1. Fixed Price and Haggling Markets Chris McLaughry Kwan Homchampa

2. Purpose See the effects of time constraints on selection of market.

3. Experiment Setup  Buyers  Reservation Prices of 1000 to 2800  Steps of 200  Sellers  1 st cost of 500  MC increase by 50,100,150,200,250.

4. Setup  9 Rounds  2 Fixed Price  2 Haggling  5 Choose your market  Times of 1 to 5 minutes  Receipts  Just there to annoy you

5. What we expected  Haggling takes time  Fewer Transactions per round when haggling  Move toward fixed price market during shorter rounds

7. Equilibrium  Price: 1400  Quantity: 72  Demand Surplus: 38000  Supply Surplus: 56000  Total Surplus: 94000

8. Results

12. Time VS Market Participation  Overall Downward Trend  Indicates people tended towards haggling in longer time periods  Regression  # of Fixed = -0.9 (length) +12.3 R square = 0.32  Excluding 5 minutes, # of Fixed = -2 (length) +14.5 R square = 0.8 For buyers: # of Fixed = -1.2 (length) + 7R-sq = 0.9 For sellers: # of Fixed = -0.8 (length) + 7.5R-sq = 0.64

15. Profit  In first 4 rounds, highest overall profit came from fixed price  Except for the 1 minute round, overall profit remained stable over the 5 choosing rounds

16. Problems with the Experiment  Data Collection  Incomplete Data  Incorrect Data  Confusion  Buyer/Seller matchups  Sample size small  Personal Desires  Short Haggling  Insignificant Time costs