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Social, Behavioral, and Experimental Economics (SBEE)

Monday, April 6, 2015
12:00 AM
3100 North Quad (Ehrlicher Room)

Vertical and Horizontal Advice in School Matching

Abstract:

As part of the Social, Behavioral and Experimental Economics (SBEE) Seminar series, New York University Professor of Economics Andrew Schotter will present a lecture on his paper, "Vertical and Horizontal Advice in School Matching."

While, in theory, the school matching problem is a static non-cooperative one-shot game, in reality the “matching game" is played by parents who choose their strategies after consulting or chatting with other parents in their social networks (horizontal advice)  or with parents who have engaged in the match in previous years (vertical advice).  

In this talk, Schotter will present the results of two papers, one dealing with horizontal and one with vertical advice. In these papers, Schotter and his team compare the performance of the Boston and the Gale-Shapley mechanisms in the presence of both types of advice.  Their results indicate that allowing subjects to chat has an important impact on the strategies they choose, on their welfare, and on the stability of the matches created. With vertical advice, they found that even when the Gale-Shapley mechanism is used, over time, it is possible for later generations of players in the match to avoid submitting truthful strategies despite the fact that this is a dominant strategy.

In other words, the fraction of subjects reporting truthfully falls to about 0.44. This is explained by deriving a social-learning model of advice giving and strategy choice, estimating it structurally given the data generated by the experiment, and then simulating the model using the estimated parameters. The impact of intergenerational advice in a social learning model appears to be disruptive.

This talk is co-sponsored by the School of Information, the Ross School of Business, and the LSA Department of Economics.

Speaker:
Andy Schotter, New York University