ABSTRACT
This chapter reports the results of a series of tournaments held at the Santa Fe Institute beginning in March, 1990 in which computer programs played the roles of buyers and sellers in a synchronized double auction (DA) market. It shows that despite the decentralized nature of the trading process and traders' incomplete information about supply and demand, transaction-price trajectories for a heterogeneous collection of computer programs typically converged to the competitive equilibrium, resulting in allocations that were nearly 100% efficient. The discretization of time was adopted to simplify the programming of trading strategies and improve the synchronization of communications between players and the monitor in a multiprocessing or network-computing environment where delays may vary from player to player and moment to moment. The chapter shows that a very simple trading strategy is a highly effective and robust performer in synchronized double auction markets.
