| An interest in understanding the importance of market institutions motivates the research conducted in this thesis. More specifically, we pursue the conjecture that the set of rules that constitute a market institution influence the outcome of trade. To investigate this conjecture we take a road less often traveled. We try to shift attention away from the agents populating the market and instead focus on the set of rules that constitute a market. We show that this set of rules can be interpreted as an algorithm. By focusing on the algorithmic properties of a market institution we hope to gain more insights into the extent to which markets facilitate trade.; We compare and contrast two pairs of market institutions where the mathematical analysis is based on computational theory. For both comparisons, we perform a so-called worst-case analysis. This means that we analyze whether or not different market institutions place different bounds on what can happen in the worst-case, where the worst-case depends on the employed measure of market performance. The important advantage of this approach is that the obtained conclusions do not depend on the explicit formulation of the agents populating the market.; One possible drawback of this approach is that we do not know how likely these worst-case scenarios are. However, we suggest, that this may not be a serious drawback once we accept the view that an important quality of institutions in general, and market institutions in particular, could be that they limit the occurrence of certain extreme and less desirable events. A worst-case analysis allows us to zero in on this possible important aspect of market institutions because it enables us to understand the extent to which the market institution itself limits the occurrence of certain less desirable events. |
