Nessun titolo diapositiva

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EXEC
Welcome to the Experiment
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Welcome to the Experiment

• Thank you for participating.
• The experiment is straightforward, and the
  instructions are simple. If you follow them
  carefully you could win a considerable amount of
  money which will be paid to you in cash at the
  end of the experiment.

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The Experiment in General

• This experiment consists of a simple market. In
  this market there is a single good (asset)
  being traded and you are all free, if you wish,
  to buy or sell the asset at any time during the
  trading period.
• You make money in this experiment either by
  trading the asset of from the dividend on the
  asset.

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Trading Periods

• The experiment will consist of a series of
  trading periods 4 practice and 10 real.
• At the start of each trading period you will all
  be endowed with some money and some units of the
  asset.
• During the trading period you will be able to buy
  and sell units of the asset in a way we will
  describe shortly.

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Dividends and Payments

• Each period all units of the asset pay a
  dividend.
• Apart from this dividend the assets are worthless
  at the end of the period.
• The dividend is either 10p or 0p - each with
  equal chance.
• Your payment for each period will be the
  difference between your money at the end of the
  period and that at the beginning.

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Your overall payment

• Your payment for the experiment as a whole will
  be the sum of the payments for each of the 10
  real periods (the practice periods do not count)
  PLUS a participation fee of 3.
• Note that your payment in a period could be
  negative if you end up with less money than you
  started.

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Information about the dividend

• Each period the asset pays a dividend either of
  10p or of 0p - each equally likely, and chosen,
  but not revealed to you, at the beginning of the
  period.
• To get more information about the dividend you
  can buy signals which are partly but not
  completely informative. Each signal costs 4p, and
  takes the value either 0 or 1.

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Signals

• Signals give information - but not perfect
  information - about the true value of the
  dividend.
• If the dividend is 10p then it is more likely
  (but not certain) that the signal is 1.
• If the dividend is 0p then it is more likely (but
  not certain) that the signal is 0.
• More precisely.

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Signal Information when dividend is 10p

• Each signal either takes the value 1 or the value
  0.
• The probability of getting a signal equal to 1 is
  3/5.
• The probability of getting a signal equal to 0 is
  2/5.

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Signal Information when dividend is 0p

• Each signal either takes the value 1 or the value
  0.
• The probability of getting a signal equal to 1 is
  2/5.
• The probability of getting a signal equal to 0 is
  3/5.

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Initial Endowments each Period

• Each participant has each period an endowment of
  
• 1000 pence in money
• 10 assets
• 0 signals
• The money can be used for buying signals or
  assets. Money can be increased by selling assets.

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What you can do each period

• Buy assets
• Sell assets
• Buy signals
• The trading mechanism for buying and selling
  assets is that known as the Double Auction this
  is simple and will be explained shortly.

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The Double Auction Mechanism

• Buyers make bids a bid is the most the buyer is
  willing to pay for an asset
• Sellers make asks an ask is the least the seller
  is willing to sell an asset for
• Buyers can accept asks
• Sellers can accept bids

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To buy

• Either
• Make a bid and have some seller accept it
• Or
• Accept an ask that some seller has made

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To sell

• Either
• Make an ask and have some buyer accept it
• Or
• Accept a bid that some buyer has made

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The procedures in practice

• Let us now show you how these procedures will be
  implemented in the experiment.
• We begin by showing the trading screen.

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Information in the top two rows

• The top row tells you what period it is and how
  much time is left to the end of the trading
  period
• The second row tells you how much money you have
  and how many assets you have at that stage in the
  trading period

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Information in the five columns

• The first is where you make asks
• The second is where you sell
• The third is where you buy signals, where you see
  these signals and where are recorded trades that
  have taken place in the market
• The fourth is where you buy
• The fifth is where you make bids

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How to make asks

• You do this in the first column
• This is when you want to make an offer to sell an
  asset
• You enter the price you are willing to accept in
  the box and then click on confirm
• Your ask will appear in the fifth column where
  are listed prices at which people are willing to
  sell

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How to sell

• You do this in the second column
• This is when you want to accept an offer to buy
  an asset any such offers will be listed at the
  top of the column
• You highlight the price you want to accept and
  then click on Sell
• Your sale will appear at the top of the third
  column where are listed prices at which the
  asset has been exchanged

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How to buy signals

• You do this in the third column
• This is when you want to buy a signal
• You click on OK
• The signal will appear just above and will be
  aggregated with any previous signals you have
  bought. (Note - signals are private. Only you see
  your signal.)

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How to buy

• You do this in the fourth column
• This is when you want to accept an offer to sell
  an asset any such offers will be listed at the
  top of the column
• You highlight the price you want to accept and
  then click on Buy
• Your purchase will appear at the top of the third
  column where are listed prices at which the
  asset has been exchanged

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How to make bids

• You do this in the fifth column
• This is when you want to make an offer to buy an
  asset
• You enter the price you are willing to pay in the
  box and then click on confirm
• Your bid will appear in the second column where
  are listed prices at which people are willing to
  buy

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Detail

• Let us now look at these various operations in
  more detail and in a slightly different order
• First, buying signals
• Second, making an ask
• Third, buying
• Fourth, making a bid
• Fifth, selling

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How to buy signals
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In this box you can buy signals. This box will
record how many signals you have bought and their
values.
Click on the OK button if you want to buy a signal
The cost of a signal is 4p
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If you press again the ok button you buy another
signal
Your money will pass from 1000p to 996
Your signal is one
Now you have a signal
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Your money will pass from 996p to 992p
Your second signal is one
Now you have two signals
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How to make an ask
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All other players will see your ask in this box
From this box you can put in the market the
price you ask to sell one of your assets.
In this box you have to write the price you ask
to sell one of your assets.
To confirm your choice it will be sufficient to
press this button.
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How to buy
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If you want to close the contract and buy the
asset you have to push the button Buy
All subjects that want to buy an asset for 8p can
try to close the contract. Now only one asset is
on the market, and so only the faster subject
will buy the asset at the price of 8p
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The market price will be subtract from your money
The exchange price will be visualize in this box.
The bought asset will be summed to your assets
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How to make a bid
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All other players will see your bid in this box
From this box you can put in the market the
price you bid to buy an asset.
In this box you have to write the price you bid
to buy an asset.
To confirm your offer you have to press
this button.
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How to sell
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If you want to sell one of your assets you have
to press the button Sell.
All subjects that want to sell an asset for
5p can try to close the contract. At the moment
there is only one subject that to buy an asset
for 5p. Only the faster subject will sell his
asset at the price of 5p.
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The market price will be sum to your money
The exchange price will be visualize in this box.
The bought asset will be subtract from your assets
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When the market will be closed, it will be
revealed the asset dividend, and your pay off
will be calculated.
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Parameters of the experiment
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• Parameters of the experiment
• Participation bonus 3 pounds

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• Parameters of the experiment
• Participation bonus 3 pounds
• Starting money 10 pounds

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• Parameters of the experiment
• Participation bonus 3 pounds
• Starting money 10 pounds
• Starting Assets 10

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• Parameters of the experiment
• Participation bonus 3 pounds
• Starting money 10 pounds
• Starting Assets 10
• Starting Signals 0

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• Parameters of the experiment
• Participation bonus 3 pounds
• Starting money 10 pounds
• Starting Assets 10
• Starting Signals 0
• Cost of a Signal 4p

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• Parameters of the experiment
• Participation bonus 3 pounds
• Starting money 10 pounds
• Starting Assets 10
• Starting Signals 0
• Cost of a Signal 4p
• Dividend either 10p
• or 0p

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• Parameters of the experiment
• Participation bonus 3 pounds
• Starting money 10 pounds
• Starting Assets 10
• Starting Signals 0
• Cost of a Signal 4p
• Dividend either 10p
• or 0p

Signals are generated by a dies with three 1 and
two 0
Signals are generated by a dies with three 0 and
two 1
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Conclusions

• That is the end of the Instructions
• If you have any questions at this stage, please
  ask one of the experimenters
• We now proceed to the first of the four practice
  rounds.