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We consider the problem of allocating indivisible items to agents where both agents and items are partitioned into disjoint groups. Following previous works on public housing allocation, each item (or house) belongs to a block and each agent is assigned a type. The allocation problem consists in assigning at most one item to each agent in a good way while respecting diversity constraints. Based on Schelling’s seminal work, we introduce a generic individual utility function where the welfare of an agent not only relies on her preferences over the items but also takes into account the fraction of agents of her own type in her own block. In this context, we investigate the issue of stability, and study two existing allocation mechanisms: a sequential mechanism used in Singapore and a distributed procedure based on mutually improving swaps of items.

Sequential and Swap Mechanisms for Public Housing Allocation with Quotas and Neighbourhood-Based Utilities