Efficient Allocations in Double Auction Markets

This paper proposes a simple descriptive model of discrete-time double auction markets for divisible assets. As in the classical models of exchange economies, we consider a finite set of agents described by their initial endowments and preferences. Instead of the classical Walrasian-type market models, however, we assume that all trades take place in a centralized double auction where the agents communicate through sealed limit orders for buying and selling. We find that, under nonstrategic bidding, double auction clears with zero trades precisely when the agents’ current holdings are on the Pareto frontier. More interestingly, the double auctions implement Adam Smith’s “invisible hand” in the sense that, when starting from disequilibrium, repeated double auctions lead to a sequence of allocations that converges to individually rational Pareto allocations.

How at the Institute of Information Systems and Marketing One Thing Leads to Another and Eventually Results in a Low-Trade Theorem

This chapter portrays how research topics arise and develop in the creative environment of the research group Information & Market Engineering of the Institute of Information Systems and Marketing at the Karlsruhe Institute of Technology. It is somewhat long-winded in the beginning but identifies then a clear goal. In the following, it strays around several lines of research; touches on the question of why something like forecasting markets, the actual research topic, works at all – without answering it; and finally reaches a result that has little to do with the original objective. Along the way, the chapter provides some insights into the economic theory of double auctions.

Rights and rents in local commons

Motivated by management problems in national fisheries, we examine management of renewable resources in local or regional commons. This paper suggests that property rights, or lack thereof, be replaced by well-defined user rights. It shows that the use of commons can be conditioned, paid for, or valued, via market mechanisms. To that end, direct deals and double auctions are expedient. Either institution can distribute, restore and secure resource rent. Either can also focalize debates as to which assignments, regulations or taxation of rights might be fair or legitimate.

A cloud priority-based dynamic online double auction mechanism (PB-DODAM)

Double auctions are considered to be effective price-scheduling mechanisms to resolve cloud resource allocation and service pricing problems. Most of the classical double auction models use price-based mechanisms in which determination of the winner is based on the prices offered by the agents in the market. In cloud ecosystems, the services offered by cloud service providers are inherently time-constrained and if they are not sold, the allocated resources for the unsold services are wasted. Furthermore, cloud service users have time constraints to complete their tasks, otherwise, they would not need to request these services. These features, perishability and time-criticality, have not received much attention in most classical double auction models. In this paper, we propose a cloud priority-based dynamic online double auction mechanism (PB-DODAM), which is aligned with the dynamic nature of cloud supply and demand and the agents’ time constraints. In PB-DODAM, a heuristic algorithm which prioritizes the agents’ asks and bids based on their overall condition and time constraints for resource allocation and price-scheduling mechanisms is proposed. The proposed mechanism drastically increases resource allocation and traders’ profits in both low-risk and high-risk market conditions by raising the matching rate. Moreover, the proposed mechanism calculates the precise defer time to wait for any urgent or high-priority request without sacrificing the achieved performance in resource allocation and traders’ profits. Based on experimental results in different scenarios, the proposed mechanism outperforms the classical price-based online double auctions in terms of resource allocation efficiency and traders’ profits while fulfilling the double auction’s truthfulness pillar.