A study on how market policy affects human market selection decision

Open Access
- Author:
- Sohn, Jung-woo
- Graduate Program:
- Information Sciences and Technology
- Degree:
- Doctor of Philosophy
- Document Type:
- Dissertation
- Date of Defense:
- July 18, 2013
- Committee Members:
- John Yen, Committee Chair/Co-Chair
Jens Grossklags, Committee Member
Dinghao Wu, Committee Member
Anthony Mark Kwasnica, Committee Member - Keywords:
- multiple markets
game theory
trader market selection
economic experiment
market design
agent based model
bounded rational - Abstract:
- We live in the world of choices. Nowadays, the globalization and progress in information technology created the availability of multiple markets. This study aims to deepen the understanding of human trader decision-making when there is more than one market exchange, with traders having the choice of selecting from the multiple markets. In this setting, markets have different market policies from one to another and they will subsequently affect the market selection choices of the traders. The research question spanning throughout this dissertation is: ``What will be the impact from market policies on human market selection behaviors when there is more than one market exchange?'' In particular, this study focuses on understanding the impact of fee-charging policies on trader market selection behaviors. In this dissertation, the approach tackling this question begins from the real-world observations and computer simulation results, moves on to building trader market selection models based on microeconomic theories, then to testing the models with human trader experiments, and stops at the model refinements from the experiment and the simulation results. Due to the complexity inherent in market systems and human traders, understanding human market selection decisions spans over the interdisciplinary context of microeconomics, design of online market exchanges, economic experiments with human traders, and understanding complex systems. Based on the findings from computer simulations, a simple game-theoretic model on trader market selection behavior is constructed when markets have different fee-charging policies on the traders. The model is then tested under the experiment settings with real human trader subjects. Using the experimental results, the model is then refined and extended to include a more complex type of fee-charging policy, where buyers and sellers face different amount of transaction fee. The rational, economic market selection models based on game theory are then further modified as to include the possible bounded-rationality in human market selection decisions. With the understanding of human traders' market selection and its relationship to the market policies, the research outcomes are expected to provide important implications for market business entrepreneurs, market policy makers in governments, and the designers of online marketplaces.