A Game-Theoretical Analysis of Charging Strategies for Competing Double Auction Marketplaces

Abstract The double auction marketplaces usually charge fees to traders to make profits, but little work has been done on analyzing how marketplaces charge appropriate fees to make profits in multiple marketplaces competing environment. In this paper, we investigate this problem by using game theory. Specifically, we consider four typical types of fees, and use Fictitious Play algorithm to analyze the Nash equilibrium market selection and bidding strategy of traders in competing environment when different types of fees are charged. Building on this, we draw insights about how the marketplaces charge strategies in equilibrium when sellers and buyers have made the choice of the marketplace and bid in Nash equilibrium. Furthermore, we investigate which type of fees is more competitive in terms of maximizing profits while keeping traders staying in the marketplaces. Our experimental results provide useful insights on setting charging strategies for competing double auction marketplaces.

Authors

• Bing Shi 0002
• Xiao Li

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