Symmetric Equilibria in Double Auctions with Markdown Buyers and Markup Sellers [chapter]

Roberto Cervone, Stefano Galavotti, Marco LiCalzi
2009 Lecture notes in economics and mathematical systems  
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
more » ... egies for the sellers and show how it explains away the paradox of buyers' advantage in three different double-sided market protocols.
doi:10.1007/978-3-642-02956-1_7 fatcat:3p226uxx3ng5jjihehkmoussze