The Walrasian Auctioneer

Swaptree isn’t the first to try online bartering — Peerflix, Bookins, and La La help people trade movies, books, and CDs, respectively, while SwapThing lets users combine goods, cash, and services.

But it is, significantly, the first site to pull off direct trades between more than two people: Thanks to a nifty algorithm designed by Boesel, Swaptree can engineer three- and even four-way trades among users who want different things.

…For instance, one person sends a book to a second person, who sends a CD to a third, who sends a DVD to a fourth, who then sends the first person a videogame. Of course, ferreting out possible trades among tens of thousands of items requires intense computing. "The first four-way trade took 20 minutes to complete," Boesel says. His team has since squeezed the time down to one-fifth of a second.

Read more here.  If this kind of procedure is generalizable, what does it imply for the path of future money demand and the price level?  Of course it does require that everyone send what he or she promises to send…


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