It has been argued that cognitively constrained consumers respond suboptimally to complex decision problems, and that firms can exploit these limitations by introducing spurious complexity into tariff structures, weakening price competition. We model a countervailing force. Restricting one’s choices to the most easily comparable options is a psychologically well-attested heuristic. Consumers wh...

The Internet allows for A2A commerce at an unprecedented scale; anyone can do business with anyone. The new markets made possible by the Internet bring with them new challenges. This paper presents a system for buyers in electronic markets to avoid bad sellers by modeling the reputation of a seller. The model proposed by Cohen and Tran [6] is extended to provide a method for the exchange of ind...

We model the availability of product information in Internet-based markets, and explain the underlying causes for the phenomenon of less than perfect information available to consumers of products and services in these markets. We use Salop’s model of product differentiation and explore the conditions under which sellers make horizontal information available to buyers. We demonstrate that under...

The Internet revolution brought about significant changes in the availability of market information to consumers in many industries. This research examines technology-driven changes in market transparency, defined as the ability of market participants to observe information about products and prices. The objective is to develop a modeling and empirical basis for a theory of market transparency ...

In this paper, we examine the scope for international stock portfolio diversification, from the viewpoint of a United States representative investor, in regard to both the Asian and the European stock markets. Our findings indicate that despite correlation style evidence to the contrary, the European stock markets provide a superior long-term diversification opportunity relative to that provide...

The long-term relationship between financial markets and economic conditions is unclear. This paper aims to investigate how movements in the financial markets interact with the broader economy in the long term. Dynamic factor models are implemented to capture unobserved factors—common factor and sector factors. The common factor represents the co-movement between the real economy and the financ...

The aim of this paper is to analyze the relationships between common shocks affecting the real economy and those underlying co-fluctuations in U.S. financial markets. In order to do this, we test for links between these common factors and also use the econometric theory of non-stationary panel data to estimate the relationships. The estimates prove the existence of significant relationships bet...

Peer-to-peer markets going mobile spur spontaneity in trading considerably. Spontaneity, however, imposes severe informational requirements on the market participants. Informational requirements are twofold: Firstly, participants have to agree on a common vocabulary for that spontaneous market. Secondly, they need precise information about how the trading process is organized. Due to the lack o...

The Trading Agent Competition (TAC) is an open-invitation forum designed to encourage research into electronic markets and trading agents. In this paper we present the Socrates trading agent and the strategies that were developed for and used in the TAC Supply Chain Management game as part of the 2004 competition. The resulting behaviour and performance in the TAC competition as well as in a se...