Template-type: ReDif-Paper 1.0
Author-Name: Bochet Olivier 
Author-Name: Klaus Bettina 
Author-Name: Walzl Markus 
Author-workplace-name: METEOR
Title: Dynamic Recontracting processes with Multiple Indivisible Goods
Abstract: We consider multiple-type housing markets. To capture the dynamic aspect of trade in such markets, we study a dynamic recontracting process similar to the one introduced by Serrano and Volij (2005). First, we analyze the set of recurrent classes of this process as a (non-empty) solution concept. We show that each core allocation always constitutes a singleton recurrent class and provide examples of non-singleton recurrent classes consisting of blocking-cycles of individually rational allocations. For multiple-type housing markets stochastic stability never serves as a selection device among recurrent classes. Next, we propose a method to compute the limit invariant distribution of the dynamic recontracting process. The limit invariant distribution exploits the interplay of coalitional stability and accessibility that determines a probability distribution over final allocations. We provide various examples to demonstrate how the limit invariant distribution discriminates among stochastically stable allocations: surprisingly, some core allocations are less likely to be final allocations of the dynamic process than cycles composed of non-core allocations.
Keywords: microeconomics ; 
Series: Research Memoranda
Creation-Date: 2007
Number: 018
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:d5699e7f-3884-4c6d-b561-d5de25874372/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 334404
Handle: RePEc:unm:umamet:2007018