DOUBLE AUCTION TOURNAMENT
Computer Strategy Challenge
Rewards: $10,000


THE CHALLENGE

Entries in the form of computer programs are invited for a 
Double Auction Tournament  to be conducted at the Santa Fe 
Institute in March 1990.  The Double Auction  game is based 
on the operation of the New York Stock Exchange and the  
Chicago Board of Trade, and is of current interest to 
economists  and game theorists.  Developing an effective 
strategy for playing the game is apparently a simple 
challenge, but actually rather subtle.


THE GAME

Each player in a game is either a buyer or a seller of tokens.  
A seller tries to sell his or her tokens for as much as possible
above token cost.  A buyer tries to purchase tokens as 
cheaply as possible below their redemption value.  Each 
seller's token costs and each buyer's redemption values are
preassigned and differ from player to player.  They are 
private information not known to the other players.

Each auction proceeds in alternating bid/offer and buy/sell 
steps.  In a bid/offer step each seller may offer to sell a 
token, and each buyer may make a bid to buy a token, each 
at prices they themselves specify.  The lowest offer and 
highest bid determine the current bid and current offer 
prices.  Then in the following buy/sell step the holder of the
current bid may accept the current offer, or vice-versa, thus
completing a transaction.  If both sides accept, the tie is 
broken randomly.


THE TOURNAMENT

In the computer tournament each player will be represented 
by a separate computer program.  A central monitor 
program manages the game.  Reward money totaling 
$10,000 will be distributed among the participants in 
proportion to the total trading profit earned by their 
programs.  Many games will be played to determine 
which programs make the highest profit on average.  Entries 
will be limited to 100 and a small entrance fee will be 
charged.  The purpose of the tournament is to gather 
scientific data to improve our understanding of market 
trading strategies, which may offer new insights into the 
behavior of real world markets.

Each player's program may be written in C, Fortran or Pascal. 
Skeleton programs are provided in these languages so that
participants only need to develop the routines that make the
strategic decisions, such as how high to bid or when to accept 
an offer.  


THE SANTA FE TOKEN EXCHANGE

Participants who have access to the worldwide Internet 
computer network will be able to play each other and local 
strategies in practice games by connecting to the Santa Fe 
Token Exchange.  The Exchange is a monitor running 
regularly at the Santa Fe Institute until just before the actual
tournament.


MORE INFORMATION

For further details about the tournament please include an 
electronic mail address, if available, and write to:

Double Auction Tournament
Santa Fe Institute
1120 Canyon Road
Santa Fe, NM 87501

or send electronic mail to dat@sfi.santafe.edu.


This tournament is sponsored by the Economics Program of 
the Santa Fe Institute.  Reward money provided in part by 
IBM.

Developed by Richard Palmer, John Rust and John Miller.

Sponsored by the Santa Fe Institute.

