City Research Online

Reallocation with priorities

Combe, J. & Schlegel, J. C. ORCID: 0000-0002-8385-8349 (2024). Reallocation with priorities. Games and Economic Behavior, 143, pp. 287-299. doi: 10.1016/j.geb.2023.11.015


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
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:
[thumbnail of CS_RWP_21_Aug_2023-1.pdf] Text - Accepted Version
This document is not freely accessible until 6 June 2025 due to copyright restrictions.
Available under License Creative Commons Attribution Non-commercial No Derivatives.

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