Top Trading with Fixed Tie-Breaking in Markets with Indivisible Goods
AbstractWe study markets with indivisible goods where monetary compensations are not possible. Each individual is endowed with an object and a preference relation over all objects. When preferences are strict, Gale's top trading cycle algorithm finds the unique core allocation. When preferences are not necessarily strict, we use an exogenous profile of tie-breakers to resolve any ties in individuals' preferences and apply Gale's top trading cycle algorithm for the resulting profile of strict preferences. We provide a foundation of these simple extensions of Gale's top trading cycle algorithm from strict preferences to weak preferences. We show that Gale's top trading cycle algorithm with fixed tie-breaking is characterized by individual rationality, strategy-proofness, weak efficiency, non-bossiness, and consistency. Our result supports the common practice in applications to break ties in weak preferences using some fixed exogenous criteria and then to use a "good and simple" rule for the resulting strict preferences. This reinforces the market-based approach even in the presence of indifferences because always competitive allocations are chosen.
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Bibliographic InfoPaper provided by Centre interuniversitaire de recherche en économie quantitative, CIREQ in its series Cahiers de recherche with number 03-2012.
Length: 28 pages
Date of creation: 2012
Date of revision:
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More information through EDIRC
indivisible goods; top trading cycles; indifferences; fixed tie-breaking;
Other versions of this item:
- EHLERS, Lars, 2012. "Top Trading with Fixed Tie-Breaking in Markets with Indivisible Goods," Cahiers de recherche 2012-02, Universite de Montreal, Departement de sciences economiques.
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- 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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