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Matching Markets With Mixed Ownership: The Case For A Real‐Life Assignment Mechanism

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  • Pablo Guillen
  • Onur Kesten

Abstract

We consider a common indivisible good allocation problem whose popular applications include on‐campus housing, kidney exchange, and school choice. We show that the so‐called New House 4 (NH4) mechanism, which has been in use at MIT since the 1980s, is equivalent to a natural adaptation of the well‐known Gale–Shapley (GS) mechanism. We run two experiments comparing NH4 with the prominently advocated Top Trading Cycles (TTC) mechanism and NH4 with GS. We find that under NH4, the participation rate is significantly higher than under TTC. Based on a new ordinal test of efficiency, NH4 is more likely to Pareto dominate TTC.

Suggested Citation

  • Pablo Guillen & Onur Kesten, 2012. "Matching Markets With Mixed Ownership: The Case For A Real‐Life Assignment Mechanism," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(3), pages 1027-1046, August.
  • Handle: RePEc:wly:iecrev:v:53:y:2012:i:3:p:1027-1046
    DOI: 10.1111/j.1468-2354.2012.00710.x
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    1. Alexander Westkamp, 2013. "An analysis of the German university admissions system," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(3), pages 561-589, August.
    2. Hugh-Jones, David & Kurino, Morimitsu & Vanberg, Christoph, 2014. "An experimental study on the incentives of the probabilistic serial mechanism," Games and Economic Behavior, Elsevier, vol. 87(C), pages 367-380.
    3. Rustamdjan Hakimov & C.-Philipp Heller & Dorothea Kübler & Morimitsu Kurino, 2021. "How to Avoid Black Markets for Appointments with Online Booking Systems," American Economic Review, American Economic Association, vol. 111(7), pages 2127-2151, July.
    4. Julien Combe & Jan Christoph Schlegel, 2021. "Reallocation with Priorities," Working Papers 2021-09, Center for Research in Economics and Statistics.
    5. 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.
    6. Qianfeng Tang & Yongchao Zhang, 2021. "Weak stability and Pareto efficiency in school choice," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(2), pages 533-552, March.
    7. Guillen, Pablo & Hing, Alexander, 2014. "Lying through their teeth: Third party advice and truth telling in a strategy proof mechanism," European Economic Review, Elsevier, vol. 70(C), pages 178-185.
    8. Braun, Sebastian & Dwenger, Nadja & Kübler, Dorothea & Westkamp, Alexander, 2014. "Implementing quotas in university admissions: An experimental analysis," Games and Economic Behavior, Elsevier, vol. 85(C), pages 232-251.
    9. Rustamdjan Hakimov & Onur Kesten, 2018. "The Equitable Top Trading Cycles Mechanism For School Choice," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(4), pages 2219-2258, November.
    10. Juan D Carrillo & Saurabh Singhal, 2011. "Tiered Housing Allocation: an Experimental Analysis," Working Paper 8511, USC Lusk Center for Real Estate.
    11. Lingbo Huang & Tracy Xiao Liu & Jun Zhang, 2023. "Born to wait? A study on allocation rules in booking systems," Discussion Papers 2023-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    12. Hakimov, Rustamdjan & Kübler, Dorothea, 2019. "Experiments On Matching Markets: A Survey," Rationality and Competition Discussion Paper Series 153, CRC TRR 190 Rationality and Competition.
    13. Jinyong Jeong, 2021. "Matching with property rights: an application to Korean teacher transfer program," Review of Economic Design, Springer;Society for Economic Design, vol. 25(3), pages 139-156, September.
    14. 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).
    15. Umut Dur & Onur Kesten, 2019. "Sequential versus simultaneous assignment systems and two applications," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 68(2), pages 251-283, September.
    16. Juan D. Carrillo & Saurabh Singhal, 2016. "Tiered Housing Allocation with Preannounced Rankings: An Experimental Analysis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(1), pages 133-160, March.
    17. Schummer, James & Abizada, Azar, 2017. "Incentives in landing slot problems," Journal of Economic Theory, Elsevier, vol. 170(C), pages 29-55.
    18. John Kennes Jr. & Daniel Monte Jr. & Norovsambuu Tumennasan Jr., 2014. "The Day Care Assignment: A Dynamic Matching Problem," American Economic Journal: Microeconomics, American Economic Association, vol. 6(4), pages 362-406, November.
    19. Kesten, Onur & Kurino, Morimitsu, 2019. "Strategy-proof improvements upon deferred acceptance: A maximal domain for possibility," Games and Economic Behavior, Elsevier, vol. 117(C), pages 120-143.

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