Transcript Powerpoint Slides

Fixed Price and Haggling
Markets
Chris McLaughry
Kwan Homchampa
Purpose
See the effects of time constraints
on selection of market.
Experiment Setup
 Buyers
 Reservation Prices of 1000 to 2800
 Steps of 200
 Sellers
 1st cost of 500
 MC increase by 50,100,150,200,250.
Setup
 9 Rounds
 2 Fixed Price
 2 Haggling
 5 Choose your market
 Times of 1 to 5 minutes
 Receipts
 Just there to annoy you
What we expected
 Haggling takes time
 Fewer Transactions per round when
haggling
 Move toward fixed price market during
shorter rounds
Supply Demand Graph
3000
2500
Price
2000
Demand
1500
Supply
1000
500
0
1
6
11
16
21
26
31
36
41
46
51
56
Quantity
61
66
71
76
81
86
91
96
Equilibrium
 Price: 1400
 Quantity: 72
 Demand Surplus: 38000
 Supply Surplus: 56000
 Total Surplus: 94000
Results
# of transactions
80
# of transactions
70
60
50
40
30
20
10
0
1
2
3
Length of Round
4
5
Profit per person
12000
10000
8000
fixed
6000
variable
4000
2000
0
1
2
3
Length of round
4
5
Number of Buyers and Sellers in the Fixed Market
8
7
6
5
Buyer
Seller
4
3
2
1
0
1
2
3
Length of Round
4
5
Time VS Market Participation
 Overall Downward Trend
 Indicates people tended towards haggling in
longer time periods
 Regression
 # of Fixed = -0.9 (length) +12.3
R square = 0.32
 Excluding 5 minutes,
# of Fixed = -2 (length) +14.5
R square = 0.8
For buyers: # of Fixed = -1.2 (length) + 7
R-sq = 0.9
For sellers: # of Fixed = -0.8 (length) + 7.5 R-sq = 0.64
Total Profit per round
80000
70000
60000
Profit
50000
Fixed
40000
Variable
Total
30000
20000
10000
0
1
2
3
Round #
4
5
Total Profit
80000
60000
40000
Fixed
20000
Variable
0
1
2
Round
Profit
 In first 4 rounds, highest overall profit
came from fixed price
 Except for the 1 minute round, overall
profit remained stable over the 5 choosing
rounds
Problems with the Experiment
 Data Collection
 Incomplete Data
 Incorrect Data
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Confusion
Buyer/Seller matchups
Sample size small
Personal Desires
Short Haggling
 Insignificant Time costs