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

• Authors: Flip Klijn.
• BSE Working Paper: 110939 | November 24
• Keywords: strategy-proofness , housing markets , market design , respecting improvement , top-trading-cycles (TTC) mechanism , pair-efficiency
• JEL codes: C78, D47
• strategy-proofness
• housing markets
• market design
• respecting improvement
• top-trading-cycles (TTC) mechanism
• pair-efficiency

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.