Mechanism performance under strategy advice and sub-optimal play: A school choice experiment

Abstract

We implement a laboratory experiment to study how strategy advice affects participant decisions in a school choice game. In the Deferred Acceptance (DA) mechanism, advice to choose the dominant strategy of truth-telling induces participants to do so. In the Immediate Acceptance (IA) mechanism, advice to implement one of two heuristic strategies induces participants to choose one of those strategies. We develop a new partially-ordered typology of DA strategies to study the sub-optimal strategies chosen by participants under advice versus no advice. Then, using the varying proportions of participants choosing sub-optimal strategies in our data, we perform exploratory analyses on mechanism performance. We find that DA outperforms IA in efficiency, stability, and proportion of participants assigned their most preferred school. These performance differences are larger under strategy advice. (school choice, experiment, strategy advice, mechanism design, sub-optimal play)