The FishMarket Tournaments

First Edition

Barcelona, 9th June 1997

Bidding Protocol Description

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Downward Bidding Dynamics Descriptor

It is worth stating explicitly the actual bidding protocol, and noting how a slight parametrization of it may provide for rather general trading conditions:

The Fishmarket uses a specific downward-bidding protocol (DBP). In FM96.5, our current implementation, it was implemented as follows:

[Step 1]
The auctioneer chooses a good from a lot of goods that is sorted according to the order in which sellers deliver goods to the sellers' admitter.
[Step 2]
With a chosen good, the auctioneer opens a bidding round by quoting offers downward from the good's starting price, previously fixed by the sellers' admitter, as long as these quotations are above a retention price previously defined by the seller.
[Step 3]
Several situations might arise during this round:
Multiple bids:
Several buyers submit their bids at the current price. In this case, a collision comes about, the good is not sold to any buyer, and the auctioneer restarts the round at a higher price. Nevertheless, the auctioneer keeps track of the number of successive collisions that take place, in order to avoid an infinite collision loop. This loop is broken by randomly selecting one buyer out of the set of colliding bidders if and when a maximum number of allowable successive collisions is reached.
One bid:
Only one buyer submits a bid at the current price. The good is sold to this buyer whenever his credit can support his bid. Otherwise, he is punished with a fine. If the bidder cannot pay this fine, he is expelled out of the auction room. Whenever there is an unsupported bid the round is restarted by the auctioneer at a higher price.
Zero bids:
No buyer submits a bid at the current price. If the retention price has not been reached yet, the auctioneer quotes a new price which is obtained by decreasing the current price according to the price step. If the retention price is reached, the auctioneer declares the good withdrawn (i.e.the good is returned to its owner) and closes the round.
[Step 4]
The first three steps repeat until there are no more goods left.

Notice that six parameters controling the dynamics of the bidding process are implicit in this protocol definition. We shall enumerate them now, and require that they become instantiated as part of a tournament definition. Hence the following:



Ps Price Step. Increment or decrement of price between two consecutive offers shouted out by the auctioneer
to Minimum time between offers. Delay between consecutive offers.
tr Minimum time between rounds. Delay between the end of a round and the beginning of the next round.
Cmax Maximum number of successive collisions. The auctioneer randomly chooses one buyer out of the set of bidders when the maximum number of successive collisions is reached.
Sf Sanction factor. This coefficient is utilized by the buyers' manager to calculate the amount of the sanction to be imposed on buyers submitting unsupported bids.
Pi Price increment. This value determines how the new offer is calculated by the auctioneer from the current offer when either a collision, a fine or an expulsion occur.

This set of parameters is what we call the Downward bidding protocol (DBP) dynamics descriptor. Our first tournament will instantiate the DBP dynamics descriptor as follows.



Ps 10ptas
to 500ms
tr 2000ms
Cmax 3
Sf 25%
Pi 25%
Updated: May, 25th 1997

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