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Two-Sided Matching via Balanced Exchange

Author

Listed:
  • Umut Mert Dur

    (University of Texas at Austin)

  • M. Utku Ünver

    (Boston College)

Abstract

We introduce a new matching model to mimic two-sided exchange programs such as tuition and worker exchanges, in which export-import balances are required for longevity of programs. These exchanges use decentralized markets, making it difficult to achieve this goal. We introduce the two-sided top-trading-cycles, the unique mechanism that is balanced-efficient, worker-strategy-proof, acceptable, individually rational, and respecting priority bylaws regarding worker eligibility. Moreover, it encourages exchange, because full participation is the dominant strategy for firms. We extend it to dynamic settings permitting tolerable yearly imbalances and demonstrate that its regular and tolerable versions perform considerably better than models of current practice.

Suggested Citation

  • Umut Mert Dur & M. Utku Ünver, 2012. "Two-Sided Matching via Balanced Exchange," Boston College Working Papers in Economics 815, Boston College Department of Economics, revised 28 Feb 2018.
    • Handle: RePEc:boc:bocoec:815
    Note: previously circulated as "Two-Sided Matching via Balanced Exchange: Tuition and Worker Exchanges"
    as

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    References listed on IDEAS

    as
    1. Szilvia Papai, 2000. "Strategyproof Assignment by Hierarchical Exchange," Econometrica, Econometric Society, vol. 68(6), pages 1403-1434, November.
    2. Abdulkadiroglu, Atila & Sonmez, Tayfun, 1999. "House Allocation with Existing Tenants," Journal of Economic Theory, Elsevier, vol. 88(2), pages 233-260, October.
    3. Fuhito Kojima & Parag A. Pathak, 2009. "Incentives and Stability in Large Two-Sided Matching Markets," American Economic Review, American Economic Association, vol. 99(3), pages 608-627, June.
    4. Sönmez, Tayfun & Ünver, M. Utku, 2010. "House allocation with existing tenants: A characterization," Games and Economic Behavior, Elsevier, vol. 69(2), pages 425-445, July.
    5. Tayfun Sonmez, 1999. "Strategy-Proofness and Essentially Single-Valued Cores," Econometrica, Econometric Society, vol. 67(3), pages 677-690, May.
    6. Pycia, Marek & Unver, Utku, 2017. "Incentive compatible allocation and exchange of discrete resources," Theoretical Economics, Econometric Society, vol. 12(1), January.
    7. Kesten, Onur, 2006. "On two competing mechanisms for priority-based allocation problems," Journal of Economic Theory, Elsevier, vol. 127(1), pages 155-171, March.
    8. Sonmez, Tayfun, 1997. "Manipulation via Capacities in Two-Sided Matching Markets," Journal of Economic Theory, Elsevier, vol. 77(1), pages 197-204, November.
    9. Sweeney, Joan & Sweeney, Richard James, 1977. "Monetary Theory and the Great Capitol Hill Baby Sitting Co-op Crisis: Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(1), pages 86-89, February.
    10. Atila Abdulkadiroglu & Tayfun Sönmez, 2003. "School Choice: A Mechanism Design Approach," American Economic Review, American Economic Association, vol. 93(3), pages 729-747, June.
    11. Ma, Jinpeng, 1994. "Strategy-Proofness and the Strict Core in a Market with Indivisibilities," International Journal of Game Theory, Springer;Game Theory Society, vol. 23(1), pages 75-83.
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    Citations

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    Cited by:

    1. Hafalir, Isa E. & Kojima, Fuhito & Yenmez, M. Bumin, 2022. "Interdistrict school choice: A theory of student assignment," Journal of Economic Theory, Elsevier, vol. 201(C).
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    3. Bloch, Francis & Cantala, David & Gibaja, Damián, 2020. "Matching through institutions," Games and Economic Behavior, Elsevier, vol. 121(C), pages 204-231.
    4. Péter Csóka & P. Jean-Jacques Herings, 2018. "Decentralized Clearing in Financial Networks," Management Science, INFORMS, vol. 64(10), pages 4681-4699, October.
    5. Biró, Péter & Klijn, Flip & Pápai, Szilvia, 2022. "Serial Rules in a Multi-Unit Shapley-Scarf Market," Games and Economic Behavior, Elsevier, vol. 136(C), pages 428-453.
    6. Julien Combe, 2023. "Reallocation with priorities and minimal envy mechanisms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 76(2), pages 551-584, August.

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    More about this item

    Keywords

    Market Design; Matching Theory; Tuition Exchange; Balanced Exchange; Two–sided Matching; Two–sided Top Trading Cycles;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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