Instructions for the Second Experiment

The objective of the game is to trade so as to reach the highest possible level, where the levels are described in the table below. There are 8 levels indicated below. Each level is defined by a row which includes nine different combinations of good X and good Y. Each combination is denoted by parentheses, with the first entry indicating the number of units of good X and the second entry indicating the number of units of good Y. You attain a particular level when the quantities of good X and good Y you end up with (after trading) are either both equal to or surpass one of the 9 X-Y combinations that define the level. For example, if you trade so that you end up with 18 units of good X and 37 units of good Y then you will have attained level 3 as the point (18, 37) is on level 3. Similarly, if you end up with 19 units of good X and 38 units of good Y then you would also end up on level 3 as there is no point on level 4 (or any higher level) which Is composed of 19 or less units of good X and 37 or less units of good Y.

Keep track of all trades so that you know how many units of good X and good Y you end up with. At the end of Round 1, compute your profits as follows. First, ascertain the level you attained based on the number of units of good X and good Y you end up with. Multiply this level by .50. For example, if you attained level 3 then you get 3 x \$.50, or \$1.50. Add to this a commission of \$.10 for each of the first 16 units you sell of the good you have less of at the end of the round. For example, if you started with 72 units of good X and 10 units of good Y and you end up with 62 units of good X and 15 units of good Y, then add 10 x \$.10, or \$1.00, for the 10 units of good X you sold. If you ended up with less than 56 units of good X, meaning that you sold over 16 units of good X, than add 16 x .10, or \$1.60, as you only get a commission on the first 16 units sold. Similarly, if you end with less of good Y then you started with (and more of good X) then compute the commission on the number of units of good Y sold. Record your total profits in Round 1, including the commission, in the space marked profits in Round 1 on the sheet you will subsequently be distributed. Also record the amount of goods X and Y you ended up with at the end of the round.

There are two rounds in the experiment. The second round is identical to the first. In the second round, you will again begin with the same number of units of good X and Y you started with in the first round. The rules of the second round are the same as the first round. At the end of the second round, compute your profits the same way as in the first round and record your profits and the numbers of units of goods X and Y you ended up with on the sheet you will subsequently be distributed. Then add your profits on the two rounds and enter the total on the space marked total profits. Make sure the names and sections of all members of your group are recorded on the sheet you will be subsequently given. Hand in this sheet at the end of the experiment.

Schedule of Levels

Level Combinations of X and Y

1 (10,72) (12,48) (14,28) (16,18) (17,17) (18,16) (28,14) (48,12) (72,10)

2 (12,84) (14,56) (16,32) (18,22) (20,20) (22,18) (32,16) (56,14) (84,12)

3 (14,96) (16,64) (18,37) (21,25) (23,23) (25,21) (37,18) (64,16) (96,14)

4 (16,108) (18,72) (21,41) (23,29) (26,26) (29,23) (41,21) (72,18) (108,16)

5 (18,126) (21,84) (24,48) (27,33) (30,30) (33,27) (48,24) (84,21) (126,18)

6 (20,138) (23,92) (26,53) (30,36) (33,33) (36,30) (53,26) (92,23) (138,20)

7 (22,150) (25,100) (29,57) (32,40) (36,36) (40,32) (57,29) (100,25) (150,22)

8 (24,168) (28,112) (32,64) (36,44) (40,40) (44,36) (64,32) (112,28) (168,24)