I am thinking of ways that this might be used for the delivery of legal services:
CRCS Lunch Seminar
Date: Monday, March 21, 2011
Time: 11:30am – 1:-00pm
Place: Maxwell Dworkin 119
While computers have automated the operation of most financial markets, the underlying mechanism was designed for people to operate it. It is simple, not necessarily efficient, and has room for improvement. This work is an endeavor to design efficient automated market-making mechanisms that take into consideration of the logical relationships of securities.
We propose a general framework for the design of securities markets over combinatorial or infinite state spaces. The framework enables the design of computationally efficient markets tailored to an arbitrary, yet relatively small, space of securities with bounded payoff. We prove that any market satisfying a set of intuitive conditions must price securities via a convex cost function, which is constructed via conjugate duality. Rather than dealing with an exponentially large or infinite outcome space directly, our framework only requires optimization over a convex hull. By reducing the problem of automated market-making to convex optimization, where many efficient algorithms exist, we arrive at a range of new polynomial-time pricing mechanisms for various problems. We demonstrate the advantages of this framework with the design of some particular markets. We also show that by relaxing the convex hull we can gain computational tractability without compromising the market institution’s bounded budget.
This talk is based on joint work with Jacob Abernethy and Jennifer Wortman Vaughan.
