Samstag, 24. Dezember 2011

On (implementation issues of) Virtual Stock Markets

After my recent post on prediction markets, I decided to implement a small auctioneer for virtual stock markets with two parties making deals, i.e. not a market maker mechanism but a (traditional) double auction. But, despite the simple idea behind a bid/ask driven market, the implementation has to take into account quite a number of details: can you buy/sell one unit or multiple units of a good at a time? Does trading occur at discrete events or is it continuous? Is pricing uniform (all trade at the same equilibirum price) or discriminatory (individual matching of bid/ask orders)? And, if one the two options is chosen, how is the price determined?

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