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Figure 2: Price distributions for populations of 0-level buyers and sellers. The prices are tex2html_wrap_inline758 . The columns represent the percentage of time the good was sold at each price, in each population. In p1 sellers return qualities tex2html_wrap_inline558 , in p2 its tex2html_wrap_inline560 , and so on such that by p8 its tex2html_wrap_inline562 . The highest peak in all populations corresponds to price 9.

Since there is no obvious way to analytically determine how different populations of agents would interact and, of greater interest to us, how much better (or worse) the agents with deeper models would fare, we decided to implement a society of the agents described above and ran it to test our hypotheses. In all tests, we had 5 buyers and 8 sellers. The buyers had the same value function tex2html_wrap_inline772 , which means that if p = q then the buyers will prefer the seller that offers the higher quality. All sellers had costs equal to the quality they returned in order to support the common wisdom assumption that quality goods cost more to produce. We also set tex2html_wrap_inline776 , tex2html_wrap_inline778 , and tex2html_wrap_inline780 . There were 100 runs done for each population of agents, each run consisting of 10000 auctions (i.e. iterations of the protocol). The lessons presented here are based on the averages of these 100 runs.

Jose M. Vidal
Wed Aug 21 07:12:37 EDT 1996