Convergence of Double Auctions to Pareto Optimal Allocations in the Edgeworth Box
25 Pages Posted: 10 Jun 2004
There are 2 versions of this paper
Convergence of Double Auctions to Pareto Optimal Allocations in the Edgeworth Box
Convergence of Double Auctions to Pareto Optimal Allocations in the Edgeworth Box
Date Written: June 7, 2004
Abstract
Double auctions with profit-motivated human traders as well as "zero-intelligence" programmed traders have previously been shown to converge to Pareto optimal allocations in partial equilibrium settings. We show that these results remain robust in two-good general equilibrium settings and elucidate how market structure, not optimization by traders, guides efficient resource allocation.
Keywords: Pareto optimal allocations, Edgeworth Box, Double auction, Zero-intelligence traders
JEL Classification: C63, C68, D44, D51, D58, D61
Suggested Citation: Suggested Citation
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