Evolution of markets a simulation with centralized, posted offer and decentralized formats Journal of Evolutionary Economics, Forthcoming, 2016

Abstract

We apply standard evolutionary dynamics to study trader participation in threecompeting market formats —call market (CM), posted offer (PO) and decentralizedmarket (DM). In our framework, heterogeneous buyers and sellers seek to transact ahomogeneous good, which can be done by allocating their time among three differentmarket formats. Our results show that (i) the final participation of traders in the CMis much higher, (ii) the PO can coexist with the CM, (iii) the DM unravels when com-peting against CM and (iv) the DM can coexist with the PO, depending on the initialparticipation conditions. Thus, we demonstrate that agent-based simulations are suf-ficient to achieve some of the previously known theoretical results, while examining abroad menu of formats, including those used most frequently in 21st century markets

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In Journal of Evolutionary Economics
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