auction market

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Auction Market

A security exchange in which buyers make bids and sellers make offers in order to make transactions in a security. On an auction market, the current price for a share in a security is the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. For example, if potential buyers for Security A enter bids of $50, $51, and $52, and potential sellers enter offers of $52, $53, and $54, the current share price is $52. Only the bid/offer for $52 is executed; others must make better bids and offers in order to conduct transactions. The New York Stock Exchange is a major auction market.

auction market

A market in which buyers and sellers gather to transact business through announced bid and ask prices. The organized securities exchanges are examples of auction markets. Compare dealer market, open outcry.

Auction market.

Auction market trading, sometimes known as open outcry, is the way the major exchanges, such as the New York Stock Exchange (NYSE) and the Chicago Mercantile Exchange (CME), have traditionally handled buying and selling.

Brokers acting for buyers compete against each other on the exchange floor, as brokers acting for sellers do, to get the best price. While the trading can be quite intense, it is orderly because the participants adhere to exchange rules.

References in periodicals archive ?
Copeland and Friedman [1987; 1991] provide useful background information on laboratory procedures and computerized double auction markets.
Friedman [1984] offers a partial analysis of simple double auction markets as games of complete information, and concludes that in Nash equilibrium satisfying a renegotiation-proofness condition, at worst only a single (and least valuable) trade will remain unrealized.
To analyze the situation faced by traders as a game of incomplete information is a daunting task, particularly in the case of double auction markets (and clearinghouse markets with book [is greater than] 0) since continuous-time strategies then must be chosen.
In double auction markets, the difference between the best (lowest) ask and the best (highest) bid is recalculated every time either changes, and spread is the time-weighted average over the time when both bids and asks are present during a subperiod.
The rest of Table V reports similar results for double auction markets.
Early studies of double auction markets for perishables (e.
Such considerations, combined with early evidence from experimental posted offer markets, led Smith [1982,177] to posit that the Hayek Hypothesis generally performs better in double auction markets than in posted offer markets.
Examination of the four double auction experiments in Figure 2 reveals that our double auction markets generated price deviations of approximately the same magnitude as HLV.
This result parallels HLV's finding for double auction markets in the SMP design.
Similarly, little evidence of the exercise of market power through strategic withholding is evident in three of the four double auction markets (DA2, DAX1 and DA1).
These results parallel HLV's findings in double auction markets.
Posted offer and double auction markets do not perform identically in this design, however.