SBBA: A strongly-budget-balanced double-auction mechanism

Erel Segal-Halevi, Avinatan Hassidim, Yonatan Aumann

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

20 Scopus citations


In a seminal paper, McAfee (1992) presented the first dominant strategy truthful mechanism for double auction. His mechanism attains nearly optimal gain-from-trade when the market is sufficiently large. However, his mechanism may leave money on the table, since the price paid by the buyers may be higher than the price paid to the sellers. This money is included in the gain-from-trade and in some cases it accounts for almost all the gain-from-trade, leaving almost no gain-from trade to the traders. We present SBBA: a variant of McAfee’s mechanism which is strongly budget-balanced. There is a single price, all money is exchanged between buyers and sellers and no money is left on the table. This means that all gain-from-trade is enjoyed by the traders. We generalize this variant to spatially-distributed markets with transit costs.

Original languageEnglish
Title of host publicationAlgorithmic Game Theory - 9th International Symposium, SAGT 2016, Proceedings
EditorsMartin Gairing, Rahul Savani
PublisherSpringer Verlag
Number of pages13
ISBN (Print)9783662533536
StatePublished - 2016
Event9th International Symposium on Algorithmic Game Theory, SAGT 2016 - Liverpool, United Kingdom
Duration: 19 Sep 201621 Sep 2016

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume9928 LNCS
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349


Conference9th International Symposium on Algorithmic Game Theory, SAGT 2016
Country/TerritoryUnited Kingdom

Bibliographical note

Publisher Copyright:
© Springer-Verlag Berlin Heidelberg 2016.


  • Budget balance
  • Double auction
  • Gain from trade
  • Mechanism design
  • Social welfare
  • Spatially distributed market


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