1.Rankings-Dependent Preferences: A Real Goods Matching Experiment

Authors:Andrew Kloosterman, Peter Troyan

Abstract: We investigate whether preferences for objects received via a matching mechanism are influenced by how highly agents rank them in their reported rank order list. We hypothesize that all else equal, agents receive greater utility for the same object when they rank it higher. The addition of rankings-dependent utility implies that it may not be a dominant strategy to submit truthful preferences to a strategyproof mechanism, and that non-strategyproof mechanisms that give more agents objects they report as higher ranked may increase market welfare. We test these hypotheses with a matching experiment in a strategyproof mechanism, the random serial dictatorship, and a non-strategyproof mechanism, the Boston mechanism. A novel feature of our experimental design is that the objects allocated in the matching markets are real goods, which allows us to directly measure rankings-dependence by eliciting values for goods both inside and outside of the mechanism. Our experimental results confirm that the elicited differences in values do decrease for lower-ranked goods. We find no differences between the two mechanisms for the rates of truth-telling and the final welfare.