An Analysis of Top Trading Cycles in Two-Sided Matching Markets

17 Pages Posted: 1 Aug 2015

See all articles by Yeon-Koo Che

Yeon-Koo Che

Columbia University

Olivier Tercieux

Paris-Jourdan Sciences Economiques (PSE)

Date Written: July 30, 2015

Abstract

We study top trading cycles in a two-sided matching environment (Abdulkadiroglu and Sonmez (2003)) under the assumption that individuals’ preferences and objects’ priorities are drawn iid uniformly. The distributions of agents’ preferences and objects’ priorities remaining after a given round of TTC depend nontrivially on the exact history of the algorithm up to that round (and so need not be uniform iid). Despite the nontrivial history-dependence of evolving economies, we show that the number of individuals/objects assigned at each round follows a simple Markov chain and we explicitly derive the transition probabilities.

Keywords: Random matching markets, Markov property

JEL Classification: C70, D47, D61, D63

Suggested Citation

Che, Yeon-Koo and Tercieux, Olivier, An Analysis of Top Trading Cycles in Two-Sided Matching Markets (July 30, 2015). Cowles Foundation Discussion Paper No. 2014, Available at SSRN: https://ssrn.com/abstract=2638013 or http://dx.doi.org/10.2139/ssrn.2638013

Yeon-Koo Che (Contact Author)

Columbia University ( email )

420 W. 118th Street, 1016IAB
New York, NY 10027
United States
212-854-8276 (Phone)

HOME PAGE: http://www.columbia.edu/~yc2271

Olivier Tercieux

Paris-Jourdan Sciences Economiques (PSE) ( email )

48, BD Jourdan
75014 Paris
France

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