Instructions

In this section of the experiment, you will be given a choice to exchange your tokens balance for a new currency, tickets. The exchange rate and purchasing power (value) of the tickets will be determined in each round by the decisions that you and your peers make within the round.

The market for currency exchange will work similar to the goods market. In the first step of currency exchange, you will be asked how many tokens, out of your token holdings, you would like to exchange for tickets. The exchange rate of tokens for tickets will be determined by the bids submitted by you and your peers in the economy after everyone submits their bid for the first step. In the second step, the exchange rate will be announced, and you will be asked how many tokens you would like to exchange for tickets, given the revealed exchange rate. In the second step of currency exchange, you can only exchange up to the number of tokens that you submitted in your initial bid in step 1 of the currency exchange.

The following definitions describe the currencies that you will encounter in all future rounds of the game:

Tokens: A currency used for exchange in this game that closely resembles cash. This currency is printed and maintained by the government in the economy. The monetary policy of tokens is driven by the legislative actions of the government, implying that there is no limit to the amount of tokens that can be created in the economy. Tokens are subject to appreciation or depreciation of value depending on the monetary actions of the government.

Tickets: A currency used for exchange in this game that closely resembles virtual currency. This currency is created and maintained by a decentralized network with participants who offer a system of checks and balances to the monetary issuance rule that governs the network. The monetary policy to tickets is driven by purely democratic consensus of the network participants. There is a hard limit on the number of tickets that can be created in the economy and the issuance schedule of tickets decreases every second round once you are able to exchange your tokens for tickets. Tickets are subject to a highly volatile exchange rate between tokens and tickets because the value of tickets is purely determined by the overall acceptance of them. In other words, if your peers in the game choose not to use tickets to purchase the good in the market, then they will rapidly lose value, and you may not be able to purchase any of the good with the tickets that you have acquired. Alternatively, if most of your peers in the economy choose to accept and transact with tickets, then they will quickly gain value relative to tokens, and they will yield you more purchasing power in later round than your initial endowment of tokens.

The currency exchange, like the goods market, will take place as a two-step auction. First, you will submit a bid for how many units of tokens you would be willing to part with in exchange for tickets; second, you will be shown the market-determined exchange rate between tokens and tickets and be asked to choose how many of the tickets you would like to purchase, given the exchange rate. There will be a per-unit transaction cost for using the ticket payment network, and it is equivalent in value to the transaction cost for using the token payment network, but will vary with the exchange rate.

In every round where you can use both tokens and tickets, the currency exchange will occur after you receive your endowment of 100 tokens, but before the auction for the good.