Theoretical Economics, Volume 19, Number 2 (May 2024)

Theoretical Economics 19 (2024), 551–564


Pair-efficient reallocation of indivisible objects

Özgün Ekici

Abstract


We revisit the classical object reallocation problem under strict preferences. When attention is constrained to the set of Pareto-efficient rules, it is known that top trading cycles (TTC) is the only rule that is strategyproof and individually-rational. We relax this constraint and consider pair-efficiency. A rule is pair-efficient if it never induces an allocation at which a pair of agents gain from trading their assigned objects. Remarkably, even in the larger set of pair-efficient rules, we find that TTC is still the only rule that is strategyproof and individually-rational. Our characterization result gives strong support to the use of TTC in object reallocation problems.

Keywords: Indivisible object, pair-efficient, strategyproof, individually-rational, Top trading cycles

JEL classification: C78, D61, D63, D82

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