Roberto Cervone () (Department of Applied Mathematics, University of Venice) Stefano Galavotti () (Department of Decision Sciences, University of Florence) Marco LiCalzi () (Department of Applied Mathematics and Advanced School of Economics, University of Venice)
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Zhan and Friedman (2007) study double auctions where buyers and sellers are constrained to using simple markdown and markup rules. In spite of the alleged symmetry in roles and assumptions, buyers are shown to have the upper hand both in the call market and in the continuous double auction. We replicate the study and show that their formulation of the sellers’ markup strategies, while seemingly natural, is strategically unsound because of a hidden asymmetry. We introduce a symmetric set of markup strategies for the sellers and show how it explains away the paradox of buyers’ advantage in three different double-sided market protocols.
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Paper provided by Department of Applied Mathematics, University of Venice in its series Working Papers with number
187.
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