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Math and Logic in Daily Life Auction Experiment

Learn about numbers, auction types, and participate in an auction experiment to understand buyer-seller dynamics. Explore bidding strategies and round rules for a hands-on learning experience.

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Math and Logic in Daily Life Auction Experiment

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  1. IGE 104 Logic and Mathematics for Daily Living Lecture 2 June 9, 2010

  2. Lecture Outline • Background Survey • Numbers and more • The Auction Experiment • Understanding the auction experiment

  3. Background Survey • Please fill it out, thank you!

  4. Numbers and More Getting comfortable with them

  5. Numbers and More • Let’s get to know our numbers • They represent amounts of things • They can also represent value (as in money) • What do we care about? • Producers • If you are selling things you care about having higher prices and lower costs • Consumers • If you are buying things you care about having lower prices and higher benefit

  6. Auction Time Cookies for sale

  7. Auction Types • English Auction • Bidders offer higher prices until no one wants to pay more • Dutch Auction • Bidders start at a price and offer lower prices until the item is sold • Double Auction • Both! • Buyers use English Auction • Sellers use Dutch Auction • Item is sold when an equal price is reached

  8. Auction Experiment • You will receive a card • DO NOT SHOW IT TO OTHER PEOPLE

  9. Auction Experiment: Buyer & Seller Buyers Sellers • Want to buy a cookie • Get a certain benefit from a cookie • Don’t want to pay too much • Each subsequent cookie gives a bit less benefit • Want to sell a cookie • Have to pay a certain cost to produce that cookie • Don’t want to lose money on the sale • Each subsequent cookie costs a bit more to make

  10. Auction Experiment: The Rules Buyers Sellers • Can buy up to 5 cookies • 0 items = 0 benefit • No outside transactions • Can’t pay more than you benefit from the item • Bid up: offer to pay MORE each time • Can only sell up to 5 cookies • 0 items = 0 profits • No outside transactions • Can’t sell for less than it costs to make the item • Bid down: offer to sell for LESS each time

  11. Auction Experiment: Rules • There will be 4 rounds • Practice round • Real round • Real round 2 (sellers change cards) • Real round 3 (buyers and sellers swap) • In each round: • Open bidding, buyers can call out higher prices they will pay, and sellers can call out lower prices they will sell for • Once a buyer and a seller offer prices that are equal then the cookie is sold and we START OVER with an open bid • The round ends when a sale cannot be made

  12. Auction Experiment • When making a bid: speak loudly and clearly • “Buyer M – 100” • “Seller L – 200” • I will write on the board and call on people. • In the end, one person will record the sale prices and will average them

  13. Auction Experiment Discussion

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