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Information Acquisition in Matching Markets: The Role of Price Discovery

Authors: Nicole Immorlica; Jacob Leshno; Irene Lo; Brendan Lucier;

Information Acquisition in Matching Markets: The Role of Price Discovery

Abstract

We explore the acquisition and flow of information in matching markets through a model of college admissions with endogenous costly information acquisition. We extend the notion of stability to this partial information setting, and introduce regret-free stability as a refinement that additionally requires optimal student information acquisition. We show regret-free stable outcomes exist, and finding them is equivalent to finding appropriately-defined market-clearing cutoffs. To understand information flows, we recast matching mechanisms as price-discovery processes. No mechanism guarantees a regret-free stable outcome, because information deadlocks imply some students must acquire information sub optimally. Our analysis suggests approaches for facilitating efficient price discovery, leveraging historical information or market sub-samples to estimate cutoffs. We show that mechanisms that use such methods to advise applicants on their admission chances yield approximately regret-free stable outcomes. A survey of university admission systems highlights the practical importance of providing applicants with information about their admission chances.

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    influence
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Powered by OpenAIRE graph
Found an issue? Give us feedback
selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
13
Top 10%
Average
Top 10%
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