Economics 201: Double-Oral Auction Lab Report Assignment
Fall
2006
You have participated in two experiments using a double-oral
auction market. The other lab sections performed two experiments with a similar
basic structure, but with different numbers. You are now to write a brief report
interpreting the results of the experiments based on the economic theory of markets.
You will probably want to focus on the experiments in which you participated,
but you may also discuss the experiments performed by the other sections (and
you need to look briefly at them for question 4). This report is to be written
in collaboration with a partner as assigned below. Each pair of lab partners should
submit one report, which is due in class on the morning of Wednesday, September
6.
Information about buyer values and seller costs in each experiment, along
with full documentation of experiment results, are available using links provided
at the bottom of this page. Note that the results for the
three lab sessions are located on separate pages of the Results_F06 worksheet.
You may use the computational features of Excel to make calculations that are
relevant to your analysis. Be sure to take account of the fact that the tables
in the Values spreadsheet allow for 16 buyers and sellers in each lab. Some labs
may have had fewer participants; the exact numbers are noted on the Results worksheets.
In
preparing your report, you might wish to consider the following questions:
- What was the demand curve for widgets in each experiment by that group of
participants designated as "buyers?" (Hint: This is to be derived from their given
values, not from the results of the experiment.)
- What was the supply
curve for widgets in each experiment by that group of participants designated
as "sellers?" (The above hint applies here as well.)
- Was the outcome in
terms of quantity exchanged and price in each experiment what you would expect
based on theory? What about the pattern that the distribution of trading prices
followed from the first trading period to the last?
- How did the six experiments
(two in each lab sections) differ from one another? How would you expect these
differences to affect the outcomes? Do you see these effects in the actual results?
- How
closely did the experimental market compare to the textbook paradigm of a competitive
market, both in terms of assumptions and in terms of the actual prices and quantity
exchanged that you observed? What were the principal similarities and differences?
- Suppose
that buyers and sellers with values and costs like those in the experiment were
interacting in a market that achieved perfect competitive equilibrium (CE). In
a CE, some buyers and sellers may choose not to undertake transactions, but all
transactions that occur are at the same competitive equilibrium price. How much
profit would each buyer and seller have earned (per period) in CE? What would
have been the total profit to buyers and total profit to sellers (per period)
in CE? How do those total "potential" profits for buyers and sellers compare to
the total actual profits from exchange in the various periods of the experiments?
(Note: It will take you a long time to calculate the profits from every period
of every experiment. Select a few periods to work with at first and then go as
far with this as you can/want to.)
- In this experiment there may have been
periods in which the price was restricted by a price control (ceiling or floor),
in which sellers or buyers were urged to collude, or in which a tax was placed
on buyers or sellers. Do the results you observe under these market distortions
match those you expect based on economic theory? Explain.
Links
to data values, experiment results, and partner assignments:
Data
values for double-oral auction (Excel spreadsheet)
Results
of Fall 2006 experiments (Excel spreadsheet)
Partners
for double-oral lab report (pdf document)
Any questions
or problems? parker@reed.edu