[UTMD-064] Endowments-swapping-proofness in Housing Markets with Exchange Constraints (by Yuji Fujinaka, Takuma Wakayama) (Revised version of UTMD-047)


Yuji Fujinaka, Takuma Wakayama


This paper examines housing markets where constraints are placed on the number of agents involved in exchanges. We investigate the existence of exchange-constrained mechanisms that satisfy endowments-swapping-proofness, a condition ensuring that no pair of agents can benefit from swapping their endowments before the mechanism is applied. Our primary finding is that when preferences are strict, no exchange-constrained mechanism can simultaneously satisfy both individual rationality and endowments-swapping-proofness. To avoid this negative result, we next explore three well-known restricted domains of preferences: common ranking preferences, single-peaked preferences, and single-dipped preferences. Unfortunately, even when preferences are restricted to either common ranking preferences or single-peaked preferences, the two properties remain incompatible. However, a possibility arises if preferences are single-dipped: the well-known top trading cycles mechanism is the only exchange-constrained mechanism that satisfies strategy-proofness in addition to the two properties mentioned above. Notably, this characterization holds even without strategy-proofness when only pairwise exchanges are allowed.