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New axioms for top trading cycles (2104.09157v3)
Published 19 Apr 2021 in econ.TH
Abstract: School choice is of great importance both in theory and practice. This paper studies the (student-optimal) top trading cycles mechanism (TTCM) in an axiomatic way. We introduce two new axioms: MBG (mutual best group)-quota-rationality and MBG-robust efficiency. While stability implies MBG-quota-rationality, MBG-robust efficiency is weaker than robust efficiency, which is stronger than the combination of efficiency and group strategy-proofness. The TTCM is characterized by MBG-quota-rationality and MBG-robust efficiency. Our results construct a new basis to compare the TTCM with the other school choice mechanisms, especially the student-optimal stable mechanism under Ergin but not Kesten-acyclic priority structures.