Matching with restricted trade

Afacan, Mustafa Oğuz (2018) Matching with restricted trade. [Working Paper / Technical Report] Sabanci University ID:UNSPECIFIED

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Motivated by various trade restrictions in real-life object allocation problems, we introduce an object allocation with a particular class of trade restrictions model. The set of matchings that can occur through a market-like process under such restrictions is defined, and each such matching is called feasible. We then introduce a class of mechanisms, which we refer to as “Restricted Trading Cycles” (RTC). Any RTC mechanism is feasible, constrained efficient, and respects endowments. An axiomatic characterization of RT C is obtained, with feasibility, constrained efficiency, and a new property that we call hierarchically mutual best. In terms of strategic issues, feasibility, constrained efficiency, and respecting endowments together turns out to be incompatible with strategy-proofness. This in particular implies that no RTC mechanism is strategy-proof. Lastly, we consider a probabilistically restricted trading cycles (PRTC) mechanism, which is obtained by introducing a certain randomness to the RTC class. While PRTC continues to be manipulable, compared to RTC, it is more robust to truncations and reshufflings.
Item Type: Working Paper / Technical Report
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Arts and Social Sciences > Academic programs > Economics
Faculty of Arts and Social Sciences
Depositing User: Mustafa Oğuz Afacan
Date Deposited: 31 Jul 2018 16:08
Last Modified: 26 Apr 2022 10:54

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