For this week’s Economics Lunch Seminar, Margherita Comola (Université Paris 1 – Paris School of Economics) will be presenting “An Experimental Study on Decentralized Networked Markets with Unobserved Preferences“. The Economics Lunch Seminar will be on Monday, February 20, in room 411, 12-1pm.
We design a laboratory experiment to investigate matching in a decentralized market of deferred acceptance. Agents are undifferentiated and may have multiple partners; their payoff depends on who they match with. The experiment is designed in such a way that a stable configuration exists, but cannot be eyeballed by the participants due to the computational complexity of the game. In spite of this, subjects are remarkably good at reaching a stable match, even when the payoffs of others are not publicly observed. More information does, however, speed up convergence thanks to self-censoring. We trace irrational matching choices mostly to two sources: the tendency of over-think in a setting where strategic thinking is not necessary, and the reluctance to accept matching offers from those who have been disloyal in the past.