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| Title: | Automated Markets and Trading Agents |
| Authors: | MacKie-Mason, Jeffrey K.
Wellman, Michael P. |
| Keywords: | automated markets
mechanism design
computational markets
trading agents |
| Issue Date: | Apr-2005 |
| Citation: | Handbook of Computational Economics, vol. 2 (North-Holland, forthcoming 2005). <http://hdl.handle.net/2027.42/49510> |
| Abstract: | Computer automation has the potential, just starting to be realized, of transforming the
design and operation of markets, and the behaviors of agents trading in them. We discuss
the possibilities for automating markets, presenting a broad conceptual framework
covering resource allocation as well as enabling marketplace services such as search
and transaction execution. One of the most intriguing opportunities is provided by markets
implementing computationally sophisticated negotiation mechanisms, for example
combinatorial auctions. An important theme that emerges from the literature is the centrality
of design decisions about matching the domain of goods over which a mechanism
operates to the domain over which agents have preferences. When the match is imperfect
(as is almost inevitable), the market game induced by the mechanism is analytically
intractable, and the literature provides an incomplete characterization of rational bidding
policies. A review of the literature suggests that much of our existing knowledge
comes from computational simulations, including controlled studies of abstract market
designs (e.g., simultaneous ascending auctions), and research tournaments comparing
agent strategies in a variety of market scenarios. An empirical game-theoretic methodology
combines the advantages of simulation, agent-based modeling, and statistical and
game-theoretic analysis. |
| Appears in Collections: | Information, School of (SI)
Economics, Department of
Public Policy, Gerald R. Ford School of
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| ace_galleys.pdf | | 483Kb | Adobe PDF | View/Open |
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