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Agent Competition Double-Auction Mechanism

Marshall School of Business, University of Southern California, Los Angeles, California 90089
Department of Industrial Engineering and Operations Research, University of California, Berkeley, California 94720
leonyzhu{at}marshall.usc.edu
shen{at}ieor.berkeley.edu

This paper proposes an agent competition double-auction mechanism to simplify decision making and promote transactions for the customer-to-customer marketplaces. Under the proposed double-auction mechanism, bidding one’s true valuation (private information) is the best strategy for each individual buyer and seller even when shipping costs and sales taxes are different across various possible transactions. The proposed mechanism also achieves budget balance and asymptotic efficiency. Furthermore, these results not only hold for an environment where buyers and sellers exchange identical commodities, but also can be extended to an environment with multiple substitutable commodities.

Key Words: mechanism design; double auction; strategyproof mechanism
History: Received: April 20, 2004;

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