Report-Dependent Utility and Strategy-Proofness

Despite the truthful dominant strategy, participants in strategy-proof mechanisms submit manipulated preferences. In our model, dislike rejections and enjoy confirmation from getting what they declare desirable. Formally, payoff a match decreases its position submitted ranking such that strategic trade-off between preference intensity probability arises. This can trigger commonly observed self-selection strategies. We show misrepresentations persist for arbitrarily small report-dependent components. However, honesty is guaranteed to be optimal if only there no conflict quality feasibility of match. substantiate theory with already existing evidence provide novel testable predictions. paper was accepted by Yan Chen, behavioral economics decision analysis. Funding: work supported UniCredit Universities Foundation [Modigliani Research Grant 2020/2021] Deutsche Forschungsgemeinschaft [Grant 280092119]. Supplemental Material: The online appendix available at https://doi.org/10.1287/mnsc.2022.4504 .