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0-level buyers and sellers.

This type of population is equivalent to a ``blind'' auction, where the agents only see the price and the good, but are prevented from seeing who the seller (or buyer) was. As expected, we found that an equilibrium pricegif is reached as long as all the sellers are providing the same quality. Otherwise, if the sellers offer different quality goods, the price fluctuates as the buyers try to find the best price to buy at and the sellers try to find the pricegif the buyers favor. In these populations, the sellers offering the higher quality, at a higher cost, lose money. Meanwhile, sellers offering lower quality, at a lower cost, earn some extra income by selling their low quality goods to buyers that expect, and are paying for, higher quality. When they do this, we found that the mean price actually increases, evidently because price acts as a signal for quality and the added uncertainty makes the higher prices more likely to give the buyer a higher value. We see this in Figure 2, where population p1 has all sellers returning the same quality while in each successive population more agents offer lower quality. The mean price increases in successive populations, but eventually decreases, after enough sellers start returning low quality goods.



Figure: Price distributions for populations of 0-level buyers and 0-level sellers plus one 1-level seller (#12). In p1 sellers return qualities tex2html_wrap_inline566 , in p2 its tex2html_wrap_inline568 , and so on such that by p7 its tex2html_wrap_inline570 . The 1-level seller and seller #5 always return quality 2.

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