Efficiency of Large Double Auctions

Cripps, Martin; Swinkels, Jeroen M.

doi:10.1111/j.1468-0262.2006.00649.x

Cited by 117 publications

(82 citation statements)

References 23 publications

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“…For pure exchange economies, Roberts and Postlewaite (1976) show that agents have diminishing incentives to misrepresent demand functions in the competitive mechanism as the market becomes large. Similarly, in the context of double auctions, Gresik and Satterthwaite (1989), Rustichini, Satterthwaite, and Williams (1994), and Cripps and Swinkels (2006) show that equilibrium behavior converges to truth-telling as the number of traders grows. In the two-sided matching setting, Peranson (1999), Immorlica andMahdian (2005) and Kojima and Pathak (2009) show that the deferred acceptance algorithm proposed by Gale and Shapley (1962) is difficult to manipulate profitably when the number of participants become large.…”

Section: Introductionmentioning

confidence: 99%

Incentives in the probabilistic serial mechanism

Kojima

Manea²

2010

Journal of Economic Theory

111

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Abstract. The probabilistic serial mechanism (Bogomolnaia and Moulin 2001) is ordinally efficient but not strategy-proof. We study incentives in the probabilistic serial mechanism for large allocation problems. We establish that, for a fixed set of object types and an agent with a given expected utility function, if there are sufficiently many copies of each object type, then reporting ordinal preferences truthfully is a weakly dominant strategy for the agent (regardless of the number of other agents and their preferences).The non-manipulability and the ordinal efficiency of the probabilistic serial mechanism support its implementation instead of random serial dictatorship in large assignment problems. JEL Classification Numbers: C70, D61, D63.Keywords: random assignment, probabilistic serial mechanism, ordinal efficiency, exact strategy-proofness in large markets, random serial dictatorship.

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Section: Introductionmentioning

confidence: 99%

Incentives in the probabilistic serial mechanism

Kojima

Manea²

2010

Journal of Economic Theory

111

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“…The result is that in a large market with supply function competition there is no efficiency loss (in the limit) and the order of magnitude of the deadweight loss is 2 1/ n where n is the number of firms (and the size of the market as well). This is also the rate of convergence to efficiency obtained in a double auction context by Cripps and Swinkels (2006). The welfare analysis in the supply function model contrasts thus with the one in models where there is no endogenous public signal such as the Cournot market in Vives (1988), the beauty contest in Morris and Shin (2002), or the general linear-quadratic set up of Angeletos and Pavan (2007).…”

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confidence: 85%

Strategic Supply Function Competition With Private Information

2011

Econometrica

270

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. It is found that with supply function competition, and in contrast to Bayesian Cournot competition, competitiveness is affected by the parameters of the information structure: supply functions are steeper with more noise in the private signals or more correlation among the costs parameters. In fact, for large values of noise or correlation supply functions are downward sloping, margins are larger than the Cournot ones, and as we approach the common value case they tend to the collusive level. Furthermore, competition in supply functions aggregates the dispersed information of firms (the equilibrium is privately revealing) while Cournot competition does not. The implication is that with the former the only source of deadweight loss is market power while with the latter we have to add private information. As the market grows large the equilibrium becomes competitive and we obtain an approximation to how many competitors are needed to have a certain degree of competitiveness. Terms of use: Documents inJEL Code: L13, D44, D82, L94.

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“…The market matches the asks and bids, just as in the stock market, and allocates resources accordingly. If this market is relatively competitive, then it will also result in efficient allocation of resources, see [18], [19]. Organizations will base their decision on how much infrastructure to self-procure and how much to get from the market based on the equilibrium market price and on the statistics of their demand for computation.…”

Section: Economic Issuesmentioning

confidence: 99%

Economic issues in shared infrastructures

Courcoubetis

Weber

2009

Proceedings of the 1st ACM Workshop on Virtualized Infrastructure Systems and Architectures

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We define some interesting incentive issues that arise in the management of virtual infrastructures. We demonstrate that participants' decisions about the quantities of infrastructure that they will choose to contribute to a virtual organization can be greatly affected by the resource sharing policy that they know will be deployed when the system operates. Unless this policy is well-designed, agents will attempt to free-ride by contributing less resource than is desirable. Our novel contribution is the formulation of models for designing optimal management policies, an analysis that demonstrates the inadequacy of simple sharing policies, and proposals for some better ones. We find an optimal policy in a limit as the number of participants becomes large. We learn that simple policies may be far from optimal and that efficient policy design is not trivial; policy parameters play important role in optimizing the efficiency of virtual facility formation.

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Efficiency of Large Double Auctions

Cited by 117 publications

References 23 publications

Incentives in the probabilistic serial mechanism

Incentives in the probabilistic serial mechanism

Strategic Supply Function Competition With Private Information

Economic issues in shared infrastructures

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