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Published in:
Auction Basics Read chapter Read first chapter

2015 | OriginalPaper | Chapter

6. Double Auctions

Authors : Asunción Mochón, Yago Sáez

Published in: Understanding Auctions

Publisher: Springer International Publishing

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Abstract

In the auctions analyzed to this point, we have assumed that there is only one seller and many bidders, in which the seller acts as a monopolist (forward auction). However, the main characteristic of a double auction is that multiple buyers and sellers interact; it is a two-sided auction.

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previous chapter Sequential and Simultaneous Auctions
next chapter Introduction to Combinatorial Auctions
Footnotes
1
The periodic double auction is a sealed-bid auction in which potential buyers and sellers have one period of time to submit their bids or asks. Then the auctioneer determines the items to be exchanged and a new auction starts. The auctioneer establishes a new period in which buyers and sellers can submit bids for the next auction.
 
2
In a double auction, the bidders may also bid on or the sellers may offer multiple items, but to simplify the analysis, we will assume that each participant bids on and offers, at the most, one item.
 
3
Developed by the Santa Fe Institute [67].
 
4
The main characteristic of this CDA is the time discretization, in which the BA steps alternate with the BS steps. In auctions in which time is considered continuously, the fastest agents may have certain advantages. The speed of an agent may be affected by delays in the communication system or in the processors. However, with time discretization and with a sufficient time interval for each phase, it can be ensured that all of the participants have the same opportunities.
 
5
McCabe et al. [50] proposed a CDA with a uniform-price rule, the uniform-price CDA.
 
6
It may happen that the bid of the last round on the buyers’ side not to be equal to the offer of the last round on the sellers’ side. Hence, the clearing house will have to set a selling price which will not be higher than the last bid nor lower than the last offer.
 
Literature
31.
D. Friedman and J. Rust. The Double Auction Market: Institutions, Theories and Evidence, volume A Proceeding volumen in the Santa Fe Institute Studies in the Science of Complexity. Perseus Publishing, 1993.
41.
V. Krishna. Auction Theory. Elsevier, 2009.
49.
K.A. McCabe, S.J. Rassenti, and V. Smith. Designing auctions institutions: is double dutch the best? The Economic Journal, 102(410):9–23, 1992.CrossRef
50.
K.A. McCabe, S.J. Rassenti, and V.L. Smith. Designing a uniform-price double auction: An experimental evaluation. In D. Friedman and J. Rust, editors, The Double Auction Market: Institutions, Theories and Evidence, pages 307–332. Perseus Publishing, 1993.
67.
J. Rust, J. Miller, and R. Palmer. Behavior of trading automata in a computerized double auction market. In D. Friedman and J. Rust, editors, The Double Auction Market: Institutions, Theories and Evidence, pages 155–198. Perseus Publishing, 1992.
73.
M.A. Satterthwaite and S.R. Williams. The bayesian theory of the k-double auction. In D. Friedman and J. Rust, editors, The Double Auction Market: Institutions, Theories and Evidence, pages 99–123. Perseus Publishing, 1993.
Metadata
Title
Double Auctions
Authors
Asunción Mochón
Yago Sáez
Copyright Year
2015
Book
Understanding Auctions

Print ISBN: 978-3-319-08812-9

Electronic ISBN: 978-3-319-08813-6

Copyright Year: 2015

DOI
https://doi.org/10.1007/978-3-319-08813-6_6