at strategic misrepresentation, and I examine the causes and correlates of this behavior. These results inform the assessment of the costs and benefits of strategy-proof mechanisms and demonstrate broad challenges in mechanism design.