City Research Online

Abstract

We consider a reallocation problem with priorities where each agent is initially endowed with a house and is willing to exchange it but each house has a priority ordering over the agents of the market. In this setting, it is well known that there is no individually rational and stable mechanism. As a result, the literature has introduced a modified stability notion called μ0-stability. In contrast to college admission problems, in which prioritie s are present but there is no initial endowment, we show that the ownership-adjusted Deferred Acceptance mechanism identified in the literature is not the only individually rational, strategy-proof and μ0-stable mechanism. By introducing a new axiom called the independence of irrelevant agents and using the standard axiom of unanimity, we show that the ownership-adjusted Deferred Acceptance mechanism is the unique mechanism that is individually rational, strategy-proof, μ0-stable, unanimous and independent of irrelevant agents.

Publication Type:	Article
Additional Information:	© 2023. This manuscript version is made available under the CC-BY-NC-ND 4.0 license https://creativecommons.org/licenses/by-nc-nd/4.0/
Publisher Keywords:	Matching, Housing market, Reallocation, Stability, Priorities
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HM Sociology
Departments:	School of Policy & Global Affairs > Economics
SWORD Depositor:	Symplectic Administrator

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