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Maximizing Matching in Double-sided Auctions

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  • Jinzhong Niu
  • Simon Parsons

Abstract

In this paper, we introduce a novel, non-recursive, maximal matching algorithm for double auctions, which aims to maximize the amount of commodities to be traded. It differs from the usual equilibrium matching, which clears a market at the equilibrium price. We compare the two algorithms through experimental analyses, showing that the maximal matching algorithm is favored in scenarios where trading volume is a priority and that it may possibly improve allocative efficiency over equilibrium matching as well. A parameterized algorithm that incorporates both maximal matching and equilibrium matching as special cases is also presented to allow flexible control on how much to trade in a double auction.

Suggested Citation

  • Jinzhong Niu & Simon Parsons, 2013. "Maximizing Matching in Double-sided Auctions," Papers 1304.3135, arXiv.org.
    • Handle: RePEc:arx:papers:1304.3135
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    File URL: http://arxiv.org/pdf/1304.3135
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    References listed on IDEAS

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    1. Zhan, Wenjie & Friedman, Daniel, 2007. "Markups in double auction markets," Journal of Economic Dynamics and Control, Elsevier, vol. 31(9), pages 2984-3005, September.
    2. Gjerstad, Steven & Dickhaut, John, 1998. "Price Formation in Double Auctions," Games and Economic Behavior, Elsevier, vol. 22(1), pages 1-29, January.
    3. Gode, Dhananjay K & Sunder, Shyam, 1993. "Allocative Efficiency of Markets with Zero-Intelligence Traders: Market as a Partial Substitute for Individual Rationality," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 119-137, February.
    4. Rich, Changhua Sun & Friedman, Daniel, 1998. "The Matching Market Institution: A Laboratory Investigation," American Economic Review, American Economic Association, vol. 88(5), pages 1311-1322, December.
    5. Cason, Timothy N., 1992. "Call market efficiency with simple adaptive learning," Economics Letters, Elsevier, vol. 40(1), pages 27-32, September.
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    Cited by:

    1. Suneel Sarswat & Abhishek Kr Singh, 2020. "Formally Verified Trades in Financial Markets," Papers 2007.10805, arXiv.org.
    2. Suneel Sarswat & Abhishek Kr Singh, 2019. "Formal verification of trading in financial markets," Papers 1907.07885, arXiv.org.
    3. Mohit Garg & Suneel Sarswat, 2022. "The Design and Regulation of Exchanges: A Formal Approach," Papers 2210.05447, arXiv.org.
    4. Abdullah M. Alabdullatif & Enrico H. Gerding & Alvaro Perez-Diaz, 2020. "Market Design and Trading Strategies for Community Energy Markets with Storage and Renewable Supply," Energies, MDPI, vol. 13(4), pages 1-31, February.
    5. Miyashita, Kazuo, 2015. "Developing an Online Market Mechanism for Trading Perishable Agricultural Commodities," 2015 Conference, August 9-14, 2015, Milan, Italy 212470, International Association of Agricultural Economists.

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