Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/162988 
Year of Publication: 
2017
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods No. 2017/13
Publisher: 
Max Planck Institute for Research on Collective Goods, Bonn
Abstract: 
This paper compares two prominent stochastic assignment mechanisms in the laboratory: Random serial dictatorship (RSD) and top trading cycles with random endowments (TTC). In standard theory, both mechanisms are strategy-proof and Pareto-effcient for the house allocation problem without endowments. In the experiment, RSD outperforms TTC. This can be attributed to more dominant strategy play under RSD. The behavioral theory of obvious strategy-proofness can partly explain this difference in dominant strategy play. Generally, subjects with extremely high and low levels of contingent reasoning play their dominant strategies. These results suggest that one strategy-proof mechanism may outperform another one if individuals are boundedly rational.
Subjects: 
market design
mechanism design
randomization
Document Type: 
Working Paper

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