Unequal Outside Options, Integration, and Deferred Acceptance: Experimental Evidence

This is experimental data for "Unequal Outside Options, Integration, and Deferred Acceptance: Experimental Evidence".
Abstract:
Centralized admission systems often coexist with attractive opportunities outside the system, such as private universities or alternative programs. Under the strategy-proof deferred acceptance (DA) mechanism, truthful preference reporting is optimal when rank-order lists (ROLs) are unconstrained. Yet participants in laboratory and field settings often deviate from truthful reporting, raising the question of whether outside options affect behavior despite DA’s theoretical strategy-proofness.
This paper experimentally studies how attractive outside options available to only a subset of participants affect reporting behavior and outcomes under DA, and whether integrating these options into the centralized mechanism matters in the absence of aftermarket frictions. Participants submit unconstrained ROLs in a centralized allocation environment using DA. In the treatment conditions, one third of participants have access to an attractive outside option that ranks just below the top in-system alternative. The presence of outside options increases truthful reporting relative to a baseline without outside options. However, truthfulness does not differ between participants with and without access to the outside option, and integration does not significantly affect reporting behavior or allocation outcomes. These findings suggest that outside options can shape strategic behavior, but have limited effects on allocation outcomes when ROLs are unconstrained and aftermarket frictions are absent.