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Computational Economics

, Volume 32, Issue 3, pp 295–315 | Cite as

The Strategic Exploitation of Limited Information and Opportunity in Networked Markets

  • Dan Ladley
  • Seth Bullock
Article

Abstract

This paper studies the effect of constraining interactions within a market. A model is analysed in which boundedly rational agents trade with and gather information from their neighbours within a trade network. It is demonstrated that a trader’s ability to profit and to identify the equilibrium price is positively correlated with its degree of connectivity within the market. Where traders differ in their number of potential trading partners, well-connected traders are found to benefit from aggressive trading behaviour. Where information propagation is constrained by the topology of the trade network, connectedness affects the nature of the strategies employed.

Keywords

Trade network Agent-based computational economics Information Strategy 

JEL Classifications

D85 D83 D40 

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Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  1. 1.Leeds University Business SchoolUniversity of LeedsLeedsUK
  2. 2.School of Electronics and Computer ScienceUniversity of SouthamptonSouthamptonUK

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