Kevin Bryan: The 2018 John Bates Clark: Parag Pathak: “Consider the old ‘Boston mechanism’…. Everyone would be allocated their first choice if possible…

…If a school is oversubscribed, some random percentage get their second choice, and if still oversubscribed, their third, and so on. This mechanism gives clear reason for strategic manipulation: you certainly don’t want to list a very popular school as your second choice…. Pathak and Abdulkadiroglu show… sophisticated parents may prefer the old Boston mechanism because it makes them better off at the expense of the less sophisticated! The latter concern is a tough one for traditional mechanism design to handle…. There remains some debate about what is means for a mechanism to be “better” when some agents are unsophisticated or when they do not have strict preferences over all options….

Pathak has also contributed… to the literature on large matching markets…. Where both sides have preferences… there are no stable matching mechanisms where both sides want to report truthfully…. When the market is large, it is (in a particular sense) an equilibrium for both sides to act truthfully; roughly, even if I screw one student I don’t want out of a slot, in a thick market it is unlikely I wind up with a more-preferred student to replace them. There has more recently been a growing literature on what really matters in matching markets: is it the stability of the matching mechanism, or the thickness of the market, or the timing, and so on…

#shouldread