Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2015:9: Strategy-Proof House Allocation with Price Restrictions

Tommy Andersson () and Lars-Gunnar Svensson ()
Additional contact information
Tommy Andersson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Lars-Gunnar Svensson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: This paper considers a house allocation problem with no initial ownership and where prices are bounded from below and above by exogenously given price restrictions. This type of housing market contains, e.g., the "assignment market" and the "student placement problem" as special cases. A mechanism called the minimal RPE mechanism is defined, and two main results are obtained. First, it is demonstrated that the mechanism is manipulable at some profile in the full preference domain. Second, it is proved that there is a subset of the full domain, containing almost all profiles in the full domain, such that the minimal RPE mechanism is strategy-proof in that subset.

Keywords: house allocation; matching; strategy-proofness; preference domains

JEL-codes: C78; D71

14 pages, First version: April 1, 2015. Revised: October 15, 2015. Earlier revisions: April 27, 2015, April 28, 2015, April 28, 2015.

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