In the first session of exercise one, the sellers were able to sell nothing or up to two products but the buyers could only by one. There were no taxes or consequences so the only enemy of the seller was trying to outsell the others due to the instant competition created by being able to sell two products. My prediction for round one was that not every seller would be able to sell their product which was unable to be prove due to the way the data was shown on the excel spreadsheet. We are able to see that there were 16 transactions in all three sessions of round one but we cannot see the seller ID and so it is not able to be proved if my theory on competition was correct.
The second session of round one helped my second theory that the sellers would lower their prices in order to outsell their competition. The sellers were so determined to sell that they did not really seek out higher value buyers, they simply stated how much they wanted and bargained from there.
The third session of round one was very telling as the sellers continued to decrease their prices. The average cost of product went from an initial average of $14.22 down to $13.41, a 6% decrease within only two rounds. The buyers profit went from $140.50 to $145.50, a $5 increase, while the sellers as a whole lost $13 in profit.
The cannibalization amongst sellers was horrific. They were even competing with the other buyers with the intent to sell both of their products for very cheap, rather than selling one product for a higher cost. The sellers were shouting offers without figuring out the highest profit they could make first. This was not the best marketing strategy as even in a perfect market, the high value buyer is suited for the low value seller and thus the other two groups likely would have gone without or made little to no profit.
In exercise two, there was initiated a $5 fine for the