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1-level buyers and 1 and 2-level sellers.

Assuming that the 2-level seller has perfect models of the other agents, we find that he wins an overwhelming percentage of the time. This is true, surprisingly enough, even when some of the 1-level sellers offer slightly higher quality goods. However, when the quality difference becomes too great (i.e. greater than 1), the buyers finally start to buy from the high quality 1-level sellers.

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