The effects of market structure on a heterogeneous evolving population of traders

The majority of market theory is only concerned with centralised markets. In this paper, we consider a market that is distributed over a network, allowing us to characterise spatially (or temporally) separated markets. The effect of this modification on the behaviour of a market with a heterogeneous population of traders, under selection through a genetic algorithm, is examined. It is demonstrated that better-connected traders are able to make more profit than less connected traders and that this is due to a difference in the number of possible trading opportunities and not due to informational inequalities. A learning rule that had previously been demonstrated to profitably exploit network structure for a homogeneous population is shown to confer no advantage when selection is applied to a heterogeneous population of traders. It is also shown that better-connected traders adopt more aggressive market strategies in order to extract more surplus from the market.