Controlling Individual Types

 

A big advantage of using password files is that you lock each trader’s number in the market.  For

example on the default password file the first five passwords are as follows:

 

aa3247

ADD6790

adn3275

aj9134

AT5678

 

So the trader who logs in with aa3247 is trader number 1, ADD6790 is trader number 2 and so on.  It does not matter when they login their slot is preserved.  This in turn lets you control precisely each trader’s type.

 

For example in the basic case B01 there are two types defined as follows:

 

Trader Type Data

Type 1

Type 2

Cash

1000

1000

Endow 1

15

0

Endow 2

0

15

Rights 1

0

0

Rights 2

0

0

Lower Bound

-100000000

-100000000

Lower Bound Payoff

-100000000

-100000000

Upper Bound

100000000

100000000

Upper Bound Payoff

100000000

100000000

Constant

0

0

Linear Coefficient

0.0001

0.0001

Quadratic Coefficient

0

0

Log Coefficient

0

0

CARA Coefficient

0

0

CARA Exponent

0

0

HARA Coefficient

0

0

HARA Exponent

0

0

 

Each trader type has 1000 cash and trader type 1 has 15 units of endow 1 (coupon bond) and 0 units of the zero coupon bond.  Trader type 2 has 0 units of the coupon bond and 15 units of the zero coupon bond.  Their trading rights are 0 for each (no restrictions). 

 

Aside:   Trading rights can be set per security and per trader:  0 no restrictions, 1 make market only (i.e., a dealer), 2 take market only, 3 cannot trade at all.

 

A linear conversion is used for both types to trading or grade cash bonus.  This is merely 0.0001*market cash of their final marked position.  Some interesting and simple variations of this is to use a natural logarithm coefficient (say 1000 beside the log coefficient) this will scale market cash as 1000*ln(Market Cash) and setting it to 0 if market cash is negative.  The advantage of this is that it makes the traders attend to risk and return as if they are risk averse with log preferences.

 

In the above the upper and lower bounds define what range of market cash is permitted.  This can be large.  Outside the range the trading bonus (Grade cash) conversion is bounded at the amount that corresponds to the upper/lower bound.

Locking Types:

 

In the above the first five passwords lock in the types as follows:

 

Aa3247  =  Type 1,

ADD6790 = Type 2,

Adn3275 = Type 1,

Aj9134 = Type 2, etc.,

 

This is assigned irrespective of when they actually login or what order they login.

 

So you can see how to control the types and or type of market (dealer versus double auction) by specifying each type carefully.

 

How Do I Add Types?

 

You can easily add new types to any case.  To do so requires using additional columns carefully in the spreadsheet as illustrated below:

 

First, Cell B6 specifies how many types.  The default for B01 is 2

Second, A,B,C 20 --- A,B,C 47 must exactly equal the two types plus the labels.

 

This is illustrated below:

 

Number of Securities

2

Name

Cp Bnd

Maximum Number of Trials

8

Security Type

Bond

Number of Periods per Trial

3

Price Quotes

Endogenous

Period Length (seconds)

240

Start Life

1

Maximum Number of Traders

60

End Life

3

Number of Trader Types

2

Short selling

Yes

Market Depth

10

Quote to Price Formula

Quote

Depth Displayed

5

Information

No

Borrowing Allowed

Yes

 

 

Last Row with Exogenous Prices

 

 

Number of Information Types

0

 

 

Last Row with Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recalculate

No

 

 

 

 

 

 

 

 

 

 

Trader Type Data

Type 1

Type 2

Payoff and Settlement Data

Cash

1000

1000

Trial 1

Endow 1

15

0

Period 2

Endow 2

0

15

Period 3

Rights 1

0

0

Trial 2

Rights 2

0

0

Period 2

Lower Bound

-100000000

-100000000

Period 3

Lower Bound Payoff

-100000000

-100000000

Trial 3

Upper Bound

100000000

100000000

Period 2

Upper Bound Payoff

100000000

100000000

Period 3

Constant

0

0

Trial 4

Linear Coefficient

0.0001

0.0001

Period 2

Quadratic Coefficient

0

0

Period 3

Log Coefficient

0

0

Trial 5

CARA Coefficient

0

0

Period 2

CARA Exponent

0

0

Period 3

HARA Coefficient

0

0

Trial 6

HARA Exponent

0

0

Period 2

 

Now suppose you want to change from 2 types to 4 types, you do so as follows:

 

First cut the tan section that is beside the types above and move this subsection over three columns.  Then copy and paste the types section (two traders only not names) and paste beside type 2.  Relabel types to 3 and 4 and change as desired the components.

 

Finally, do not forget to change cell B6 from 2 to 4.  This will now appear as follws (plus we have given 3 and 4 a real position 1,000,000 cash and 15,000 securities!

 

Number of Securities

2

Name

Cp Bnd

Zero Cp

 

Maximum Number of Trials

8

Security Type

Bond

Bond

 

Number of Periods per Trial

3

Price Quotes

Endogenous

Endogenous

 

Period Length (seconds)

240

Start Life

1

1

 

Maximum Number of Traders

60

End Life

3

3

 

Number of Trader Types

4

Short selling

Yes

Yes

 

Market Depth

10

Quote to Price Formula

Quote

Quote

 

Depth Displayed

5

Information

No

No

 

Borrowing Allowed

Yes

 

 

 

 

Last Row with Exogenous Prices

 

 

 

 

Number of Information Types

0

 

 

 

 

Last Row with Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recalculate

No

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trader Type Data

Type 1

Type 2

Type 3

Type 4

Payoff and Settlement Data

Cash

1000

1000

1000000

1000000

Trial 1

Endow 1

15

0

15000

0

Period 2

Endow 2

0

15

0

15000

Period 3

Rights 1

0

0

0

0

Trial 2

Rights 2

0

0

0

0

Period 2

Lower Bound

-100000000

-100000000

-100000000

-100000000

Period 3

Lower Bound Payoff

-100000000

-100000000

-100000000

-100000000

Trial 3

Upper Bound

100000000

100000000

100000000

100000000

Period 2

Upper Bound Payoff

100000000

100000000

100000000

100000000

Period 3

Constant

0

0

0

0

Trial 4

Linear Coefficient

0.0001

0.0001

0.0001

0.0001

Period 2

Quadratic Coefficient

0

0

0

0

Period 3

Log Coefficient

0

0

0

0

Trial 5

CARA Coefficient

0

0

0

0

Period 2

CARA Exponent

0

0

0

0

Period 3

HARA Coefficient

0

0

0

0

Trial 6

HARA Exponent

0

0

0

0

Period 2

 

Finally, whenever you change a case save the Excel spreadsheet and run a local test on the same PC (i.e., open the market and two traders just to try it out).