Symmetric Equilibria in Double Auctions with Markdown Buyers and Markup Sellers

Roberto Cervone (), Stefano Galavotti () and Marco LiCalzi
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Roberto Cervone: University of Venice

Chapter Chapter 7 in Artificial Economics, 2009, pp 81-92 from Springer

Abstract: Abstract 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, exhibits 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.

Keywords: Unique Equilibrium; Symmetric Equilibrium; Double Auction; Nonzero Probability; Bayesian Nash Equilibrium (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1007/978-3-642-02956-1_7

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