### Part 1 Instructions - Page 1 of 4

• Rounds

This part of the experiment, part 1 of 3, consists of 10 rounds.

• Sellers

The experiment is for 2 players, who are both sellers in the same market. Your earnings depend on the decisions made by you and by the other seller.

• Fixed Matching

You will be matched with the same person in all 10 rounds, who will be selected at random from the other participants.

• Price Decisions

You begin each round by choosing a price between £3.00 and £15.00 inclusive. You cannot see the other seller's price when choosing your price and vice versa.

• Sales Quantity

The buyer purchases from the seller who demands the lower price. The quantity purchased is inversely related to the price: the higher the price, the lower the quantity. If more than one seller ties for the lowest price, the quantity is divided equally between them.

If your price is the lower, your sales quantity is defined by the following formula:

Your sales quantity = 15.00 - (lower price).