IDEAS home Printed from https://ideas.repec.org/a/eee/mateco/v100y2022ics0304406821001749.html
   My bibliography  Save this article

Trading probabilities along cycles

Author

Listed:
  • Altuntaş, Açelya
  • Phan, William

Abstract

Consider the problem of allocating indivisible objects when agents are endowed with fractional amounts and rules can assign lotteries. We study a natural generalization (to the probabilistic domain) of Gale’s Top Trading Cycles. The latter features an algorithm wherein agents trade objects along a cycle—in our new family of rules, agents now trade probabilities of objects along a cycle. We ask if the attractive properties, namely efficiency, individual rationality, and strategy-proofness extended in the stochastic dominance sense, carry over to the Trading-Probabilities-Along-Cycles (TPAC) rules. All of these rules are sd-efficient. We characterize separately the subclass of TPAC rules satisfying the sd-endowment lower bound and sd-strategy-proofness. Regarding fairness, we follow in spirit to the no-envy in net trade condition of Schmeidler and Vind (1972), where the set of allocations satisfying the property essentially coincides with the set of competitive equilibria, and augment the notion appropriately for our environment. We further generalize the TPAC family while extending results on sd-efficiency and the sd-endowment lower bound, and provide sufficient conditions on parameters for the rules to arbitrarily closely satisfy the sd-no-envy in net trade.

Suggested Citation

  • Altuntaş, Açelya & Phan, William, 2022. "Trading probabilities along cycles," Journal of Mathematical Economics, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:mateco:v:100:y:2022:i:c:s0304406821001749
    DOI: 10.1016/j.jmateco.2021.102631
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304406821001749
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jmateco.2021.102631?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stergios Athanassoglou & Jay Sethuraman, 2011. "House allocation with fractional endowments," International Journal of Game Theory, Springer;Game Theory Society, vol. 40(3), pages 481-513, August.
    2. YIlmaz, Özgür, 2010. "The probabilistic serial mechanism with private endowments," Games and Economic Behavior, Elsevier, vol. 69(2), pages 475-491, July.
    3. Bogomolnaia, Anna & Moulin, Herve, 2001. "A New Solution to the Random Assignment Problem," Journal of Economic Theory, Elsevier, vol. 100(2), pages 295-328, October.
    4. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
    5. Pycia, Marek & Unver, Utku, 2017. "Incentive compatible allocation and exchange of discrete resources," Theoretical Economics, Econometric Society, vol. 12(1), January.
    6. Thayer Morrill, 2013. "An alternative characterization of top trading cycles," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(1), pages 181-197, September.
    7. McLennan, Andrew, 2002. "Ordinal Efficiency and the Polyhedral Separating Hyperplane Theorem," Journal of Economic Theory, Elsevier, vol. 105(2), pages 435-449, August.
    8. Echenique, Federico & Miralles, Antonio & Zhang, Jun, 2021. "Fairness and efficiency for allocations with participation constraints," Journal of Economic Theory, Elsevier, vol. 195(C).
    9. Sophie Bade, 2020. "Random Serial Dictatorship: The One and Only," Mathematics of Operations Research, INFORMS, vol. 45(1), pages 353-368, February.
    10. Yeon-Koo Che & Fuhito Kojima, 2010. "Asymptotic Equivalence of Probabilistic Serial and Random Priority Mechanisms," Econometrica, Econometric Society, vol. 78(5), pages 1625-1672, September.
    11. Morrill, Thayer, 2015. "Making just school assignments," Games and Economic Behavior, Elsevier, vol. 92(C), pages 18-27.
    12. Anno, Hidekazu, 2015. "A short proof for the characterization of the core in housing markets," Economics Letters, Elsevier, vol. 126(C), pages 66-67.
    13. Carroll, Gabriel, 2014. "A general equivalence theorem for allocation of indivisible objects," Journal of Mathematical Economics, Elsevier, vol. 51(C), pages 163-177.
    14. Hylland, Aanund & Zeckhauser, Richard, 1979. "The Efficient Allocation of Individuals to Positions," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 293-314, April.
    15. Thayer Morrill, 2015. "Two simple variations of top trading cycles," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 60(1), pages 123-140, September.
    16. 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.
    17. Kesten, Onur, 2009. "Why do popular mechanisms lack efficiency in random environments?," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2209-2226, September.
    18. Jingsheng Yu & Jun Zhang, 2020. "Efficient and fair trading algorithms in market design environments," Papers 2005.06878, arXiv.org, revised May 2021.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Patrick Harless & William Phan, 2020. "On endowments and indivisibility: partial ownership in the Shapley–Scarf model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(2), pages 411-435, September.
    2. Morrill, Thayer & Roth, Alvin E., 2024. "Top trading cycles," Journal of Mathematical Economics, Elsevier, vol. 112(C).
    3. Ivan Balbuzanov & Maciej H. Kotowski, 2019. "Endowments, Exclusion, and Exchange," Econometrica, Econometric Society, vol. 87(5), pages 1663-1692, September.
    4. Jingsheng Yu & Jun Zhang, 2020. "Efficient and fair trading algorithms in market design environments," Papers 2005.06878, arXiv.org, revised May 2021.
    5. Marek Pycia & M. Utku Ünver, 2022. "Outside options in neutral allocation of discrete resources," Review of Economic Design, Springer;Society for Economic Design, vol. 26(4), pages 581-604, December.
    6. Afacan, Mustafa Oğuz & Hu, Gaoji & Li, Jiangtao, 2024. "Housing markets since Shapley and Scarf," Journal of Mathematical Economics, Elsevier, vol. 111(C).
    7. Nesterov, Alexander S., 2017. "Fairness and efficiency in strategy-proof object allocation mechanisms," Journal of Economic Theory, Elsevier, vol. 170(C), pages 145-168.
    8. Shende, Priyanka & Purohit, Manish, 2023. "Strategy-proof and envy-free mechanisms for house allocation," Journal of Economic Theory, Elsevier, vol. 213(C).
    9. YIlmaz, Özgür, 2010. "The probabilistic serial mechanism with private endowments," Games and Economic Behavior, Elsevier, vol. 69(2), pages 475-491, July.
    10. Han, Xiang, 2024. "A theory of fair random allocation under priorities," Theoretical Economics, Econometric Society, vol. 19(3), July.
    11. Hougaard, Jens Leth & Moreno-Ternero, Juan D. & Østerdal, Lars Peter, 2014. "Assigning agents to a line," Games and Economic Behavior, Elsevier, vol. 87(C), pages 539-553.
    12. Tamura, Yuki & Hosseini, Hadi, 2022. "The crawler: Three equivalence results for object (re)allocation problems when preferences are single-peaked," Journal of Economic Theory, Elsevier, vol. 203(C).
    13. Balbuzanov, Ivan, 2022. "Constrained random matching," Journal of Economic Theory, Elsevier, vol. 203(C).
    14. Atila Abdulkadiroglu & Tommy Andersson, 2022. "School Choice," NBER Working Papers 29822, National Bureau of Economic Research, Inc.
    15. Kesten, Onur, 2009. "Why do popular mechanisms lack efficiency in random environments?," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2209-2226, September.
    16. Kesten, Onur & Unver, Utku, 2015. "A theory of school choice lotteries," Theoretical Economics, Econometric Society, vol. 10(2), May.
    17. Andrew McLennan & Shino Takayama & Yuki Tamura, 2024. "An Efficient, Computationally Tractable School Choice Mechanism," Discussion Papers Series 668, School of Economics, University of Queensland, Australia.
    18. Ekici, Özgün, 2024. "Pair-efficient reallocation of indivisible objects," Theoretical Economics, Econometric Society, vol. 19(2), May.
    19. Liu, Peng & Zeng, Huaxia, 2019. "Random assignments on preference domains with a tier structure," Journal of Mathematical Economics, Elsevier, vol. 84(C), pages 176-194.
    20. Onur Kesten & Morimitsu Kurino & Alexander S. Nesterov, 2017. "Efficient lottery design," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(1), pages 31-57, January.

    More about this item

    Keywords

    Top trading cycles; Probabilistic assignment; Efficiency; Strategy-proofness; Individual rationality; No-envy in net trade;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:mateco:v:100:y:2022:i:c:s0304406821001749. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jmateco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.