Dynamic Recontracting processes with Multiple Indivisible Goods
AbstractWe consider multiple-type housing markets. To capture the dynamic aspect of trade in such markets, we study a dynamic recontracting process similar to the one introduced by Serrano and Volij (2005). First, we analyze the set of recurrent classes of this process as a (non-empty) solution concept. We show that each core allocation always constitutes a singleton recurrent class and provide examples of non-singleton recurrent classes consisting of blocking-cycles of individually rational allocations. For multiple-type housing markets stochastic stability never serves as a selection device among recurrent classes. Next, we propose a method to compute the limit invariant distribution of the dynamic recontracting process. The limit invariant distribution exploits the interplay of coalitional stability and accessibility that determines a probability distribution over final allocations. We provide various examples to demonstrate how the limit invariant distribution discriminates among stochastically stable allocations: surprisingly, some core allocations are less likely to be final allocations of the dynamic process than cycles composed of non-core allocations.
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Bibliographic InfoPaper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 018.
Date of creation: 2007
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Web page: http://www.maastrichtuniversity.nl/web/UMPublications.htm
Other versions of this item:
- BOCHET, Olivier & KLAUS, Bettina & WALZL, Markus, 2007. "Dynamic recontracting processes with multiple indivisible goods," CORE Discussion Papers 2007061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
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- Bettina Klaus & Flip Klijn & Markus Walzl, 2008.
"Stochastic Stability for Roommate Markets,"
357, Barcelona Graduate School of Economics.
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