My research mentor first approached me with a research project about the real estate market bubble. My interest in financial markets immediately attracted me to the project because it offered me a chance to learn about the fundamental causes of market bubbles. Additionally, the research project offered me a chance to develop my programming experience while developing a simulated real estate market. Both of these qualities fit into my long-term goal of going to graduate school to study either computer science or financial mathematics and eventually pursuing my career goal of becoming a sort of data or research analyst for an investment firm.
My research has mainly consisted of programming the experiment in Second Life. I usually go into my professor’s lab around three to four days a week. While at the lab, I’ll program my experiment, talk to my professor about the experimental design, or read an article my professor has given to me. Additionally, the lab, which consists of three graduate students and me, gets together and discusses each person’s weekly progress. I particularly enjoy these discussions because I get to learn about the other research projects the lab is conducting and the economic problems they are trying to solve. I’ve learned a great deal about economics and computer science from the graduate students, such as differences between exogenous and endogenous markets and how to improve the efficiency of an algorithm. I’ve also gotten the chance to talk to the Nobel Laureate Dr. Vernon Smith as an expert in real estate markets.
One thing I learned this week was the differences between English and Dutch auctions. A Dutch auction is a descending price auction where a finite quantity of goods begins selling at a starting price, and then descends to an end price. Buyers then risk having a particular good sell out while waiting for a cheaper price. On the contrary, an English auction is an ascending price auction where buyers choose when they want to leave the auction. The auction starts with every buyer in the auction at a low price. The price then increases until enough players have left the auction so that the quantity of goods equals the quantity of buyers.