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Characterizing the top trading cycles rule for housing markets with lexicographic preferences when externalities are limited

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  • Bettina Klaus

Abstract

We consider a variation of the housing market model a la Shapley and Scarf (1974) where agents care both about their own consumption via demand preferences and about the agent who receives their endowment via supply preferences (see Klaus and Meo, 2021). Then, if preferences are either all demand lexicographic or all supply lexicographic, we characterize the corresponding top trading cycles rule by individual rationality, Pareto optimality, and strategy-proofness. Since on the lexicographic preference domains the strong core can be multi-valued, our result sheds light on the fact that the properties that also characterized the strong core rule for Shapley-Scarf housing markets (Ma, 1994) characterize the top trading cycles rule and not the strong core rule (or correspondence).

Suggested Citation

  • Bettina Klaus, 2021. "Characterizing the top trading cycles rule for housing markets with lexicographic preferences when externalities are limited," Cahiers de Recherches Economiques du Département d'économie 21.04, Université de Lausanne, Faculté des HEC, Département d’économie.
    • Handle: RePEc:lau:crdeep:21.04
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    References listed on IDEAS

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    1. Hong, Miho & Park, Jaeok, 2022. "Core and top trading cycles in a market with indivisible goods and externalities," Journal of Mathematical Economics, Elsevier, vol. 100(C).
    2. Tayfun Sonmez, 1999. "Strategy-Proofness and Essentially Single-Valued Cores," Econometrica, Econometric Society, vol. 67(3), pages 677-690, May.
    3. Bettina Klaus & Claudia Meo, 2023. "The core for housing markets with limited externalities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 76(3), pages 779-811, October.
    4. Lars-Gunnar Svensson, 1999. "Strategy-proof allocation of indivisible goods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 16(4), pages 557-567.
    5. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
    6. Roth, Alvin E., 1982. "Incentive compatibility in a market with indivisible goods," Economics Letters, Elsevier, vol. 9(2), pages 127-132.
    7. Ekici, Özgün, 2024. "Pair-efficient reallocation of indivisible objects," Theoretical Economics, Econometric Society, vol. 19(2), May.
    8. Ma, Jinpeng, 1994. "Strategy-Proofness and the Strict Core in a Market with Indivisibilities," International Journal of Game Theory, Springer;Game Theory Society, vol. 23(1), pages 75-83.
    9. Ekici, Özgün & Sethuraman, Jay, 2024. "Characterizing the TTC rule via pair-efficiency: A short proof," Economics Letters, Elsevier, vol. 234(C).
    10. Maria Gabriella Graziano & Claudia Meo & Nicholas C. Yannelis, 2020. "Shapley and Scarf housing markets with consumption externalities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1481-1514, September.
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    Cited by:

    1. Hong, Miho & Park, Jaeok, 2022. "Core and top trading cycles in a market with indivisible goods and externalities," Journal of Mathematical Economics, Elsevier, vol. 100(C).
    2. Piazza, Adriana & Torres-Martínez, Juan Pablo, 2024. "Coalitional stability in matching problems with externalities and random preferences," Games and Economic Behavior, Elsevier, vol. 143(C), pages 321-339.

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    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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