An Analysis of Top Trading Cycles in Two-Sided Matching Markets
17 Pages Posted: 1 Aug 2015
Date Written: July 30, 2015
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: Suggested Citation