EconBase
← All papers

Evolution of Market Microstructure in the Age of AI

Irene Aldridge

arXiv 27 Sep 2026 · Econometrics

arXiv:2609.33058 · PDF · Extracted main text

Abstract

Market microstructure studies how trading rules turn orders into prices and allocations. Those rules have been rebuilt repeatedly: for floor traders, electronic limit order books and high-frequency trading, batch auctions and dark pools, blockchains run by automated market makers and block builders, and now AI agents that discover, pay for, and compete over resources. This survey traces that evolution through one question: can a market allocate scarce goods efficiently and fairly without participants revealing everything they know and want? Each technological shift moved the binding constraint of market design from trader rationality to speed, to control over transaction ordering, to the dimensionality of what participants can report. Impossibility results persist; only their cost moves. We review evidence on high-frequency trading, trading venues, automated market makers, extractable value and algorithmic collusion, and identify allocation as the missing layer of the agent-commerce protocol stack.

Citation extraction

107
references
190
in-text mentions
107
distinct cited
4
self-citations
12,210
main-text words

appendix boundary found by none_found · 100% of the source is main text. Read the extracted text to check this.

Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Aldridge, Irene (2026) Comparing Market Mechanism Efficiencies self1.00094100%
2Budish, Eric and Cramton, Peter and Shim, John (2015) The High-Frequency Trading Arms Race: Frequent Batch Auctions as a Market Design Response1.00073100%
3Myerson, Roger B. and Satterthwaite, Mark A (1983) Efficient Mechanisms for Bilateral Trading0.92843100%
4Zhu, Shenzhe and Sun, Jiao and Nian, Yi and South, Tobin and Pentlan… (2025) The Automated but Risky Game: Modeling Agent-to-Agent Negotiations and Transactions in Consumer Markets0.92843100%
5Aldridge, Irene (2026) Multi-Dimensional Matching self0.874122100%
6Aldridge, Irene (2025) Crypto: Literature Review, Best Practices and Microstructure self0.87462100%
7Gode, Dhananjay K. and Sunder, Shyam (1993) Allocative Efficiency of Markets with Zero-Intelligence Traders: Market as a Partial Substitute for Individual Rationality0.84333100%
8Anthropic (2024) Model Context Protocol Specification0.73732100%
9Coinbase Developer Platform (2025) Introducing x402: A New Standard for Internet-Native Payments0.73732100%
10Daian, Philip and Goldfeder, Steven and Kell, Tyler and Li, Yunqi an… (2020) Flash Boys 2.0: Frontrunning in Decentralized Exchanges, Miner Extractable Value, and Consensus Instability0.73732100%

Showing the top 10 of 107 scored citations.