MobLab
Instructions
Aa

A Market for RobotDogs

Background

• Many residents in Pigovia love their RobotDogs
• Each resident—whether a buyer or a seller of RobotDogs—is bothered by the barking of his neighbors' RobotDogs

How to Play

• Half of you are buyers, half are sellers.
• Use slider to choose value and press Bid or Ask
• You buy a RobotDog if:
• you have the highest Bid and someone either clicks "SELL AT THE HIGHEST BID" or Asks less than your Bid.
• You sell a RobotDog if:
• you click "SELL AT THE HIGHEST BID" OR
• The price of every transaction in your group is recorded on your screen.

Payoff Computation

• Buyers: Item's value displayed on your screen. For each item you purchase
• earnings = item value - price you pay - personal nuisance cost
• Sellers: Item's cost displayed on your screen. For each item you sell
• earnings = price you receive - item cost - personal nuisance cost
• All: also bothered by each dog they didn't purchase in community
• nuisance = Others' RobotDogs purchased × Community Nuisance ÷ Number in Community
• Total earnings equal sum of earning from all your transactions minus nuisance from others' purchased RobotDogs

Example

• 10 community members; Community Nuisance per dog = \$5
• Personal nuisance cost=\$5 ÷ 10 = \$0.50
• Buyer A (value=\$8.75) pays price=\$5.25 to Seller B (cost=\$1.50)
• Seller C does not sell a RobotDog
• Buyers value price personal nuisance cost = earnings
Buyer A \$8.75 \$5.25 \$0.50 = \$3.00
Sellers price cost personal nuisance cost = earnings
Seller B \$5.25 \$1.50 \$0.50 = \$3.25
Seller C \$0.50 = –\$0.50
• To calculate the total payoff, each person sums their per transaction payoffs and then considers the RobotDog transactions of others.
• If there were two other transactions in this market, and each person in our example was not party to those transactions, their payoffs would be lower by 2 × \$0.50 = \$1.00.