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The impact of brokers on the dynamics of a Walrasian auction December
| Content Provider | Semantic Scholar |
|---|---|
| Copyright Year | 2012 |
| Abstract | We study the impact of the presence of brokers in an experimental exchange market using the Walrasian tâtonnement mechanism. We find that brokers have a tendency to act as liquidity providers, submitting orders likely to equilibrate supply and demand given the orders they receive from other participants. As a result, average excess demand and prices are less volatile, and markets reach equilibrium more often, when brokers are present compared to the case without brokers. Brokers’ liquidity-providing behavior is more pronounced when their compensation includes, in addition to their trading profit, a component related to trading volume when equilibrium is reached. Under-revelation, a strategic behavior inherent to Walrasian auctions, is about the same with and without brokers when markets clear, yielding similar levels of market efficiency, measured as total surplus divided by potential surplus. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2013-Reading/papers/EFMA2013_0058.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
