Matching Markets with Mixed Ownership: The Case for a Real‐Life Assignment Mechanism

20 Pages Posted: 27 Jul 2012

See all articles by Pablo Guillen

Pablo Guillen

Harvard University - Business School (HBS); Autonomous University of Barcelona - Faculty of Economics and Business Studies

Onur Kesten

Carnegie Mellon University - David A. Tepper School of Business

Date Written: August 2012

Abstract

We consider a common indivisible good allocation problem whose popular applications include on‐campus housing, kidney exchange, and school choice. We show that the so‐called New House 4 (NH4) mechanism, which has been in use at MIT since the 1980s, is equivalent to a natural adaptation of the well‐known Gale–Shapley (GS) mechanism. We run two experiments comparing NH4 with the prominently advocated Top Trading Cycles (TTC) mechanism and NH4 with GS. We find that under NH4, the participation rate is significantly higher than under TTC. Based on a new ordinal test of efficiency, NH4 is more likely to Pareto dominate TTC.

Suggested Citation

Guillen, Pablo and Kesten, Onur, Matching Markets with Mixed Ownership: The Case for a Real‐Life Assignment Mechanism (August 2012). International Economic Review, Vol. 53, Issue 3, pp. 1027-1046, 2012, Available at SSRN: https://ssrn.com/abstract=2118398 or http://dx.doi.org/10.1111/j.1468-2354.2012.00710.x

Pablo Guillen (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
617-495-6753 (Phone)

Autonomous University of Barcelona - Faculty of Economics and Business Studies ( email )

Campus Bellaterra
Barcelona, 08193
Spain

Onur Kesten

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

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