Seminar: Zero-intelligence traders on a network

The objective of this speech is to provide a literature review on Zero-Intelligence Traders (ZIT). ZIT was introduced in the seminal paper by Gode \& Sunder (1993) as the form of simple simulation of bottom-up bilateral market exchange between sellers and buyers. Authors demonstrated a very high efficiency (more than 95\%) of such a naive market mechanism when compared to a fully organised market, which equates demand with supply by setting an equilibrium price. Based on a literature review (Gode \& Sunder (1993) paper has over 2k citations) I will discuss: (a) sources of this high efficiency, (b) critique of a ZIT model, and (c) potential extensions of this model, especially including traders embedded in a social network.

References: 

Gode, D. K., \& Sunder, S. (1993). Allocative efficiency of markets with zero-intelligence traders: Market as a partial substitute for individual rationality. Journal of political economy, 101(1), 119-137.