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The Coordinate-Wise Core for Multiple-Type Housing Markets is Second-Best Incentive Compatible

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  • Klaus,Bettina

    (METEOR)

Abstract

We consider the generalization of Shapley and Scarf''s (1974) model of trading indivisible objects (houses) to so-called multiple-type housing markets. We show (Theorem 1) that the prominent solution for these markets, the coordinate-wise core rule, is second-best incentive compatible. In other words, there exists no other strategy-proof trading rule that Pareto dominates the coordinate-wise core rule. Given that for multiple-type housing markets Pareto efficiency, strategy-proofness, and individual rationality are not compatible, by Theorem 1 we show that applying the coordinate-wise core rule is a minimal concession with respect to Pareto efficiency while preserving strategy-proofness and individual rationality.

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Paper provided by Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) in its series Research Memorandum with number 018.

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Date of creation: 2005
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Handle: RePEc:unm:umamet:2005018

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Keywords: microeconomics ;

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  1. Roth, Alvin E. & Postlewaite, Andrew, 1977. "Weak versus strong domination in a market with indivisible goods," Journal of Mathematical Economics, Elsevier, vol. 4(2), pages 131-137, August.
  2. Miyagawa, Eiichi, 2002. "Strategy-Proofness and the Core in House Allocation Problems," Games and Economic Behavior, Elsevier, Elsevier, vol. 38(2), pages 347-361, February.
  3. Tayfun Sonmez, 1999. "Strategy-Proofness and Essentially Single-Valued Cores," Econometrica, Econometric Society, Econometric Society, vol. 67(3), pages 677-690, May.
  4. Sonmez, Tayfun & Utku Unver, M., 2005. "House allocation with existing tenants: an equivalence," Games and Economic Behavior, Elsevier, Elsevier, vol. 52(1), pages 153-185, July.
  5. Yan Chen & Tayfun S�nmez, 2002. "Improving Efficiency of On-Campus Housing: An Experimental Study," American Economic Review, American Economic Association, American Economic Association, vol. 92(5), pages 1669-1686, December.
  6. Ma, Jinpeng, 1994. "Strategy-Proofness and the Strict Core in a Market with Indivisibilities," International Journal of Game Theory, Springer, Springer, vol. 23(1), pages 75-83.
  7. Wako, Jun, 2005. "Coalition-proof Nash allocation in a barter game with multiple indivisible goods," Mathematical Social Sciences, Elsevier, Elsevier, vol. 49(2), pages 179-199, March.
  8. Roth, Alvin E., 1982. "Incentive compatibility in a market with indivisible goods," Economics Letters, Elsevier, Elsevier, vol. 9(2), pages 127-132.
  9. Chen, Yan & Sonmez, Tayfun, 2004. "An experimental study of house allocation mechanisms," Economics Letters, Elsevier, Elsevier, vol. 83(1), pages 137-140, April.
  10. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
  11. Abdulkadiroglu, Atila & Sonmez, Tayfun, 1999. "House Allocation with Existing Tenants," Journal of Economic Theory, Elsevier, Elsevier, vol. 88(2), pages 233-260, October.
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Cited by:
  1. Monte, Daniel & Tumennasan, Norovsambuu, 2013. "Centralized allocation in multiple markets," Textos para discussão 322, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
  2. Bettina Klaus & Olivier Bochet & Markus Walzl, 2010. "A Dynamic Recontracting Process for Multiple-Type Housing Markets," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP), Université de Lausanne, Faculté des HEC, DEEP 10.02, Université de Lausanne, Faculté des HEC, DEEP.
  3. Hidekazu Anno & Hiroo Sasaki, 2013. "Second-best efficiency of allocation rules: strategy-proofness and single-peaked preferences with multiple commodities," Economic Theory, Springer, Springer, vol. 54(3), pages 693-716, November.
  4. Farooq, Bilal & Miller, Eric J., 2012. "Towards integrated land use and transportation: A dynamic disequilibrium based microsimulation framework for built space markets," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 46(7), pages 1030-1053.

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