We show that in the marriage problem the student-optimal algorithm may in fact generate an equilibrium outcome that is college-optimal and student-pessimal in terms of the true preferences even though it is student-optimal and college-pessimal in terms of the submitted preferences. In the college admissions problem, the student-optimal algorithm generates either a matching that is not stable for the true preferences or a matching that is college-optimal and student-pessimal in terms of the true preferences. Thus, our results show that, in the absence of certain match variations, the newly designed student-optimal algorithm adopted by the NRMP since 1998 either may be bias in favor of hospitals in terms of the true preferences or fails to produce a true stable matching.We also discuss when the core is large and when the core is a singleton at a Nash equilibrium.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics