Zero-intelligence trading without resampling

This paper studies the consequences of removing the resampling assumption from the zero-intelligence trading model in Gode and Sunder (1993). We obtain three results. First, individual rationality is no longer sufficient to attain allocative efficiency in a continuous double auction; hence, the rules of the market matter. Second, the allocative efficiency of the continuous double auction is higher than for other sequential protocols both with or without resampling. Third, compared to zero intelligence, the effect of learning on allocative efficiency is sharply positive without resampling and mildly negative with resampling.