Multi-Attribute Exchange Market: Search for Optimal Matches

1. Multi-Attribute Exchange Market:Search for Optimal Matches Eugene Fink Jianli Gong John Hershberger

2. Combine the speed of the stock exchange with the flexibility of eBay + Motivation • Build an automated exchange for trading goods and services

3. - Complex goods - Asymmetry between buyers and sellers - Illiquid Standardized exchanges Previous work • Combinatorial auctions • Standardized exchanges - Simple goods - Symmetry between buyers and sellers - Liquid

4. Research goals Build an automated exchangefor non-standardized goods. Support fast-paced trading for markets with millions of orders Include optimization techniques to maximize traders’ satisfaction

5. Outline Multi-attribute orders Best-price matches Quality functions Experimental results

6. Market A market is a set of items that can be traded, defined by a list of attributes. Example A used-car market is a set of all conceivable vehicles, defined by model,year, and mileage.

7. Example Sell order Model: Mustang Year: 2004 Mileage: 1K Price:  $30,000 Orders A trader specifies a buy or sell order by attribute values and a price limit. A value specification may include lists of values and numeric ranges. Buy order Model: Mustang or Corvette Year: 2002..2004 Mileage: 0..10K Price:  $32,000

8. Trade Mustang, made in 2004, $31,000 Matching Sell order Mustang, made in 2004, $30,000 Price Year $32,000 Buy order Mustang, made after 2001, $32,000 04 $30,000 03 02 01 Model Camaro Mustang Corvette

9. Outline Multi-attribute orders Best-price matches Quality functions Experimental results

10. Main structures Tree of fully specified orders Unordered list of the other orders

11. Model Mustang Camry Corvette Year Year Year 1996 1999 2000 1988 Mileage Mileage Mileage Mileage 50K 10K 180K 20K 1996 Mustang, 50K miles, $7,000 1999 Camry, 10K miles, $18,000 2000 Camry, 180K miles, $5,000 1988 Corvette, 20K miles, $4,000 Best price Depth-first search Buy Order:Any car madeafter 1990

12. Depth-first search Drawback: If there are many matching leaves,the search takes a long time. Solution: Apply best-first search : • Store the best price for each subtree Use these prices to guide the search

13. Model Mustang Camry Corvette $7,000 $4,000 $5,000 Year Year Year 1996 1999 2000 1988 $18,000 $7,000 $5,000 Mileage Mileage Mileage Mileage $4,000 50K 10K 180K 20K 1996 Mustang, 50K miles, $7,000 1999 Camry, 10K miles, $18,000 2000 Camry, 180K miles, $5,000 1988 Corvette, 20K miles, $4,000 Best prices for subtrees $4,000

14. Model $4,000 Mustang Camry Corvette $7,000 $4,000 $5,000 Year Year Year 1996 1999 2000 1988 $18,000 $7,000 $5,000 Mileage Mileage Mileage Mileage $4,000 50K 10K 180K 20K 1996 Mustang, 50K miles, $7,000 1999 Camry, 10K miles, $18,000 2000 Camry, 180K miles, $5,000 2000 Camry, 180K miles, $5,000 1988 Corvette, 20K miles, $4,000 Best price Search for the best price Buy Order:Any car madeafter 1990

15. Outline Multi-attribute orders Best-price matches Quality functions Experimental results

16. Example: Quality of a car purchase +4 for each year after 1970 –5 for each 10K miles –6 for each $1,000 Quality functions A trader can specify a quality function that ranks the acceptable transactions. The transaction quality may depend on an item and its price.

17. Quality functions A trader can specify a quality function that ranks the acceptable transactions. The transaction quality may depend on an item and its price. The system searches for the matches with the highest quality.

18. Model Mustang Camry Corvette Year Year Year 1996 1999 2000 1988 Mileage Mileage Mileage Mileage 50K 10K 180K 20K 1996 Mustang, 50K miles, $7,000 1999 Camry, 10K miles, $18,000 2000 Camry, 180K miles, $5,000 1988 Corvette, 20K miles, $4,000 Quality: 37 Highest quality: 37 Quality: 3 Quality: 0 Depth-first search Buy Order:Any car madeafter 1990

19. Monotonic attributes The quality monotonically changes with the price Usually, it is also monotonic on several other attributes Example: Car quality • Increases with the year • Decreases with the mileage

20. Best-first search For every subtree, store the best value of each monotonic attribute Use these values to estimate the quality of the best match in every subtree

21. Model Mustang Camry Corvette 2000, 10K, $5,000 1996, 50K, $7,000 1988, 20K, $4,000 Year Year Year 1996 1999 2000 1988 50K, $7,000 10K, $18,000 20K, $4,000 180K, $5,000 Mileage Mileage Mileage Mileage 50K 10K 180K 20K 1996 Mustang, 50K miles, $7,000 1999 Camry, 10K miles, $18,000 2000 Camry, 180K miles, $5,000 1988 Corvette, 20K miles, $4,000 Best values for subtrees 2000, 10K, $4,000

22. 2000, 10K, $4,000 91 Model Mustang Camry Corvette 2000, 10K, $5,000 1996, 50K, $7,000 37 38 1988, 20K, $4,000 85 Year Year Year 1996 1999 2000 1988 10K, $18,000 20K, $4,000 180K, $5,000 37 Mileage Mileage Mileage Mileage 50K 10K 180K 20K 1996 Mustang, 50K miles, $7,000 1999 Camry, 10K miles, $18,000 2000 Camry, 180K miles, $5,000 1988 Corvette, 20K miles, $4,000 Highest quality: 37 Search for the best match Buy Order:Any car madeafter 1990 50K, $7,000

23. Outline Multi-attribute orders Search for matches Quality functions Experimental results

24. Performance Experiments using aPentium computer : • 2 GHz CPU • 1 Gbyte memory • 166 MHz bus

25. : 200 to 20,000 orders per second 105 104 orders per second 103 102 101 103 104 102 105 number of orders Cars and bonds Car market with eight attributes Bond market with two attributes : 500 to 50,000 orders per second bonds cars

26. 105 104 103 orders per second 102 101 30 3 10 100 1 number of attributes Artificial markets Synthetic market data: • 1 to 100 attributes • 300,000 orders Best-First Depth-First

27. Summary General model for trading of multi-attribute goods Fast identification of matches between buy and sell orders