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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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    Cited by:

    1. 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.
    2. 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).

    More about this item

    Keywords

    Core; characterization; externalities; housing markets; top trading cycles rule;
    All these keywords.

    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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