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 Buyers in the market.
What does a Seller do in this
experiment?
• What is known to Sellers? Sellers will know their costs per unit and
the number of units they have available to sell. This is private
information.
• What decisions do Sellers make? Sellers can sell units in the
market in two ways. One is by posting a price (Ask) and waiting for
Buyers to accept this price. The second way is by accepting a price
(Bid) posted by Buyers.
• How do Sellers make money in this experiment? By selling units at
prices greater than their costs per unit.
• An Ask price can be any price between $0 and $100.
• Note: Once trading begins, your screen will show all outstanding
Bid and Ask prices in the market.
What does a Buyer do in this
experiment?
• What is known to Buyers? Buyers know their values per unit minus
the tax per unit. This is private information.
• What decisions do Buyers make? Buyers can buy units in the market
in two ways. One is by posting a price (Bid) and waiting for Sellers to
accept this price. The second way is by accepting a price (Ask) posted
by Sellers.
• How do Buyers make money in this experiment?
By buying units at prices less than your values minus the tax per unit.
• A Bid price can be any price between $0 and $100.
• Note: Once trading begins, your screen will show all outstanding Bid
and Ask prices in the market.