An Experimental Evaluation of a Matching Market Mechanism

Over the last three decades, insights from market design have had a tremendous impact on matching markets without prices. Economists have helped re-design the mechanisms for matching new doctors to hospitals, for assigning students to schools in a number of large school districts, and for optimally matching kidney donors to recipients. Despite the apparent success of market design in these markets, there is remarkably little empirical evidence of the impact of these reforms on market and match outcomes. This project will provide the most credible evidence to date of the impact of matching using a common market design mechanism on match outcomes in the context of matching Army officers to positions. Each year, over ten thousand officers apply for transfers to new units within the military. This project will measure the impact of 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 Human Resources Command (HRC). This project uses a randomized controlled trial to measure the impact of replacing the status quo assignment process with the deferred acceptance algorithm on match outcomes, like officers’ retention and performance. Specifically, disjoint markets, defined by officers’ rank and specialization (e.g. Captains in engineering) were randomly assigned to determine 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 a market design intervention on match and market outcomes.