Published in

Institute for Operations Research and Management Sciences, Operations Research, 1(56), p. 102-120, 2008

DOI: 10.1287/opre.1070.0458

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Truthful Double Auction Mechanisms

Journal article published in 2 by Leon Yang Chu, Zuo-Jun Max Shen
This paper was not found in any repository, but could be made available legally by the author.
This paper was not found in any repository, but could be made available legally by the author.

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Abstract

Following the multistage design approach, we propose two asymptotically efficient truthful double auction mechanisms, the BC-LP mechanism and the MBC mechanism, for an exchange market with many buyers and sellers. In this market, each buyer wants to procure a bundle of commodities and each seller supplies one unit of a commodity. Furthermore, various transaction-related costs will be incurred when a buyer trades with a seller. We prove that under both mechanisms, truthful bidding is a dominant strategy for all buyers and sellers when the buyers' bundle information and the transaction cost information are common knowledge. The BC-LP mechanism can be implemented by just solving two linear programs, whereas the MBC mechanism has a higher complexity. The empirical study shows that the MBC mechanism achieves higher efficiency over the BC-LP mechanism and that both outperform the KSM-TR mechanism, the only known truthful mechanism for a more restrictive exchange market.