Fast TTC Computation

arXiv:2403.15111v1 [econ.EM] 22 Mar 2024

Irene Aldridge
March 17, 2024

Abstract
This paper proposes a fast Markov Matrix-based methodology for
computing Top Trading Cycles (TTC) that delivers O(1) computational
speed, that is speed independent of the number of agents and objects in
the system. The proposed methodology is well suited for complex large-
dimensional problems like housing choice. The methodology retains all
the properties of TTC, namely, Pareto-efficiency, individual rationality
and strategy-proofness.

1 Introduction
The Top Trading Cycles Algorithm due Gale and [7] is a Pareto-efficient way
to allocate objects based on agents preferences. Working with strict prefer-
ences of agents over objects, the algorithm estimates the allocations that are
individually-rational, envy-free and strategy-proof. Perhaps the only drawback
of the TTC algorithm is that it is computationally slow. [6] showed that a con-
ventional TTC algorithm for a system with strict preferences runs in O(n log
n) time, where n is the number of agents and objects in the system.
This paper proposes an optimization of the TTC algorithm. Specifically,
to reduce the computational burden of TTC, we propose to map TTC onto a
Markov Matrix, which can be solved efficiently in O(1), i.e., independently of
the number of agents or objects in the system ([8]).
Converting preferences to a Markov Matrix allows us to quickly identify and
eliminate cycles, and assign proper order to the agents to choose the best objects
available to them at the time of their choice.

2 Methodology
2.1 Methodology Overview
A Markov Matrix, also known as a stochastic matrix, is a n x n matrix sum-
marizing probabilities of a given agent moving from state i to state j. This
probability is recorded in the cell Aij . All the columns are normalized to sum
up to 1 to reflect the closed state of the system: all paths leaving a given state
are reflected in the matrix.

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 The solution to a Markov Matrix produces stable-state inferences: the steady-
state probabilities of finding an agent in a given state. These inferences are free
of cycles, since cycles or periodic movements are not stable and are not re-
flected in the steady-state inferences. A Perron-Frobenius solution to finding
the steady-state inferences then delivers the O(1) estimate via singular value
calculations ([8]).
In this research, we propose harnessing the power of Markov Matrices by
expressing agent preferences in a Markov-like model. We start with agents
i = {1, ..., I} and assign as their “destinations” objects j = {1, ..., N }. For each
transfer from state i to state j, we assign a ”probability” Pij that reflects agent
i’s preferences over objects {j}. Specifically, we assign probability 1 to transfer
ij if j is the number 1 choice for agent i. Next, given the rank choice Rij of agent
i over the object j, we assign probability Pij = (N − Rij )/N to the transition
from i to j.
Once our Markov Matrix is complete, we next estimate the steady-state
probabilities as the first singular vector of the matrix, following Perron-Frobenius
Theorem (see, for example, [3]). The relative ordering of the coefficients in the
first singular vector follows cyclicality of the agents and their preferences: the
lower the coefficient, the less stable is the transition, the more likely it is to be
in the cycle, the more priority it is given in our algorithm described below.

2.2 A Toy Example 1

To illustrate the idea, consider the following matrix of preferences over four
objects 1, 2, 3, 4.
P = [[1 2 3 4] [4 1 3 2] [2 1 4 3] [1 4 3 2]]
The TTC graph corresponding to P looks as follows:

1. Among the highest-level preferences, identify cycles by connecting agents

with their best-choice objects (Figure 1).
2. Eliminate objects that are either self-referencing or in a cycle (Figures 2,
3 and 4).
3. Repeat the process for the remaining agents and objects (Figure 5).

The resulting ”classical” TTC Solution is:

Agent 1 → 1 Agent 2 → 3 Agent 3 → 2 Agent 4 → 4
In this paper, we propose to:
1. Summarize preferences using a novel weighted directed graph approach.

2. Use Perron-Frobenius Theorem to efficiently compute the cycles in O(1)

time.
Thus, a graph for the preference matrix P can be represented as graph G,
with the first choice as 1, the second choice as (N − 1)/N , . . . and the last
choice as 1/N :

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 Figure 1: Step 1: identify the highest-level preferences.

Figure 2: Step 2: observe that Agent 1 prefers object 1, eliminate Agent 1 and
object 1.

Figure 3: Step 3. Observe that, after object 1 exists, Agent 4 prefers object 4.

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 Figure 4: Step 4. Agent 4 and object 4 exit the system.

Figure 5: Step 5. Agent 2 updates his preferences because objects 1 and 4 are
no longer available. Agent 2 receives object 3 and Agent 3 receives object 2.

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 P = 1: 1 ≻ 2 ≻ 3 ≻ 4
2: 4 ≻ 1 ≻ 3 ≻ 2
3: 2 ≻ 1 ≻ 4 ≻ 3
4: 1 ≻ 4 ≻ 3 ≻ 2
G = [[1, ¾, ½ , ¼], [¾, ¼, ½, 1]. [¾, 1, ¼, ½], [1, ¼, ½, ¾]]
The matrix G documents agent preferences over objects in a linear fashion.
It can be thought of as the choice each agent i would make given the opportunity
to pick any of the 4 states, which in TTC are commonly referred to as objects.
Thus, Agent 1 would much prefer to stay with state 1, then state 2, state 3, and
state 4, in that order. At the same time, Agent 1 would much rather move to
state 4, then state 1, state 3 and state 2. In the context of this discussion, we
use a linear probability scale, and the resulting outcome is consistent with TTC.
We can, however, generalize the approach to another probability distribution.
After summarizing each agent’s preferences over objects on a 0-1 scale, we
normalize matrix G to ensure all columns add up to 1. To do so, we sum up
the Pcolumns and divide each element by their respective sum of the column:
i Gij = [3.5 2.25 1.75 2.5 ]
normalized matrix = [[0.28571429 0.33333333 0.28571429 0.1]
[0.21428571 0.11111111 0.28571429 0.4 ]
[0.21428571 0.44444444 0.14285714 0.2 ]
[0.28571429 0.11111111 0.28571429 0.3 ]]
Next, we apply the singular value decomposition and consider the first sin-
gular vector: V [0] = [−0.67952481 − 0.43424211 − 0.33978586 − 0.48396838]
The smallest values in this vector represent the cycles and are removed in
their respective order: Thus, the first agent is the first to obtain his wish (object
1), Agent 4 is next, taking out object 4, Agent 2 is next with object 3, followed
by Agent 3 with object 2.
The process delivers results identical to the conventional TTC approach
shown above.

2.3 A Toy Example 2

P = [[1 2 3 4 5] [5 4 1 3 2] [2 1 5 4 3] [1 5 4 3 2] [2 3 5 4 1]]
The TTC algorithm works as follows:
Figure . Example 2, TTC Round 1
Cycles 1 and 2 ↔ 5 are eliminated, leaving agents 3 and 4.
In the next round, Agent 4 prefers 4, and exits, leaving Agent 3 with object
3.
We can replicate the same process with our methodology. Create a weighted
graph G as follows:
G = [[1, 4/5, 3/5, 2/5, 1/5],
[3/5, 1/5, 2/5, 4/5, 1],
[4/5, 1, 1/5, 2/5, 3/5],
[1, 1/5, 2/5, 3/5, 4/5],
[1/5, 1, 4/5, 2/5, 3/5]]
In other words, G = [[1, 0.8, 0.6, 0.4, 0.2],

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 [0.6, 0.2, 0.4, 0.8, 1],
[0.8, 1, 0.2, 0.4, 0.6],
[1, 0.2, 0.4, 0.6, 0.8],
[0.2,
P 1, 0.8, 0.4, 0.6]]
i Gij = [3.6 3.2 2.4 2.6 3.2]
Normalized matrix = [[0.27777778 0.25 0.25 0.15384615 0.0625 ]
[0.16666667 0.0625 0.16666667 0.30769231 0.3125 ]
[0.22222222 0.3125 0.08333333 0.15384615 0.1875 ]
[0.27777778 0.0625 0.16666667 0.23076923 0.25 ]
[0.05555556 0.3125 0.33333333 0.15384615 0.1875 ]]
V [0] = [−0.53588536 − 0.47158305 − 0.35029467 − 0.38264279 − 0.47044069]
Here, the first agent makes his choice, followed by the second, the fifth, the
fourth and the third agents: Agent 1 → 1 Agent 2 → 5 Agent 5 → 2 Agent 4
→ 4 Agent 3 → 3
Our methodology delivers the same assignment as TTC, but is very fast
and infinitely scalable to very large systems. Since we are using TTC as the
core methodology, our algorithm delivers Pareto-efficient, strategy-proof and
individually-rational allocations, just like TTC does.

2.4 Large-Sample Extension

One of the advantages of SVD methodology is that it can be readily extended to
matrices with an arbitrarily large number of data observations. Unlike its cousin
Principal Component Analysis (PCA), SVD does not impose any restrictions
on the shape of matrices.
In a particular version of the algorithm proposed in this article, the number
of agents needs to equal the number of objects, making this method suitable
for problems like Housing Assignment ([1], [2]) and others where the number
of agents can be very large and the number of distinct available objects can be
equal. Furthermore, unlike recently-proposed algorithms like [4] and [5], SVD
does not admit randomization. To many agents, randomization may seem unfair
and thus inducing envy. The proposed methodology is, therefore, more optimal.

3 Conclusion
The proposed computation of TTC algorithm delivers a fast solution to an ob-
ject allocation problem, regardless of the size of the data at hand. It can be effi-
ciently used to allocate extremely large arrays of agents, each with well-defined
multiple preferences, such as public schools to prospective students and so on.
The algorithm retains all the properties of TTC, namely Pareto-optimality,
strategy-proofness and individual rationality.

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