Instructions for Participants
GAS MARKET - GAS RETAILER
Welcome to the Aton
Experimental Economics Laboratory. This is an experiment
analysing the economics of
decision making. You will be participating
as a gas retailer engaged in
a market for gas. If you make good
decisions you could make up to $25 in the experiment that will be
you in cash at the end of the experiment. The
rate that we will use to convert laboratory
dollars to Australian
dollars is 7,000,000 experimental dollars to one (1) Australian dollar. You will also be paid a show-up fee of 5
The amount of money
depends on the decisions you make, so it
important to read and understand these instructions.
please do not look at other people's information or computer screen,
not talk. You are free to ask
questions of the
Your decisions and payoff is private: do not discuss them with anyone
else in the room or during any breaks.
study is conducted by the Aton
Economics Laboratory (AEElab).
about AEELab is available at http://www.aton.com.au
the experiment terminates early (for example, due
problems) all participants will be
paid on the basis of their experimental dollar
balance at the time of termination if this is determinable. If
this cannot be determined, only the show-up fee will be paid.
You are free to
experiment at any time. However if you leave before
the end of the experiment you will only receive your show-up fee.
no foreseeable risks or discomforts from your participation
in this experiment.
cash payment there are no direct peronal benefits for
All data collected will be saved
person-identifiable information will be reported in any published or
of the experimental
instructions and getting logged in.
Signing of consent forms
Familiarisation trading session,
to learn how to use the trading screens
Experimental Session 1
The total time
required, including reading instructions and receiving
payment at the end of the experiment will be approximately 1.5
familiarisation trading session is just for practice, and does not
count toward your
final earnings. This is for you to learn how
to trade, and what effects your profit.
You are one
of five retailers of gas (Retailers A - E) in a market for gas. The
market runs for 4
years, from 1/1/2001 to 31/12/2004. The
experiment will be measured in experimental days, each day being about
seconds. Your job is to make as much
money as you can, in any way you see fit. More specifically, you are to buy gas on the
wholesale market from gas pipeline operators (Pipe X and Pipe Y).
This gas is supplied to your local Gas
Tank. You then sell the
gas from this tank to
the retail market. The difference in the
price you buy gas at, and what you sell the gas at is yours to keep,
converting into Australian dollars. The
specifics of how buy and sell gas on the computer will be discussed
from the pipes by making a bid to buy a quanity of GigaJoules (GJ) of
gas at a
particular price (in $/GJ). Note
that a GJ is simply a set quantity of gas. The pipeline operators
can see your bids (and those from other retailers), and can chose which
bids to accept. If they accept your bid, it becomes a Supply
Contract. This means that the pipe will supply you the
of gas over the next 20 experimental days. You will pay for the
gas you receive each day at the bid price (in $/GJ).
Suppose I bid for 4,000 GJ of gas,
at a price of $10/GJ. What happens ?
If your bid is accepted by a Pipe, it
will become a Supply Contract, which lasts 20 days from the date of
acceptance. You will be delivered 4,000/20 = 200 GJ of gas each
day into your tank. You will pay 200 * 10 = $2,000 to the pipe
operator each day, for the gas supplied.
your bid is not accepted, it will
automatically be deleted after 20 experimental days.
the gas you have purchased to consumers. Every 2
experimental days a consumer will appear in the retailer market
and want to purchase gas from one of
the retailers. The consumer will look at the current price being
offered by each of the 5 retailers, and will enter a 180
contract with the cheapest retailer, at the price being offered by that
retailer. Each day during that 180 day contract, the
consumer will take gas from the retailers tank, and pay the retailer
for the gas consumed at the contract price. The consumers contract
price remains fixed for the duration of their contract.
consume higher quantities of gas the lower the contract price.
quantity of gas that the consumer buys is
on a daily basis, and since the contract price is fixed for the
duration of their contract, so is their daily consumption.
the 180 day contract is completed, the
consumer re-enters the market, and again signs a contract with the
a retailer, you can set your offer
price. Each time a consumer enters the market you will see a
small figure "flash" in one of the retailer "contract boxes". If
it flashes in your box, it means you are currently the cheapest
retailer, and you have just had a contract signed with you. If it
flashes elsewhere, then that retailer is currently offering gas more
cheaply than you are.
will be initialized with 36 consumers of varying lenghts of
contracts, each contracted at $20 per GJ. Additionally, you have
been allocated with a full tank of gas, purchased at $20 per GJ.
day, gas you have purchased from the pipes flows into your tank, and
then consumers take their daily
demand from your tank. You must purchase
sufficient gas from the pipes to meet your consumers demand. If you do not, your tank will become empty. At
that point you will automatically issue a default bid, which costs $50 a GJ,
for enough to cover your current customers' demand.
Your tank is also of
a finite size - if you enter into too many supply contracts, your tank
will "vent" - which means the gas is simply being wasted. You
are still paying the pipe for it. Hence, if you buy too much gas
and vent your tank, you are wasting money.
Look at the
picture of the computer screen now. The
top bar of the window shows the current date, and your current bank
experimental dollars. Both are updated
in real time.
listing of My Current Bids is where you enter in bids to purchase gas. Note the Price and Quantity fields, where you
enter in the Per GJ price and how many GJ you wish
purchase. Once submitted to the market a bid
will stay active for 20 days. After 20
days the bid is automatically deleted. Once
a pipeline operator has accepted your
bid or the bid becomes stale, the bid falls off the "My Current Bids"
is listed on the "Active Contract"
current date you will find the "My
Current Bids" area. This shows all
bids to purchase gas that you
have made, but have not yet been accepted. Your
ID number, the Date the bid was made, the Price
per gigajoule, Quantity,
and Implied Daily Flow are listed. Implied
Daily Flow is the quantity of the bid divided by 20. Each bid is for a 20 day contract.
Therefore if you purchase 2,000 GJ you
will receive 10 GJ each day for the 20 day contract.
right of the"My Current Bids"
area are the "Active Contract"
Contract" tabs. The active
lists all bids that have been accepted by the pipeline operators. This shows creator ID, Date accepted, Price,
Quantity, Daily Flow, and Days Remaining in the contract. 20 days after acceptance, the contract will
end. The "Inactive
Contracts" lists the
contracts that have either gone stale, or ended.
lower left side of the screen is the "Supply
of Gas" area. "My Demand (GJ/Day):" is
listed first, and simply states how much gas is being demanded by all
your currently contracted
for that day. "My Supply" is listed as
how much gas is being input into your gas tank that day.
Cost ($/Gj)" tells you how much your next unit of gas that you
cost you to
buy. That is, if you sell the next unit
of gas above the price listed in "Supply
Cost ($/Gj)" you will sell it
price above what you paid for it, and make a profit. The input box with the button "Set" to the
right is where you enter the price at which you are willing to sell gas
consumers. After you have entered a
price, press the "Set" button
to offer this price to consumers. If you
are the lowest priced retailer, the
next consumer to enter the market will sign a 180 contract with you.
The "Contract" box listed below "Supply Cost ($/GJ)" shows if you
chosen for the current consumer purchasing gas. When
you have the lowest retail price for gas, and
have been chosen as
the gas provider for the current consumer in the market, you will see a
icon of a person pop up in this window. The
area to the right of your gas tank is "The
Other Retailers" area, and indicates when a consumer has chosen
retailer to purchase gas from. If
another retailer has a lower price than the other retailers, and has
chosen as the gas provider for the current consumer in the market, you
a small icon of a person pop up in that other retailer's
window to the far right.
representation of your tank is in the "My
Gas Tank" area. The supply of gas
into your tank is in the upper left side of the area. Tank
capacity, the amount capacity that is available (Free (Tj)), the amount
of capacity that is being used (Used (Tj)), and days of gas supply left
are listed below. In the middle is your gas tank. The
Supply of gas into your tank,
and Demand of gas by consumers out of your tank may not be equal. This is due to your gas tank.
If your supply of gas equals demand for that
day, the level of gas in your gas tank will remain unchanged. If your supply of gas is lower than what your
consumers demand, gas will be withdrawn from your tank to fulfill
demand. If the supply of gas into your
tank is higher
than what your consumers demand for the day, gas will be put into your
which can be used at a later date. The size
your tank will always be able to store enough gas about 20 days of
supply. Storing gas costs you nothing
The Consumer information is listed to the
right of your gas tank. The number of consumers, the average
contract price paid to you, the the consumer demand is listed.
You may wish to watch the consumer demand and the supply of gas into
your tank, to make sure you have enough gas. If you run
out of gas, and your consumer demand is greater than the supply of gas
your gas tank, the "default bid"
process will supply your consumers'
you will, in general, lose money on those units of gas supplied by
You are one
of five retailers. You sell gas to
consumers. Every 2 days, a new consumer buys a 180 day contract from
retailer who has the lowest price. You must supply consumers who are
contracted with you with gas
gas from the wholesale market. To buy
gas you enter bids that indicate how much gas you wish to buy and at
for 20 day contracts. The pipeline
operators sell gas to retailers at the bid price. You
must buy more gas when your gas supply
gets low. If you run out of gas, gas
will be supplied to your consumers, and you will receive no profit for
of that gas.
At the end
of this experiment your earnings will be calculated and exchanged into
Australian dollars, and paid to you. You are initially given an
endowment of money which allows you to purchase gas. Your final
payment will be based on money earned above whet you start with.
For instance, if you are initially given 1,000,000 experimental
any money made over 1,000,000 will be converted into Australian
and paid to you in cash. Additionally, the maximum payment that
you can receive is capped at 25 Australian dollars.
any questions, please raise your hand and ask the conductor.
If you are ready to commence, please CLICK HERE to launch the trading screen and login.
Last Updated: 2nd February 2007
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