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Uniform Double Auction

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Objective

You will participate in a market as a buyer or seller. Your goal is to maximize your profit.

  • You will interact with other participants repeatedly for {{numRounds}} rounds. Your role is randomly assigned. You keep your role for the first five rounds, then switch for the next five rounds. Try to improve your decisions based on previous outcomes. At the end, we will add all your profits and show a ranking of performance in the experiment.
  • Buyers receive a private value (maximum willingness to pay).
  • Sellers receive a private cost (minimum acceptable price).

Step 1: Submit Your Price
  • Buyers submit one bid price: how much they are willing to pay.
  • Sellers submit one ask price: the price they want to be paid.
Step 2: Market Clearing

After all submissions:

  1. Bids are ranked High-to-Low.
  2. Asks are ranked Low-to-High.
  3. The highest buyer is matched with the lowest seller.
  4. The second-highest buyer is matched with the second-lowest seller.
  5. A match is successful only if the buyer's bid is ≥ the seller's ask.
  6. This process of matching continues until the buyer's bid is lower than the seller's ask.
Strategy Tips
  • Buyers: Do not bid above your value; you will lose money.
  • Sellers: Do not ask below your cost; you will lose money.
Step 3: Market Price (P*)

How much will you pay as a buyer? How much will you receive as a seller? A single market price will be calculated on the basis of all submitted bids and asks. All trades occur at the same price.

  • Look at the last successful match.
  • Take the buyer's bid and the seller's ask in that match.
  • The market price is the average of these two numbers.

Example of a Market Price:

Bids: 100, 90, 80, 70
Asks: 20, 40, 60, 85

  • 100 ≥ 20 (match)
  • 90 ≥ 40 (match)
  • 80 ≥ 60 (match)
  • 70 < 85 (stop)

The number of trades is 3. The last matched bid: 80 Last matched ask: 60. The market price is P* = (80 + 60) / 2 = 70.

Step 4: Profit

If you are selected among the matched traders, you will trade at the market price.

  • Buyer profit: Value − Market Price

  • Seller profit: Market Price - Cost

If you do not trade, your profit is zero.

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