Marcelo Fernandez

"DEFERRED ACCEPTANCE AND REGRET-FREE TRUTH-TELLING"

MARCELO ARIEL FERNANDEZ

The deferred acceptance mechanism has been widely adopted across centralized matching markets despite the fact that it provides participants with opportunities to “game the system.” I show that participants optimally choose not to manipulate the deferred acceptance mechanism in order to avoid regret given the information structure typically observed in practice. Moreover, the deferred acceptance mechanism is the unique mechanism within an interesting class to induce truth-telling from participants in this way. The notions of regret and regretfree truth-telling are novel.