An Experimental Evaluation of a Matching Market Mechanism

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Over the last three decades, insights from market design have had a tremendous impact onmatching markets without prices. Economists have helped re-design the mechanisms formatching new doctors to hospitals, for assigning students to schools in a number of large schooldistricts, and for optimally matching kidney donors to recipients. Despite the apparent success ofmarket design in these markets, there is remarkably little empirical evidence of the impact ofthese reforms on market and match outcomes. This project will provide the most credibleevidence to date of the impact of matching using a common market design mechanism on matchoutcomes in the context of matching Army officers to positions. Each year, over ten thousandofficers apply for transfers to new units within the military. This project will measure the impactof using a common market design algorithm or the status quo mechanism on match outcomes,like officers’ retention and performance.Each year, over ten thousand officers apply for transfers to new units within the military.Currently, this officer to unit matching is implemented manually by the US Army’s HumanResources Command (HRC). This project uses a randomized controlled trial to measure theimpact of replacing the status quo assignment process with the deferred acceptance algorithm onmatch outcomes, like officers’ retention and performance. Specifically, disjoint markets, definedby officers’ rank and specialization (e.g. Captains in engineering) were randomly assigned todetermine matches using either the deferred acceptance algorithm or the status quo mechanism.This will provide the first evidence from a randomized controlled trial about the impact of amarket design intervention on match and market outcomes.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.