Summary Buyer or Seller: You will be randomly assigned to the role of a Buyer or Seller by the computer. Your role will remain the same throughout the.

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Presentation transcript:

Summary Buyer or Seller: You will be randomly assigned to the role of a Buyer or Seller by the computer. Your role will remain the same throughout the entire experiment and will be known only to you. Buy or Sell: Depending on your role you will buy or sell units of a fictitious commodity. Keeping track of time: You are given a limited time to make your decisions. Trading Rounds: There are multiple trading rounds. Tax per unit: A tax per unit in the amount of $12.00 is collected from the Sellers in the market.

What does a Seller do in this experiment? Sellers move first. What is known to Sellers? You will know your costs per unit and the number of units you have available to sell. This will be private information. What decisions do Sellers make? You specify an Offer price, and you specify the number of units that you would like to sell at the specified Offer price. You can sell as many units as you have available. How do Sellers make money in this experiment? By selling units at a price greater than your costs plus tax per unit. An Offer price can be any price between $0 and $100.

What does a Buyer do in this experiment? Buyers move after the Sellers make their decisions. Buyers enter the market one by one, in random order. What is known to Buyers? Buyers know their value per unit minus the tax per unit. This is private information. Buyers also know the Offers made by all the Sellers in the market. What decisions do Buyers make? Buyers decide whether to accept any of the Sellers’ Offers. You can buy as many units as are available in the market. How do Buyers make money in this experiment? By buying units at prices less than your values per unit.