House exchange and residential segregation in networks

This paper considers a Schelling model in an arbitrary fixed network where there are no vacant houses. Agents have preferences either for segregation or for mixed neighborhoods. Utility is non-transferable. Two agents exchange houses when the trade is mutually beneficial. We find that an allocation is stable when for two agents of opposite-color each black (white) agent has a higher proportion of neighbors who are black (white). This result holds irrespective of agents’ preferences. When all members of both groups prefer mixed neighborhoods, an allocation is also stable provided that if an agent belongs to the minority (majority), then any neighbor of opposite-color is in a smaller minority (larger majority).