Description of the Experiment

The experiment session takes 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 10 participants in a market for "Units". 

Five 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.

Five 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 SUPPLIER.

As a supplier you are seeking to produce and sell for a profit units from your "factory". A unit represents 1 MWh of energy. To create a unit, you must first have generated the MWh. You may then chose to create the unit (at any time), and sell it.

Some suppliers in today's experiment have control over if your factory is producing units, or not.

Some suppliers in today's experiment have control over the timing of converting MWh to Units. Other suppliers have this done automatically.

When you are generating power your bank account will be debited each experimental day with the "production cost" that day, and each day your supply of MWh (available for conversion to Units and then for sale) will increase.

If you are not producing, you do not incur a production charge, but you also don't have a supply of units to sell.

Thus, you can make a profit by producing units and then selling them at above your cost of production.

Units survive for the duration of the experiment. Any Units remaining unsold at the end of a year are still available for resale in following years. However any units left in your account at the end of the experiment disappear for no value.

Thus your goal is to produce and sell as many units as possible, at prices above your supply cost, thus making a profit.

Suppliers in this experiment CAN BOTH BUY AND SELL UNITS.

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

Examples

QUESTION: Consider a supplier with a supply cost of $25 per Unit and starting the experiment with $100,000 in the bank, and a production rate of 25 units per day. Suppose they sold 200 units at $40 per unit on the 10th day. What would their bank account and profit be ? How many units would still be at the factory?

ANSWER: After 10 days, the supplier would have produced 250 units, and their bank account would have decreased by ($25 * 250 units = ) $6,250 - giving a balance of $93,750. If they now sell 200 units at $40 per unit, then they earn $8,000, giving a bank balance of $101,750. They made of profit of $15 ($40 sale price less $25 production cost) on each unit sold, thus the profit was $15 * 200 = $3,000.  

The supplier has 50 units left for sale.

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