Knowledge@ASB - Online Trading: Creating Efficiency with Double-sided Markets

Over-excitement or disappointment from wannabe buyers on eBay is commonplace. But will all that change with the proliferation of double-sided markets that bring together buyers and sellers to fix prices and exchange goods more efficiently? Calculating risk on a double-sided market is complex, so much so that game theorists have not been able to understand how it's done, says Peter Bossaerts, a professor at the California Institute of Technology. However, people are surprisingly comfortable with this complexity -- and that's why human traders continue to outstrip machines.

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