CFDP 2014

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


Publication Date: July 2015

Pages: 16


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


Random matching markets, Markov property

JEL Classification Codes: C70, D47, D61, D63