Introduction: Theory and Application of Electronic Market Design

Abstract

Markets play a central role in the economy, facilitating the exchange of information, goods, services, and payments. Recent years have seen an enormous increase in the role of information technology in markets, in particular the emergence of electronic marketplaces. Different matching mechanisms are appropriate in different situations and there is not a single solution that caters for all the various negotiation situations. Therefore, economists, game theorists, and computer scientists have started to take a direct role by designing various kinds of negotiation mechanisms for computer products, travel, insurance, and utilities such as power and gas. What is so special about “electronic” market design is the fact that a designer has many more possibilities to design a negotiation mechanism than one would have for physical markets. The design of electronic markets involves a number of disciplines including game theory, mechanism design theory, simulation and laboratory experimentation. The focus of this special issue is to provide an overview of several new approaches in the field, and we are pleased to bring you an exciting selection of high standing papers. This article is intended to provide a brief introduction to this new and dynamic field.