Lecture by Professor E.Artemov from University of Melbourne

On Wednesday, June 28 the all-Russian seminar "Mathematical methods of decision analysis in economics, finance and politics" was held. Professor E. Artemov gave a lecture on «Strategic "Mistakes": Implications for Market Design Research»

A field data from Australian college admissions shows that  a non-negligible fraction of applicants  choose strategies (or rank-ordered lists) that are unambiguously dominated, but that the majority of these ``mistakes'' are payoff irrelevant. In keeping with this result, we develop a theory suggesting that the presence of such mistakes jeopardizes  the identification method based on  truthful reporting hypothesis under a (seemingly) strategy-proof mechanism,  but leaves the method based on  weaker stability condition relatively unscathed. Monte Carlo simulation further confirms this point and quantifies the differences between these two methods in the structural estimation of preference parameters and in a hypothetical counterfactual analysis.