This experiment goes over 3 rounds. In each round, participants are randomly re-matched to groups of four: one seller and three potential buyers. That means that in each round you will interact within a different group of participants. The experiment is computerized. You make all your decisions at the computer.
Each of the 3 buyers represents a small liquor store in a different area. Each store wants to order up to 200 bottles, no store could resell more than 200. One of the buyers can resell each bottle for a price of PB1 = 4 ECUs. Another buyer could resell the wine for PB2 = 14 ECUs per bottle. The third buyer could resell each wine for PB3 = 24 ECUs.
In the market, the seller first decides about the price PS per bottle at which she offers her wine (from 0 to 30).
Then, all 3 potential buyers decide simultaneously how many bottles (NBx , where x= 1, 2 or 3) they want to order at this price.
At the end of the round, the seller’s profit in the round is the total number of bottles she sells to the 3 buyers times
the price she announced, i.e. NS × PS. Each buyer’s profit is the income he receives from reselling the wine he bought
to his customers, PBx × NBx, minus the amount he pays the wine producer when purchasing the wine, PS × NBx,
so the profit is equal to (PBx – PS) * NBx.
{{ formfields }}
{{ next_button }}
{{ endblock }}