Non-Manipulable House Exchange under (Minimum) Equilibrium Prices

Tommy Andersson, Lars Ehlers and Lars-Gunnar Svensson (lars-gunnar.svensson@nek.lu.)
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Lars-Gunnar Svensson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

No 2020:28, Working Papers from Lund University, Department of Economics

Abstract: We consider a market with indivisible objects, called houses, and monetary transfers. Each house is initially occupied by one agent and each agent demands exactly one house. The problem is to identify the complete set of direct allocation mechanisms that can be used to reallocate the houses among the agents. On the one hand, for price equilibrium mechanisms, we show that the only strategy-proof mechanism is one with a minimum equilibrium price vector. The result is not true on the classical or the quasi-linear domains, but on reduced domains of preference profiles containing “almost all” profiles in the classical or the quasi-linear domain, respectively. On the other hand, while minimum price equilibrium mechanisms are not necessarily efficient (as prices are not zero), we show that no strategy-proof mechanism Pareto dominates a minimum price equilibrium mechanism, making them constrained efficient in the class of strategy-proof mechanisms.

Keywords: house allocation; initial endowments; minimum equilibrium prices; strategyproofness; constrained efficiency (search for similar items in EconPapers)
JEL-codes: C71 C78 D47 D71 D78 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2020-12-15, Revised 2024-11-04
New Economics Papers: this item is included in nep-des and nep-ure
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