Price Discovery and Prototype

The last week I turned up working on different topics than expected. With hindsight, I think I was righteously cautious when I said last week that it was maybe still a bit early to make any real statements about the price discovery mechanisms I have spend time on in the past weeks. As it turns out (without going into to much detail; that would require a rather long blogpost), although valuable, in practice some of the price discovery mechanisms I proposed have some difficult issues to solve. However, helped by the writing I did the last few weeks, I believe I found a valid, far simpler alternative. That is, since the a consumer can always choose to refuse or accept a proposed price, the CRA already provides a sufficient form of price discovery as part of the market as consumers can always discover prices by submitting a bid and subsequently refusing the matching offer. Although it may seem that I have been looking for a far more difficult solution before, it is only quite recently that I am quite certain that giving the consumer the possibility to reject matches does not have a negative impact on the market. The reason I doubted this before was because of a potential loss of allocative efficiency in a mostly consumer oriented market. However, I have come to understand that this is not necessarily the case in an environment such as the cloud computing market where there is an seemingly unlimited supply of resources (again, going into much detail would require a far lengthier post).
I discussed this with my co-promoter this week (overview of my preparations), and we agreed that at least for now it is indeed a good idea to go with this form of price discovery.

We also decided that it is valuable to put some more effort into the prototype, as I've always put much emphasis on the real world applicability of the market model. In the past few days, I have thus primarily been focusing on that prototype, while also having done some writing. Concerning that writing; I focussed some more about how the CRA model can be implemented (this helped me out when implementing the prototype), and I also wrote a bit about compound bids.

I worked quite a lot the past week, and although I've only written my weekly 5 pages, I think my efforts on the prototype will pay off in the coming weeks.

In the coming week, I'll start writing on the introduction chapter of my thesis (about cloud computing and the power industry and their markets), as well as continue to work on the prototype (still a lot to do!).