On-Campus Housing: Theory vs. Experiment

Many universities in the US offer on-campus housing opportunities to incoming as well as already enrolled students. Recent research has theoretically as well as experimentally shown that the most common student assignment mechanism used in the US is subject to serious efficiency losses. In this paper we first show that a particular mechanism which is currently in use at the MIT for about two decades is in fact equivalent to a natural adaptation of the well-known Gale-Shapley mechanism of two-sided matching theory. Motivated from the increasing popularity and success of the Gale-Shapley mechanism in a number of markets, we next experimentally compare the performances of the MIT mechanism with that of the leading theory mechanism Top Trading Cycles. Contrary to theory, the MIT mechanism performs better in terms of efficiency and participation rates, while we observe no significant difference between the two mechanisms in terms of truth-telling rates .

Matching Markets with Mixed Ownership: The Case for A Real-life Assignment Mechanism

We consider a common indivisible good allocation problem in which agents have both social and private endowments. Popular applications include student assignment to on-campus housing, kidney exchange, and particular school choice problems. In a series of experiments Chen and Sönmez (American Economic Review 92: 1669-1686, 2002) have shown that a popular mechanism from recent theory, the Top Trading Cycles (TTC) mechanism, induces a signi…cantly higher participation rate by agents with private endowments and leads to significantly more efficient outcomes than the most commonly used real-life mechanism, the Random Serial Dictatorship with Squatting Rights

On-Campus Housing: Theory vs. Experiment

Many universities in the US offer on-campus housing opportunities to incoming as well as already enrolled students. Recent research has theoretically as well as experimentally shown that the most common student assignment mechanism used in the US is subject to serious efficiency losses. In this paper we first show that a particular mechanism which is currently in use at the MIT for about two decades is in fact equivalent to a natural adaptation of the well-known Gale-Shapley mechanism of two-sided matching theory. Motivated from the increasing popularity and success of the Gale-Shapley mechanism in a number of markets, we next experimentally compare the performances of the MIT mechanism with that of the leading theory mechanism Top Trading Cycles. Contrary to theory, the MIT mechanism performs better in terms of efficiency and participation rates, while we observe no significant difference between the two mechanisms in terms of truth-telling rates

Attracting Whom? - Managing User-Generated-Content Communities for Monetization

Successful monetization of user-generated-content (UGC) business calls for attracting enough users, and the right users. The defining characteristic of UGC is users are also content contributors. In this study, we analyze the impact of a UGC firm’s quality control decision on user community composition. We model two UGC firms in competition, with one permitting only high quality content while the other not controlling quality. Users differ in their valuations and the content quality they contribute. Through analyzing various equilibrium situations, we find that higher reward value generally benefits the firm without quality control. However, when the intrinsic value of contribution is low, higher reward value may surprisingly drive high valuation users away from that firm. Also somewhat interestingly, we find that higher cost of contribution may benefit the firm that does not control quality. Our work is among the first to study the business impact of quality control of UGC

Why do popular mechanisms lack efficiency in random environments?

We consider the problem of randomly assigning n indivisible objects to n agents. Recent research introduced a promising mechanism, the probabilistic serial that has superior efficiency properties than the most common real-life mechanism random priority. On the other hand, mechanisms based on Gale's celebrated top trading cycles method have long dominated the indivisible goods literature (with the exception of the present context) thanks to their outstanding efficiency features. We present an equivalence result between the three kinds of mechanisms, that may help better understand why efficiency differences among popular mechanisms might arise in random environments. This result also suggests that the probabilistic serial and the random priority mechanisms can be viewed as two top trading cycles based mechanisms that essentially differ in the initial conditions of the market before trading starts.Indivisible goods Random priority Probabilistic serial Top trading cycles Ordinal efficiency