Overview

There are {{ num_participants }} participants in today's session.

All participants will interact in two markets, called "market A" and "market B." Your roles in these markets are determined randomly at the beginning of the experiment. Half of you will always be consumers in market A and producers in market B; the other half will always be producers in market A and consumers in market B. Markets A and B alternate over time, so if you are a consumer in the current market, you will be a producer in the following market, and vice versa.

In each market, there are three objects: a perishable "good" that cannot be brought into the next market and two durable objects called "tokens" that can be brought from the current market to the following market. Call these two types of tokens "red tokens" and "green tokens", respectively. Consumers in market A are endowed with {{ C.NUM_RED_TOKENS }} red tokens and {{ C.NUM_GREEN_TOKENS }} green tokens each, and the total number of red tokens and green tokens is always constant at {{ C.NUM_RED_TOKENS }}x {{ C.NUM_GREEN_TOKENS }} = {{ num_tokens }} each. The good in market A is called Good A, and the good in market B is called Good B. While a producer, you decide how much of Good A or B to produce. You can sell your output to exchange for any type of token, and then use the tokens to buy goods in the next market where you are a consumer. While a consumer, you decide how many of each type of token to bid for goods.

Timing

Today's session consists of several sequences, which is further broken down into an unknown number of periods. Each period consists of market A followed by market B.

The number of periods in a sequence is determined as follows. At the end of each market B, the computer draws a random integer between 1 and {{ C.DICE_MAX }} to determine whether the sequence will continue or not.
- If the number drawn is between 1 and {{ dice_continue_max }} (inclusive), the sequence continues.
- If the number drawn is {{ dice_end }}, the sequence ends.
This means after each market B, there is always a {{ p_continue }}% chance the sequence continues to a new period and a {{ p_end }}% chance the sequence ends.
The first {{ C.BLOCK_SIZE }} periods of a sequence are called a block. In a block, you will make decisions without knowing the realization of the random numbers, even if the number "{{ dice_end }}" has been drawn.
At the end of a block, you learn the realization of the random draws for all {{ C.BLOCK_SIZE }} periods in the block and therefore whether the sequence has actually ended.
- • If the number "{{ dice_end }}" is drawn anytime within the block, the sequence has ended. The final period of the sequence is the first period where a "{{ dice_end }}" is drawn. Your decisions after the final period are ignored and not count towards your final earnings.
- If the number drawn is {{ dice_end }}, the sequence ends.
Depending on the time available, we may start a new sequence. At the end of the session, the point total from all sequences will be summed up and converted to cash.

We now describe in detail the choices you make in each market, how market prices are determined, and how your token balance and point balance adjust.

Market A

In market A, participants can trade Good A and the two tokens. If you are a consumer in market A, you can decide how many red tokens and how many green tokens to bid to buy and consume Good A (call the amounts "$b_{Ar}$" and "$b_{Ag}$", respectively). If you are a producer in market A, you decide how many units of Good A to produce and sell in exchange for red tokens and green tokens, respectively (call the amounts "$x_{Ar}$" and "$x_{Ag}$", respectively). Figure 1 shows a sample decision screen you will see if you are a consumer in market A. Figure 2 shows the sample screen for a producer in market A.

Figure 2: Sample decision screen for producers in Market A

Producers can enter the quantity of Good A they wish to produce for red tokens and for green tokens in the two input boxes of the decision screen. The quantities should be 0 or positive, and the sum of the two quantities should be less or equal to {{ C.MAX_PRODUCE }} (up to two decimals are allowed). After all producers have clicked the "submit" button, the computer calculates the total amount of Good A producers have offered to produce for each type of token; call this: “Total Amount of Good A Produced for Red Tokens” and “Total Amount of Good A Produced for Green Tokens.”

Consumers can enter the quantity of red tokens and green tokens they wish to bid on a similar screen, from 0 to the maximum number of tokens available at the start of market A. After all consumers have clicked the red “submit” button, the computer calculates the total amount of tokens consumers have bid; call them: “Total Amount of Red Tokens Bid for Good A,” and “Total Amount of Green Tokens Bid for Good A.”

Finally, the computer calculates the market price of Good A in terms of red tokens and green tokens in the following way. If Total Amount of Good A Produced for Red Tokens > 0 and Total Amount of Red Tokens Bid for Good A > 0, then the Market Price of Good A in terms of Red Tokens, $P_{Ar}$, is determined by: \[P_{Ar}= \frac{\text{Total Amount of Red Tokens Bid for Good A}} {\text{Total Amount of Good A Produced for Red Tokens}}\] Similarly, the Price of Good A in terms of Green Tokens, $P_{Ag}$, is determined by: \[P_{Ag}= \frac{\text{Total Amount of Green Tokens Bid for Good A}} {\text{Total Amount of Good A Produced for Green Tokens}}\] After the prices are calculated, your point total and token balance will be adjusted as follows.

If you are a producer of Good A and you produce $x_{A} =x_{Ar} +x_{Ag} $ units of Good A, your point total will decrease by $x_{A}$ . At the same time, your balance for red tokens increases by the amount $P_{Ar}x_{Ar}$, and your balance for green tokens increases by the amount $P_{Ag}x_{Ag}$.
If you are a consumer of Good A and you bid $b_{Ar}$ units of red tokens and b_gr units of green tokens to buy and consume $x_{A}=\frac{b_{Ar}}{P_{Ar}} +\frac{b_{Ag}}{P_{Ag}}$ units of Good A, your point total increases by the amount $u(x_{A})$. The function $u$ is specified in the last column of Table A. Note that the more you consume, the more points you earn.

Table A shows the benefits to consumers and costs to producers in points for different quantities of Good A. For instance, if a producer produces 3 units of Good A, they incur a cost of 3 points. If a consumer buys and consumes 7 units of Good A, they receive a gain of {{ market_a_example_benefit }} points.

If either Total Amount of Good A Produced for the Red Token = 0 or Total Amount of Red Tokens Bid for Good A = 0, then $P_{Ar}$ = 0 and there is no exchange between Good A and red tokens. Your point total will not consider the production for red tokens and your red token balance will remain unchanged. A similar rule applies to green tokens.

Notice you make your decisions before the market prices $P_{Ar}$and $P_{Ag}$ are revealed. After all decisions have been made, any exchanges are implemented and the results from market A are shown to all participants on the computer screen. Market B then begins.

Market B

The activities in market B are similar to market A: consumers use their red and green tokens to buy and consume Good B and earn points from consumption, while producers receive red and green tokens from producing and selling Good B. There are however several differences from market A:

Recall your role as a producer or consumer switches from your role in market A: if you were a consumer in market A, you are now a producer in market B; similarly, if you were a producer in market A, you are now a consumer in market B.
The points consumers gain from consumption will follow a different formula from market A (details will follow).
Recall there is a random number drawn at the end of market B that determines whether the sequence will continue with a new market A.

Similar to market A, if you are a consumer in market B, you can decide how many red tokens and green tokens to bid in exchange for Good B (call the amounts of your token bid, "$b_{Br}$" and "$b_{Bg}$"). If you are a producer in market B, you can decide the units of Good B to produce and sell in exchange for red tokens and for green tokens (call these quantities "$x_{Br}$" and "$x_{Bg}$").

The determination of the market price and exchanges in market B follows a similar procedure as in market A. That is, if the Total Amount of Good B Produced for Red Tokens > 0 and Total Amount of Red Tokens Bid for Good B > 0, then the Market Price of Good B in the Red Token, $P_{Br}$, is determined by:

\[P_{Br}= \frac{\text{Total Amount of Red Tokens Bid for Good B}} {\text{Total Amount of Good B Produced for Red Tokens}}\] Similarly, the Market Price of Good B in the Green Token, $P_{Bg}$, is determined by: \[P_{Bg}= \frac{\text{Total Amount of Green Tokens Bid for Good B}} {\text{Total Amount of Good B Produced for Green Tokens}}\] After the price is calculated, your point total and token balance are adjusted as follows.

If you are a producer of Good B and produce $x_{B}=x_{Br}+x_{Bg}$ units of Good B, your point total decreases by $x_{B}$. At the same time, your red token balance increases by the amount $x_{Br} P_{Br}$ , and your green token balance increases by $x_{Bg} P_{Bg}$.
If you are a consumer of Good B, you use $b_{Br}$ and $b_{Bg}$ tokens to buy and consume $x_{B}=\frac{b_{Br}}{P_{Br}}+\frac{b_{Bg}}{P_{Bg}}$ units of Good B, and your point total will increase by $8 + x_{B}$ points. At the same time, your red token balance decreases by the amount $b_{Br}$ and your green token balance decrease by the amount $b_{Bg}$.

If either Total Amount of Good B Produced for the Red Token = 0 or Total Amount of Red Tokens Bid for Good B = 0, then $P_{Br}$= 0 and there is no trade of Good B for the red token. Your point total will not consider the production for red tokens and your red token balance will remain unchanged. The similar rule applies to green tokens.

Recall token balances and point totals at the end of market B will carry over to market A of the next period (if the sequence continues), which depends on the random number drawn. When the sequence ends, depending on the time available, a new sequence may then begin, and you will start afresh. Note that your token balances are not carried to the new sequence. In addition, the total available stock of tokens is constant throughout the experiment.

Tradeoffs

We described above the activities in the two markets. Each of you will alternate between being a producer in one market and a consumer in the next market. The following outlines the tradeoff you face in each producer-consumer cycle. When it is your turn to produce, you incur a production cost in the current market, but receive a consumption benefit in the next market: when you sell your good in the current market for either red tokens or green tokens, or both, these additional tokens will enable you to buy more goods in the next market. When you are a consumer, you decide whether you buy the good now or keep the tokens to spend at your next consumption opportunity.

Tradeoff you face when you are a producer. First, suppose you are a producer in market A and a consumer in market B. In market A, you decide how much to produce for red tokens, green tokens, or both. Here is the trade-off involved for your production in return for red tokens; similar considerations apply to your decision to produce for green tokens. Producing $x_{Ar}$ units of Good A incurs a cost of $x_{Ar} $ points. You can sell your output for $P_{Ar}x_{Ar} $ red tokens. In the following market B, you can use these red tokens to buy and consume up to $P_{Ar}x_{Ar} / P_{Br} $ additional units of Good B. This additional consumption will help you to earn more points (according to the last column in Table B, which is also listed on your decision screen). Notice your consumption benefit increases if price in the current market ($P_{Ar}$) increases, and decreases if the price in the next market ($P_{Ar}$) increases.

Similarly, suppose you are a producer in market B and a consumer in market A. In market B, you decide how much to produce for red tokens, green tokens, or both. We will again illustrate with red tokens and similar considerations apply to green tokens. Producing $x_{Br}$ units of Good A incurs a cost of $x_{Br}$ points. You can sell your output for $P_{Br}x_{Br}$ red tokens. If the sequence continues, then in the following market A, you can use these tokens to buy and consume up to $P_{Br}x_{Br} / P_{Ar}$ additional units of Good A. This additional consumption will help you to earn more points (according to the last column in Table A, which is also listed on your decision screen). Notice your consumption benefit increases if price in the current market ($P_{Br}$) increases, and decreases if the price in the next market ($P_{Br}$) increases.

Tradeoff you face when you are a consumer. First, suppose you are a consumer in market A. By spending tokens in the current market A, you gain a consumption benefit in this market. The cost is you could spend the same quantity of tokens to gain consumption in the next market A (if the sequence continues to the next market A). Specifically, when you spend $b_{r}$ red tokens and $b_{g}$ green tokens, the benefit is you consume $ b_{r} / P_{Ar}+b_{g} / P_{Ag}$ units of the good A in the current market. The cost is your red token balance will be reduced by $b_{r}$ units and your green token balance will be reduced by $b_{g}$ units, which you could use to purchase $b_{r} / P^{'}_{Ar}+b_{g} / P^{'}_{Ag}$ units of good in the next market if the sequence continues, where $P^{'}_{Ar}$ and $P^{'}_{Ag}$ are the prices in the next market A. Notice that your benefit from spending in the current market versus the next market increases if the prices in the next market $P^{'}_{Ar}$ and $P^{'}_{Ag}$ become relatively higher.

Similarly, suppose you are a consumer in market B. By spending tokens in the current market B, you gain a consumption benefit in this market. The cost is you could spend the same quantity of tokens to gain consumption in the next market B (if the sequence continues to the next market B). Specifically, when you spend $b_{r}$ red tokens and $b_{g}$ green tokens, the benefit is you consume $ b_{r} / P_{Br}+b_{g} / P_{Bg}$ units of the good B in the current market. The cost is your red token balance will be reduced by $b_{r}$ units and your green token balance will be reduced by $b_{g}$ units, which you could use to purchase $ b_{r} / P^{'}_{Br}+b_{g} / P^{'}_{Bg}$ units of good in the next market if the sequence continues, where $P^{'}_{Br}$ and $P^{'}_{Bg}$ are the prices in the next market B. Notice that your benefit from spending in the current market versus the next market increases if the prices in the next market $P^{'}_{Br}$ and $P^{'}_{Bg}$ become relatively higher.

Summary of Instructions

All subjects participate in a sequence of markets, alternating between market A and B. Half of you are consumers in market A and producers in market B; the other half assume the opposite roles. In market A, participants trade good A for two types of tokens, red and green. Similarly, in market B, participants trade good B for the two types of tokens.
1. Consumers decide individually how many of each type of tokens to bid to consume the good.
2. Producers decide individually how much of the good to produce for each type of token.
3. In each market, the market prices of the good in red and green tokens are determined, respectively, as \[P_{r}= \frac{\text{Total Amount of Red Tokens Bid }} {\text{Total Amount of Good Produced for Red Tokens}}\] \[P_{g}= \frac{\text{Total Amount of Green Tokens Bid }} {\text{Total Amount of Good Produced for Green Tokens}}\]
4. If no amount of good is produced for red tokens or no red tokens are bid, then there is no trade between the good and red tokens. This applies to green tokens too.
5. If either $P_{r}$ or $P_{g}$ or both are positive, then trade takes place. Producers incur a cost in points from producing, and gain tokens. Consumers spend tokens and gain points from consuming.

When you input your decisions, notice the following tradeoffs.

Producer in Market A
Good A Produced	$x_{A} = x_{Ar} + x_{Ag}$
Tokens earned	$x_{Ar}P_{Ar}$ red tokens $x_{Ag}P_{Ag}$ green tokens
Cost: points decrease in market A	$x_{A} $
Benefit: additional consumption in next market B	$\frac{P_{Ar}x_{Ar}}{P_{Br}} + \frac{P_{Ag}x_{Ag}}{P_{Bg}} $

Producer in Market B
Good B Produced	$x_{B} = x_{Br} + x_{Bg}$
Tokens earned	$x_{Br}P_{Br}$ red tokens $x_{Bg}P_{Bg}$ green tokens
Cost: points decrease in market B	$x_{B} $
Benefit: additional consumption in next market A	$\frac{P_{Br}x_{Br}}{P_{Ar}} + \frac{P_{Bg}x_{Bg}}{P_{Ag}} $

Consumer in Market A
Tokens bid	$b_{r}$ red tokens $b_{g}$ green tokens
Benefit: consumption in current market A	$\frac{b_{r}}{P_{Ar}} + \frac{b_{g}}{P_{Ag}}$
Cost: foregone consumption in next market A if the sequence continues	$\frac{b_{r}}{P^{'}_{Ar}} + \frac{b_{g}}{P^{'}_{Ag}}$

Consumer in Market B
Tokens bid	$b_{r}$ red tokens $b_{g}$ green tokens
Benefit: consumption in current market A	$\frac{b_{r}}{P_{Br}} + \frac{b_{g}}{P_{Bg}}$
Cost: foregone consumption in next market A if the sequence continues	$\frac{b_{r}}{P^{'}_{Br}} + \frac{b_{g}}{P^{'}_{Bg}}$

A period consists of market A followed by market B. The number of periods in each sequence is determined as follows. At the end of each market B, the computer will draw a random integer between 1 and {{ C.DICE_MAX }}. The sequence will continue if the random draw is between 1 and {{ dice_continue_max }} (inclusive), and end if “{{ dice_end }}” is drawn.
The first {{ C.BLOCK_SIZE }} periods of each sequence is called a block. In the block, you make decisions without knowing the realization of the random numbers. At the end of period {{ C.BLOCK_SIZE }}, you learn the random numbers for the first{{ C.BLOCK_SIZE }} periods and whether the sequence has actually ended within the block. If yes, your decisions after the final period will be ignored and not count towards your final earnings. If not, the sequence continues to period {{ new_block_period }} and you will be informed about the random numbers drawn at the end of each period onwards.
Within a sequence, tokens and point totals carry over from the current market to the next.
Tokens held at the end of a sequence cannot be carried to a new sequence and have no redemption value.
When a sequence ends, depending on the time available, a new sequence may begin. The point total from all sequences will be converted into cash at the rate of 1 point = ${{ conversion_rate }}.