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Market Design and the Evolution of Markets (MaDEM)
Start date: Sep 1, 2008, End date: Feb 28, 2014 PROJECT  FINISHED 

The broad aim of this research program is to understand how markets get created, how they evolve, and how specific market organizations affect economic outcomes. It combines theoretical and empirical analyses of specific markets and includes the development of new methods to map theory to data and vice versa. Each market provides a concrete ground to explore the broad questions the project addresses and motivates a distinct set of questions. The first class of markets the research will consider are financial markets. These can be viewed as the archetype of large markets where prices play the main role in the allocation. The focus there will on market creation, market evolution and the process of competition. The second class of markets the research will consider are allocation mechanisms where prices do not play a role in the allocation, making efficiency hard to obtain. The focus there will be on strategic manipulation of preferences by participants, their consequences on outcomes and possible remedies. Together, these markets will contribute to our understanding of how market rules affect outcomes and performance, to what extent laissez-faire evolution fosters efficient market organizations, and when and how public intervention can help generate better market organizations.
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