On the difficulty of characterizing top trading cycles with identical houses

Abstract

We study Shapley-Scarf housing markets (Shapley and Scarf, 1974) in which houses come in types and agents are indifferent between houses of the same type but rank the types strictly. On this domain of objective indifferences, top trading cycles (TTC) rules with fixed tie-breaking regain Pareto efficiency and group strategy-proofness (Sandholtz and Tai, 2026), properties that need not hold under general weak preferences. We ask whether the characterization of the TTC rule for strict preferences by Ma (1994) and the characterization of TTC rules with fixed tie-breaking for weak preferences by Ehlers (2014) extend to this domain. They do not. With five agents and two types of houses, we construct a rule that satisfies individual rationality, Pareto efficiency, group strategy-proofness, non-bossiness, and consistency, but whose restriction to the five-agent population is not welfare equivalent to any TTC rule with fixed tie-breaking. With two types, five agents are minimal for this fixed-population result. The same rule shows that several other characterizations of TTC for strict preferences do not extend either.