Barbara Ikica: Feedback effects in the experimental double auction with private information
This Tuesday we have two lectures:
10-11 Kolja Knauer: Generating k-connected orientations
11-12 Barbara Ikica: Feedback effects in the experimental double auction with private information
Abstract. The Walrasian double auction is a classical
economic model that tries to address the question of whether price
negotiations lead to a competitive equilibrium, a market price at which
the supply equals the demand. In this model, potential buyers and
sellers submit their bids and asks with respect to their budgets and
production costs, respectively, to an auctioneer, who then matches them
at a price that clears the market.
Experiments by Vernon L. Smith that earned him the Nobel Memorial Prize in Economic Sciences famously uncovered the tendency for auction prices to approach the equilibria predicted by theory. Nevertheless, the experimental work carried out so far lacks systematic analysis of behavioural forces that drive the selection of bidding strategies.
This talk gives an overview of the theory underlying double auctions and presents some recent work, performed in collaboration with the Computational Social Science group at ETH Zürich, on understanding how the amount of feedback at an individual’s disposal, varying the rule with which the auctioneer determines the prices, and tweaking the market structure affect strategic behaviour.