Abstract
In technologically interdependent economic systems inefficiencies can easily arise from allocations contrived through independent bilateral negotiations. We can challenge this problem with the ‘smart market’: a coordination center applies optimization algorithms to private bids and offers submitted by decentralized agents to compute prices and allocations. This paper presents the laboratory development of a market institution for trading natural gas in a pipeline network. The institution has evolved over the past five years through thousands of hours of cash-motivated subject participation, professional analysis and continuous repro- gramming. It is not a trivial matter to engineer the most efficient market possible when subtle nuances in institutional rules can affect outcomes. Yet doing so in the laboratory is much less costly than a potentially failed field experiment.
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© 1994 Springer Science+Business Media Dordrecht
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Rassenti, S., Smith, V., McCabe, K. (1994). Designing a Real Time Computer Assisted Auction for Natural Gas Networks. In: Cooper, W.W., Whinston, A.B. (eds) New Directions in Computational Economics. Advances in Computational Economics, vol 4. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-0770-9_3
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DOI: https://doi.org/10.1007/978-94-011-0770-9_3
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