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Top trading with fixed tie-breaking in markets with indivisible goods

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  • Ehlers, Lars

Abstract

We 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 cycles 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 cycles algorithm for the resulting profile of strict preferences. We provide a foundation of these simple extensions of Gale's top trading cycles algorithm from strict preferences to weak preferences. We show that Gale's top trading cycles 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.

Suggested Citation

  • Ehlers, Lars, 2014. "Top trading with fixed tie-breaking in markets with indivisible goods," Journal of Economic Theory, Elsevier, vol. 151(C), pages 64-87.
  • Handle: RePEc:eee:jetheo:v:151:y:2014:i:c:p:64-87
    DOI: 10.1016/j.jet.2013.12.011
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    References listed on IDEAS

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    Cited by:

    1. William Thomson, 2016. "Non-bossiness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(3), pages 665-696, October.
    2. Balbuzanov, Ivan & Kotowski, Maciej H., 2017. "Endowments, Exclusion, and Exchange," Working Paper Series rwp17-016, Harvard University, John F. Kennedy School of Government.

    More about this item

    Keywords

    Indivisible goods; Top trading cycles; Indifferences; Fixed tie-breaking;

    JEL classification:

    • 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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