1. Summary Buyer or Seller: You will be randomly assigned to the role of a Buyer or Seller by the computer. Your role will remain the same throughout the entire experiment and will be known only to you. Buy or Sell: Depending on your role you will buy or sell units of a fictitious commodity. Keeping track of time: You are given a limited time to make your decisions. Trading Rounds: There are multiple trading rounds. Tax per unit: A tax per unit in the amount of $12.00 is collected from the Sellers in the market.

2. What does a Seller do in this experiment? What is known to Sellers? Sellers will know their costs plus the tax per unit, and the number of units they have available to sell. This is private information. What decisions do Sellers make? Sellers can sell units in the market in two ways. One is by posting a price (Ask) and waiting for Buyers to accept that price. The second way is by accepting a price (Bid) posted by Buyers. How do Sellers make money in this experiment? By selling units at prices greater than their costs plus tax per unit. An Ask price can be any price between $0 and $100. Note: Once trading begins, your screen will show all outstanding Bid and Ask prices in the market.

3. What does a Buyer do in this experiment? What is known to Buyers? Buyers know their values per unit. This is private information. What decisions do Buyers make? Buyers can buy units in the market in two ways. One is by posting a price (Bid) and waiting for Sellers to accept this price. The second way is by accepting a price (Ask) posted by Sellers. How do Buyers make money in this experiment? By buying units at prices less than their values per unit. A Bid price can be any price between $0 and $100. Note: Once trading begins, your screen will show all outstanding Bid and Ask prices in the market.