A Characterization of the Top-Trading-Cycles Mechanism for Housing Markets via Respecting-Improvement

Open Access
  • Authors: Bettina Klaus, Flip Klijn and Jay Sethuraman
  • Economic Letters, Vol. 247, Article 112145, February 2025

We provide the first characterization of the prominent top-trading-cycles (TTC) mechanism in the Shapley–Scarf housing market model (Shapley and Scarf, 1974) that uses respecting-improvement. Specifically, we show that for strict preferences, the TTC mechanism is the unique mechanism satisfying pair-efficiency, respecting-improvement, and strategy-proofness.

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