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Agent Competition Double-Auction Mechanism

  • 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)

Registered author(s):

    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.

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    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 52 (2006)
    Issue (Month): 8 (August)
    Pages: 1215-1222

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    Handle: RePEc:inm:ormnsc:v:52:y:2006:i:8:p:1215-1222
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    1. McAfee, R. Preston., 1990. "A Dominant Strategy Double Auction," Working Papers 734, California Institute of Technology, Division of the Humanities and Social Sciences.
    2. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    3. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    4. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    5. Alvin E. Roth & Axel Ockenfels, . "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," Papers on Strategic Interaction 2002-32, Max Planck Institute of Economics, Strategic Interaction Group.
    6. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, 03.
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