Though the commodities being traded are fictitious, the stakes aren't. Welcome to Timothy N. Cason's experimental economics laboratory, where the lofty theories of economics come down to earth. Look no farther. Of course, they're stripped-down markets. Its value vacillates between 200 and 500 units in an experimental currency he's calling francs.
Markets are markets.
The student traders are separated by improvised cardboard partitions to prevent them from spying on rivals' moves. On this particular afternoon, Cason is conducting part of an experiment that he hopes will illuminate a controversy that has dogged the electronic stock exchange. Critics have alleged that dealers collude with each other to earn greater profits at the expense of investors. Ultimately, Cason wants to show the role that computer signals play in any possible price-fixing. But over the course of this session's 12 trading periods, he's trying to demonstrate how the market would function if dealers had no way to communicate with each other besides posting prices.