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Agent Competition Double-Auction Mechanism

Author

Listed:
  • Leon Yang Chu

    () (Marshall School of Business, University of Southern California, Los Angeles, California 90089)

  • Zuo-Jun Max Shen

    () (Department of Industrial Engineering and Operations Research, University of California, Berkeley, California 94720)

Abstract

This paper proposes an agent competition double-auction mechanism to simplify decision making and promote transactions for the customer-to-customer marketplaces. Under the proposed double-auction mechanism, bidding one's true valuation (private information) is the best strategy for each individual buyer and seller even when shipping costs and sales taxes are different across various possible transactions. The proposed mechanism also achieves budget balance and asymptotic efficiency. Furthermore, these results not only hold for an environment where buyers and sellers exchange identical commodities, but also can be extended to an environment with multiple substitutable commodities.

Suggested Citation

  • Leon Yang Chu & Zuo-Jun Max Shen, 2006. "Agent Competition Double-Auction Mechanism," Management Science, INFORMS, vol. 52(8), pages 1215-1222, August.
  • Handle: RePEc:inm:ormnsc:v:52:y:2006:i:8:p:1215-1222
    as

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    File URL: http://dx.doi.org/10.1287/mnsc.1060.0528
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    References listed on IDEAS

    as
    1. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    2. Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, vol. 92(4), pages 1093-1103, September.
    3. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    4. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    5. McAfee, R. Preston, 1992. "A dominant strategy double auction," Journal of Economic Theory, Elsevier, vol. 56(2), pages 434-450, April.
    6. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Babaioff, Moshe & Nisan, Noam & Pavlov, Elan, 2009. "Mechanisms for a spatially distributed market," Games and Economic Behavior, Elsevier, vol. 66(2), pages 660-684, July.
    2. Leon Yang Chu, 2009. "Truthful Bundle/Multiunit Double Auctions," Management Science, INFORMS, vol. 55(7), pages 1184-1198, July.
    3. Cheng, Meng & Xu, Su Xiu & Huang, George Q., 2016. "Truthful multi-unit multi-attribute double auctions for perishable supply chain trading," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 21-37.
    4. Blume, Lawrence E. & Easley, David & Kleinberg, Jon & Tardos, √Čva, 2009. "Trading networks with price-setting agents," Games and Economic Behavior, Elsevier, vol. 67(1), pages 36-50, September.
    5. repec:eee:apmaco:v:292:y:2017:i:c:p:128-144 is not listed on IDEAS
    6. Xu, Su Xiu & Cheng, Meng & Huang, George Q., 2015. "Efficient intermodal transportation auctions for B2B e-commerce logistics with transaction costs," Transportation Research Part B: Methodological, Elsevier, vol. 80(C), pages 322-337.

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