An Example: Buying and Selling on a Market (Instructions)

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An Example: Buying and Selling on a Market (Instructions).

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An Example: Buying and Selling on a Market (Instructions)
• In the following experiment you are either a buyer or a seller. The experiment is partitioned into periods. In total, there are 4 periods and one period lasts 5 minutes. During the period each buyer can buy at most three units of the good and each seller can sell at most three units of the good. By buying and selling you can earn money.
• Each seller receives a sheet of paper with information about the costs c of each unit of the good. If a seller sells at price p, she earns p – c. If she sells nothing her profit is zero.
• Each buyer receives a sheet of paper with information about the resale value v of each unit of the good. If the buyer buys at price p, she earns v - p. If she buys nothing her profit is zero.
• p – c and v – p are the profits per period. In each period the same unit costs and resale values prevail. Total profits are given by the sum of profits over all periods.