Advantages of 1-Level Modeling
Can we do better than the other guys?
- 1-level seller makes more moeny than similar 0-level sellers.
Our previous research predicted that we would see a correlation between price volatility and the 1-level seller’s gains.
- Notice that high volatility does not guarantee higher revenues. It is only the expected revenues that are higher.
If the buyers become 1-level, they eliminate the 1-level seller’s gain.
- They are not fooled by 1-level seller.
- They end up finding the two fastest sellers. This ability can also be used to ignore sellers that are selling inadequate goods.
Keeping 1-level models is computationally expensive.
- Only some agents might want to do it.
- All agents might do it, but only sometimes (i.e. when they feel that things are not “right”).
- High variance in value, high price volatility.