Description of the Experiment

This session will take approximately 1 hour to complete. 

It comprises 15 experimental periods (or "Experimental Years" - running from 1st January 2000 to 31st December 2014). For simplicity each year comprises 12 months, each of 30 days (making a total of 360 days in each experimental year).

There are 7 participants in a market for "Units".

Three of the participants are buyers of units. A retailer seeks to purchase a defined number of units in the market, for later resale to a "customer" at a profit.

Four of the participants are suppliers of Units.

You are playing the part of a SUPPLIER

As a supplier you are seeking to sell the units that the "factory" has provided you "on consignment" at the start of each period. 

Each period you will be given a new consignment of Units to sell, and any unsold units from the previous period will be "taken back" at NO COST. There is a "supply cost" for selling a unit. This is incurred WHEN THE SALE OCCURS. If you sell a unit for ABOVE the supply cost, then you make a profit. There is no penalty for not selling your "consignment" of units each period.

However if you could have sold units at above your "supply cost" but didn't, then you are foregoing a profit opportunity.

Units survive for a single period only. Any Units remaining unsold at the end of the year simply disappear (at no cost). They cannot be used in following years.

Thus your goal is to purchase sell as much of your consignment of units as possible, at prices above your supply cost, thus making a profit.

Your profit is realised and put in your bank account as you sell units.

Suppliers in this experiment CAN ONLY SELL UNITS. If you have sold all your units in a given year, just wait till the next year commences.

You will be selling your units to RETAILERS. Each retailer in the market has a target for the number of units they must purchase.

All RETAILERS in the market face a PENALTY of $57 per unit if they do not fully meet their target each year.

The penalty rate is the same for all retailers.

The task for all participants is to have as much money as possible at the end of the experiment. 

Question & Answer

Question: Consider a supplier with a supply cost of $25 per Unit sold, 3000 units in their account, and starting the experiment with $0 in the bank. If they sell 600 Units at $35 each, what does their bank account balance become?

Answer: They are selling at $35, and their cost is $25, so they are making a $10 profit on each unit sold. They have sold 600 units, so their profit is $6000. Hence, their bank account balance will rise to $6000.

Question: In the case above, what happens to the 2400 unsold units ?

Answer: If they remain unsold at the end of the period, they disappear AT NO COST.

The next few pages of instructions are to introduce the trading screens to you, and to give you instructions on getting logged into the experiment.

When you have read the above, please proceed to the next page.

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Last Modified: 18 October 2007