Instructions

Thank you all for participating in this experiment.

This experiment will simulate the process of bargaining between buyers and sellers when shopping online, and you will be randomly assigned the identity of the buyer or seller. At the beginning of each round of experiments, you will see a picture of the product, which will reflect the true condition of the product to a certain extent. The quality range of the product is from 0 to 1: a quality of 1 means that the product is brand new, a quality of 0.5 means that the product has a moderate degree of defects, and a quality of 0 means that the product cannot be used at all. The sellers will be provided with the true quality of the product. But buyers need to guess the quality of the product based on its picture. For example, the quality of a car model with only slight scratches can be 0.8.

We will provide buyers and sellers with the product’s price when the product’s quality is 1 as the seller's initial offer, which is "product value" shown in this experiment. Buyers can choose to accept directly or send a counteroffer, and buyers have a total of three bargaining opportunities. The sellers can refuse the buyers’ counteroffers. When one party chooses to reject the offer from the other party, this round of trading fails, and no player will receive earnings in this round.

Both buyers and sellers can earn additional income based on their performance in the experiment:

Buyer’s earnings = product value * real quality - final transaction price

Seller’s earnings = final transaction price – cost(see the table below)

As can be seen from the above two formulas, you need to do some simple subtraction and multiplication operations to help you calculate the offer that will enable you to get earnings. Please prepare a calculator in case you need to use it.