Laure Goursat (Sciences Po Paris)
This paper considers a matching market where agents have private information on their priority scores and must choose an object to which they apply. The analysis derives the Bayes-Nash equilibria, computes welfare ex ante and interim, and discusses implications for market design. Three main findings emerge. One, there is no symmetric equilibrium in pure strategies. Second, the symmetric equilibrium exhibits a block structure: agents sort into a finite number of classes of neighboring scores where they use the same application strategy. Third, the inefficiencies proceeding from the frictional market design prove interim asymmetric: low-score agents are better off under private information than under public information. In total, private information mitigates the discriminatory power of the priority system.