Description of the Experiment

The experiment session takes approximately 1 hour to complete. 

The experiment comprises 15 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 retailers 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. Suppliers are seeking to sell units to the retailers at above their supply cost, thus making a profit. 

You are playing the part of a retailer.

As a retailer you are seeking to purchase a targetted number of "units" each period for resale at the end of each period. The customer is "automatic" in the sense that the resale occurs automatically at the end of each period at a set price. 

At the start of each period you are informed of the number of units your "customer" wants at the end of the period, and the price they have agreed to pay. In today's experiment all retailers have a customer who has agreed to pay $57 per unit at the end of the year.

Your task is confined to seeking to purchase the required targetted number of units in the market at below the resale price.

There is NO penalty for not fully meeting your customers order. However not meeting the order means you are foregoing a profit !!!

Units survive for a single period only. Any units remaining in your account at the end of the year after the customer's sale quantity has been supplied simply disappear. They cannot be used in following years.

Thus your goal is to purchase as close to your targeted number of units as possible. If you do not have enough units to meet your customers order, you are foregoing a profit (and your pay will be lower than it might have been).

If you have too many units, you have paid money to purchase units which are just thrown away, and again your pay is lower than it might have been.

Your profit is realised and put in your bank account at the end of each period when your customer takes delivery and pays you.

Although all retailers can both buy and sell units, the natural position is for Suppliers to be net-sellers and Retailers to be net-buyers. However a Retailer who had bought more units than can be resold to their "customer" at year end can attempt to resell their surplus to other retailers while the year is still running.  

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

To be able to commence purchasing Units, each retailer is given a cash float at the start of the experiment.

This float is REPAID at the end of the last period, and DOES NOT COUNT for your remuneration.

EXAMPLES

EXAMPLE 1: Suppose a retailer was told that their customer had ordered 2,500 UNITs on 31st December 2006 at $50 each, and on 31st December the retailer had 2,400 units in their account. Under this circumstance the customer would take all 2,400 UNITs, and pay the retailer 2,400 * 50 = $120,000.

EXAMPLE 2: If a retailer's customer had committed to take 2,500 Units on 31st December 2006, and on the 31st Dec 2006 the retailer held 2,600 Units, then their customer would take 2,500 Units and pay 2,500 * $50 = $125,000. The 100 Units held surplus would "rot in the shop" and disappear for no value.
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