Guild Wars 2

There was an interesting article on Gamasutra, and I wondered what you all thought of it:

http://www.gamasutra.com/blogs/RaminShokrizade/20130426/191346/Guild_Wars_2_Economy_Review.php

Do you think his take on the state of the economy in GW2 is accurate?

He totally messed up a couple of notions.

First players can’t trade gems directly with each other. Players have no say in what the price of those gems are, it’s all done automagically.

And while the TP does take 15% away from buyers, the cost of buying and then turning around and selling gems back to the exchange is much greater than 15%, a simple calculator shows that.

Lastly he downplayed karma saying it’s scarcer than coin and worth less than copper. I had a quarter of a million karma to buy my Orr armor before I became someone who intentionally did dailies for the 4500 karma. It does have a use, just toward the end as a means to get some exotic class armor or cultural weapons and the occasional unique crafting material.

And one other thing that’s ignored. Need doesn’t drive innovation in the game. The stats of all the items that can be crafted or dropped were determine before the playerbase determined whether it would be useful or not. Because of that lots of crafted items simply don’t have a demand as the playerbase collectively steer away from them. This causes one of the imbalances between material cost to create an item vs what an item can sell for. The other is players level crafting by building what ever is cheapest to them. Demand or profit doesn’t factor into it usually. This then creates items or sub-assemblies that are much cheaper than what it costs to make because the market is flooded with them by players who just want to get their crafting skills up than satisfy demand for a profit. A little compensation at the TP is better than none since there aren’t any NPC to my knowledge are looking to buy staff head or sword hilts so it’s that or deleting them so sell them at a loss.

Hm. Some of his article is interesting, but he obviously didn’t spend any time with the end-game and doesn’t discuss the impact of token currencies (the vast majority of currencies in the game) at all. So I think the methodology is very flawed, because there’s huge chunks of the economy he plain ignored.

There’s no discussion of karma – he basically dismisses it because it can’t be turned into gold easily. There’s no mention of karma equipment, really, and karma equipment is one of the fundamentals of getting endgame equipment quickly. And to ignore the impact of token currencies is strange, because so much of the endgame economy revolves around dungeon-running and the acquiring or using token currencies, plus the temporary content all seems to introduce token systems which have their own impacts on the economy.

He’s right that the crafting system is pretty underwhelming. Yeah, it’s great that you can use it to level up, but there aren’t a whole lot of incentives to crafting beyond the leveling XP – particularly before the end game.

Ensign.2189:

He’s right that the crafting system is pretty underwhelming. Yeah, it’s great that you can use it to level up, but there aren’t a whole lot of incentives to crafting beyond the leveling XP – particularly before the end game.

It’s interesting though, because the population as a general still thinks that EXP is worth losing money over, seeing the abundance of crafted items which still flood the market at a loss of money.

Ursan.7846:

Ensign.2189:

He’s right that the crafting system is pretty underwhelming. Yeah, it’s great that you can use it to level up, but there aren’t a whole lot of incentives to crafting beyond the leveling XP – particularly before the end game.

It’s interesting though, because the population as a general still thinks that EXP is worth losing money over, seeing the abundance of crafted items which still flood the market at a loss of money.

With the base design of GW2’s crafting system, you’re never going to see a real strong potential for profits in the crafting markets. There’s no cooldowns on recipes and instant, completely equal access to raw materials. This is just about as close to that oversimplified “perfect competition” model as you could ever get. What happens there? Economic profits fall to zero.

He’s right in the sense that the way Anet implemented the item drop system not only negates most of the value of crafting, but is really a lost opportunity to open up a whole other area of the game to those that like crafting as a “profession”.

Why on earth are low-level mobs dropping fully crafted goods? Why on earth would a stag drop a piece of armor? Where do all these animals keep all these armor and weapons they drop all over. It’s a pretty ridiculous if you think about it. I could understand most of the humanoid-type mobs dropping (most) of these types of things, but spiders? Bears? Deer?

Come on. It’s plain stupid.

If, however, these mobs dropped nothing but raw materials needed for crafting, then crafting would suddenly be worthwhile, as opposed to the very limited opportunities for profit it represents now.

The good news is – this would be an easy change to make. Disruptive to the economy in the short term, to be sure….but it sure would make both looting and crafting a heck of alot more interesting (and potentially profitable).

In my opinion, no “finished goods” should drop from kills AT ALL. All weapons, clothes, armor, etc….should be made by craftsman, period.

Cmon, Anet….you obviously spent a ton of development time on creating crafting in the game, only to totally and completely negate 99% of its’ value as a game element due to your drop system.

Time to let go of the easy button.

Savage Deathknell.2036:

He’s right in the sense that the way Anet implemented the item drop system not only negates most of the value of crafting, but is really a lost opportunity to open up a whole other area of the game to those that like crafting as a “profession”.

Why on earth are low-level mobs dropping fully crafted goods? Why on earth would a stag drop a piece of armor? Where do all these animals keep all these armor and weapons they drop all over. It’s a pretty ridiculous if you think about it. I could understand most of the humanoid-type mobs dropping (most) of these types of things, but spiders? Bears? Deer?

Come on. It’s plain stupid.

If, however, these mobs dropped nothing but raw materials needed for crafting, then crafting would suddenly be worthwhile, as opposed to the very limited opportunities for profit it represents now.

The good news is – this would be an easy change to make. Disruptive to the economy in the short term, to be sure….but it sure would make both looting and crafting a heck of alot more interesting (and potentially profitable).

In my opinion, no “finished goods” should drop from kills AT ALL. All weapons, clothes, armor, etc….should be made by craftsman, period.

Cmon, Anet….you obviously spent a ton of development time on creating crafting in the game, only to totally and completely negate 99% of its’ value as a game element due to your drop system.

Time to let go of the easy button.

That’s not the case at all. While such a system would increase the opportunities for profit, and remove most instances of “loss” type crafting items, it wouldn’t magically make the crafting system profitable. No matter what you do with the demand side of this equation, there is (effectively) no barrier to entry into the supply side of the market. Crafting is non-profitable (for most people, obviously there’s a lot of opportunities for profit for experts) not because of “competing products” or a relative lack of demand. It’s non-profitable because there are no mechanisms to ensure economic profits. When an item becomes profitable, it takes almost no time or effort for anyone to immediately satisfy that market need. There’s entire websites dedicated to exposing those opportunities as well, so there’s no disproportionate information about the markets either. The only way to ensure meaningful profit opportunities are abundant is to limit the supply somehow. The most obvious (and most used in past virtual economies) is cooldowns on crafting recipes. Another option (which actually exists in GW2) is to introduce account bound crafting materials (such as skill point purchased items). A third option (also exists in GW2) is to limit access to the recipe (food trays and destroyer weapons).

Besides, what sense would it make that when you kill a risen who was just hitting you with a sword, it’s impossible for him to drop that weapon? If you’re criticizing drops to that degree, it has to be acknowledged that either he has a sword, or he’s not hitting you with it.

Ramin Shokrizade, the well known virtual economist, recently took a long look at GW2’s endgame economy and found issues with it and ultimately felt it’s very broken.

Here are some highlights.

Anyone agree? Disagree? What are your thoughts on this matter and how can this be remedied?

Source
http://gamasutra.com/blogs/RaminShokrizade/20130426/191346/Guild_Wars_2_Economy_Review.php

http://gamasutra.com/blogs/RaminShokrizade/20130426/191346/Guild_Wars_2_Economy_Review.php

Well.. this says a lot about GW2. I wonder if our own economist is brave enough to argue this piece of text.

I am also interested in what our economist has to say.

His math, is off… (partially because he didn’t play endgame content in his review, partially because his numbers are off (trading post has a 5% posting fee and a 10% tax, not a 5% tax))

His methodology is not equivalent to the average player experience (he did ALL level 15 zones before going on to the next zone, and thus was level 37 before going into a level 15+ zone)

Sure there are a lot of items in gw2 that are vendor trash, the number of vendor trash items however doesn’t mean your economy is broken.

If he is only looking at pre-80 sure vendor trash items are broken and people value crafting xp overall because a lot of people use that to level, so the level 80 economy is driving up the price of crafting materials as there are less players generating sub L5 crafting materials than those that need them.
The demand for sub 80 gear however is lower than the outputs, crashing the price to below vendor value (to which the TP caps so people sell at that +1).

“Goods are so badly flooded that it is much cheaper to just sell your equipment and buy new equipment instead of repairing it when it gets damaged.”

Um, what?

actually the article is about pre-endgame economy, not the endgame economy

beat me to the punch!

I personally feel the entire economy and reward systems are not good but that’s just me.

I like to spend money but not on junk (most of what is offered on the gem store) or because of dr, low reward rates, rng and the variable gem to gold rates for said junk or necessity stuff. overall this f2p economy design strongly encourages you to spend a lot of $ but for very little in return. basically anet created an online version of expensive dates with little “forward progression” (censored for young eyes).

Creeper.9360:

actually the article is about pre-endgame economy, not the endgame economy

Ahhh, NOW that statement I quoted makes sense.

Well, with respect to pre-endgame economy, he’s not wrong!

Pre-endgame economy.

“With the exception of craft materials, the pre-endgame item economy is broken.” His bold.

With that said, he also says: “Thus the pre-endgame item economy in GW2 is one of the worst I have studied in the last 14 years.”

This I thought was particularly apropos, considering that karma used to be hard to come by:

“Karma, despite being more rare than copper, has a value in the economy of much less than one copper, making it almost valueless in the economy.”

And this is the reason they should nerf the crap out of CoF P1:

“Coin is scarce, which is good as it makes the primary currency economy tight.”

Otherwise one of the things they got right will become no so right.

To be fair, I only read through the article once, and very quickly at that. I did so, because his approach, and observations, are very narrow and actually only pertain to a narrow portion of the economy.

It appears his approach of economy is to determine value based upon the goods and services produced by the population – i.e. gathering and crafting in games terms. His observations, and conclusion are derived from his efforts to gather, craft and sell items on the TP.

While he may propose that this may be a valid indicator of economic viability in other games, I would argue it is not for GW2 for the most part.

Unless I’m being too dismissive, basing one’s entire findings limited observations is a bit presumptuous, and can only be of limited merit.

The analysis is flawed. Normally if you’re a professional and going to be critical on something, you need to do your research first.

This is just an economist on economist crime. Can’t we all just get along?

I cringed when he said “somewhat pay to win.” Haven’t spent a dime in gem store and still kicking kitten against anything I come across.

This guy may be right about pre- engame, it is really hard to build what you want pre-lvl80. Other than that I don’t know why he would call GW2 a “somewhat pay to win”

Crafting rare-quality leveling gear is profitable. That he’s basing his opinion on the leveling item economy on the cost of crafting vendor trash says an awful lot about his methodology.

Of course I don’t even know why anyone would expect anything of value when the prelude to the article is bordering on technobabble.

Chewablesleeptablet.3185:

I cringed when he said “somewhat pay to win.” Haven’t spent a dime in gem store and still kicking kitten against anything I come across.

This guy may be right about pre- engame, it is really hard to build what you want pre-lvl80. Other than that I don’t know why he would call GW2 a “somewhat pay to win”

I think he means it’s “somewhat pay to win” because once you cap at level 80 and have your character fully geared in exotics, there’s no other real metric to advancing that character other than amassing gold, and since you can just buy gold with real money, it’s “somewhat pay to win.”

Smooth Penguin.5294:

This was brought up in the Black Lion Trading area, but I’ll post here what I did there:

The analysis is flawed. Normally if you’re a professional and going to be critical on something, you need to do your research first.

Normally when people come out and say something is “flawed,” they give reasons why.

There’s a pre-endgame economy?

Shootsfoot.9276:

Smooth Penguin.5294:

This was brought up in the Black Lion Trading area, but I’ll post here what I did there:

The analysis is flawed. Normally if you’re a professional and going to be critical on something, you need to do your research first.

Normally when people come out and say something is “flawed,” they give reasons why.

I’m currently at work, so I only have time to post quick shots here and there when the boss isn’t looking. Other players who frequent the forums will cover why his analysis is flawed, so I’m not too worried about that. But for those of us in the know, we can already pick out key parts of his argument that are off base.

Smooth Penguin.5294:

Shootsfoot.9276:

Smooth Penguin.5294:

This was brought up in the Black Lion Trading area, but I’ll post here what I did there:

The analysis is flawed. Normally if you’re a professional and going to be critical on something, you need to do your research first.

Normally when people come out and say something is “flawed,” they give reasons why.

I’m currently at work, so I only have time to post quick shots here and there when the boss isn’t looking. Other players who frequent the forums will cover why his analysis is flawed, so I’m not too worried about that. But for those of us in the know, we can already pick out key parts of his argument that are off base.

You need to work where I work! :P

Shouldn’t the title be “PRE-endgame economy is broken”?

Gotta watch out for those “Economic Terrorists”, right Gayle?

Creeper.9360:

actually the article is about pre-endgame economy, not the endgame economy

The article is about Low Level, Mid Level and End Game Economy. The End Game economy is definitely minimal in comparison to the analysis of the rest though.

I do agree with one major point though, crafting is essentially useless. Everything you can craft is cheaper to buy on the TP than it is to craft. It would be in your best interest to sell the mats and buy the item than it would be to craft the item. The only 2 reasons to craft are 1. it’s fun? (not for me) or 2. experience

Dystopiq.5218:

Goods are so badly flooded that it is much cheaper to just sell your equipment and buy new equipment instead of repairing it when it gets damaged.

Not letting that guy balance my checkbook lol.

Actually in GW2 there’s an argument to be made that crafting sub-80 gear makes items less valuable than the materials because you are extracting the XP instead of adding value.

I agree with the folks above that the analysis is flawed. It seems like he knew what answer he wanted to get before he started analyzing.

Smooth Penguin.5294:

The analysis is flawed. Normally if you’re a professional and going to be critical on something, you need to do your research first.

This is just an economist on economist crime. Can’t we all just get along?

naw, it’s clear that he did research.

gw2 economy is about as exciting, rewarding and good as the sword swinging (1,1,1,1,1,1,1,1,1,1,1,1,1…) around these parts.

I’m actually really interested in John Smith’s take on this article, actually.

He really whiffs on his analysis of crafting. I believe Syeria stated pretty eloquently in another thread, but the barrier of entry into the crafting disciplines are VERY LOW. Any mid-level recipes that “make” money, once it becomes common knowledge, is quickly going to lose its profitability. Most mid-level recipes hemmorage money, and yet the market still continues to craft them in huge numbers, because the playerbase as a whole has determined that the exp obtained from crafting is worth the gold lost for it. I think this is a very important point that most people seem to miss.

But with relation to, in his own words, “the pre-end game economy,” what he’s saying is true. The pre-end game economy is pretty out of whack. This isn’t a fault of the economy: It’s a direct result of the leveling being so fast, that the majority of players simply does not bother with pre-80 blues and greens.

That being all say, while the author of the article does have good point, he really misses hard the most because the pre-end game economy in this game is so insignificant in size. The GW2 TP is a vast vast machine, and how many percentage of the items being traded are blues/greens/whites with rock bottom value? The vast majority of items traded, such as crafting materials, rares, and exotics, sigils/runes, etc. all have value and are traded in vast quantities.

So while I can’t disagree with his analysis, I think he really misses.

The pre-end game economy is almost entirely junk. People leveling up their crafting professions craft and dump a lot of junk on the auction house, and people leveling their characters find ways to power level while being equipped almost entirely in said junk.

GW2 is unique in that people spam crafting professions onto their characters just for the XP it gives; it’s a great way to power level and skip to the end game, and tons of people take advantage of it. Crafting low level gear is poor from a gold → craft → gold perspective, but is excellent from a gold → craft → XP! perspective.

All that said, I think the GW2 pre-endgame economy is poorly designed. By dividing materials into tiers, A.Net ensured that pre-endgame drops will not retain any value in the long run; demand for pre-T5 materials is driven almost entirely by people using crafting to level alts. Outside of that, the only value any pre-T5 material has is its merchant value – as that is the only way such items can be converted into a resource, gold, that has any value at 80.

There’s essentially no way out of this now, but it was an incredibly shoddy design and a pretty big blemish on the game’s reward system.

Ensign.2189:

The pre-end game economy is almost entirely junk. People leveling up their crafting professions craft and dump a lot of junk on the auction house, and people leveling their characters find ways to power level while being equipped almost entirely in said junk.

GW2 is unique in that people spam crafting professions onto their characters just for the XP it gives; it’s a great way to power level and skip to the end game, and tons of people take advantage of it. Crafting low level gear is poor from a gold -> craft -> gold perspective, but is excellent from a gold -> craft -> XP! perspective.

All that said, I think the GW2 pre-endgame economy is poorly designed. By dividing materials into tiers, A.Net ensured that pre-endgame drops will not retain any value in the long run; demand for pre-T5 materials is driven almost entirely by people using crafting to level alts. Outside of that, the only value any pre-T5 material has is its merchant value – as that is the only way such items can be converted into a resource, gold, that has any value at 80.

There’s essentially no way out of this now, but it was an incredibly shoddy design and a pretty big blemish on the game’s reward system.

I agree with Ensign. But many GW2 gamers that I know, just rush through the doldrums of pre-endgame levels so they dont stay there for long to appreciate that.

What is more disturbing to me, having hit level 80 on all my characters is that I agree with his last comments: "The strength of the game play keeps players going for a while but every player I interviewed told me that “there just was something missing”. I would suggest that something was effective reward mechanisms.

Since the GW2 business model seems dependent on tapping a sustainable economy for continuous revenue, it seems logical that they would have wanted to build a sustainable economy into their game. They even hired a conventional economist late in the development cycle, implying that they realized that this was important to the product success. Unfortunately, this seems to have been too little, too late.

While the gameplay seems to have benefited from a “how can we do this better than has been done before”, the reward system in the game seems to be at best business as usual.

The hosts have announced that they will be revamping the reward system later this year, so they seem to be aware that they have a problem. I am eager to see what they come up with. "

Their endgame reward system is flawed and while they do put in an effort on introducing new content, character development and progression pretty much ends abruptly at level 80.

I have been playing the same static characters for months now. They look the same and have not become any stronger, even in any remote PvE-only way. This is getting boring fast.

The irony is that endgame reward system is what GW1 does very well, even though it has a much earlier level cap of 20. You can continue to get cool PvE-only skills, or progress your characters through Lightbringer, Slayers, or the other lines. These lines of progression only give minimal rewards but they still give a sense of progression to your characters (being PvE-only is fine too) after max level.

Why do I remember talking about this already.

Oh that’s right, because we did.

https://forum-en.gw2archive.eu/forum/game/bltc/Guild-Wars-2-Economy-Review/first

I’m sorry but if an economist can’t get any of the numbers right then it is really hard to take him seriously.

It’s hard to call someone an economist when their entire introductory paragraph about economics is wrong.

Ramin is a social psychologist that has made some useful contributions to game economies, particularly micropayment models, through his insights into the motivations of reward structures. I do not doubt that he has some level of expertise in that area.

Economics though? I have no reason to believe he knows anything about the economics of an economy, virtual or otherwise. I certainly didn’t pick up anything in that article to say otherwise.

From an economic standpoint, the sub-80 economy is fine, if boring – from a reward structure standpoint, however, I can’t disagree with his assessment that the sub-80 GW2 economy is really bad.

Despite the overlap, I think there’s an important distinction between the design of the reward structure (which GW2 is honestly pretty bad at) and the design of the economy (which is outstanding). They work together to create the game experience, and a strength or weakness in one, while it can prop up or tear down a game, does not necessarily translate into the same in the other.

Ensign.2189:

It’s hard to call someone an economist when their entire introductory paragraph about economics is wrong.

Ramin is a social psychologist that has made some useful contributions to game economies, particularly micropayment models, through his insights into the motivations of reward structures. I do not doubt that he has some level of expertise in that area.

Economics though? I have no reason to believe he knows anything about the economics of an economy, virtual or otherwise. I certainly didn’t pick up anything in that article to say otherwise.

From an economic standpoint, the sub-80 economy is fine, if boring – from a reward structure standpoint, however, I can’t disagree with his assessment that the sub-80 GW2 economy is really bad.

Despite the overlap, I think there’s an important distinction between the design of the reward structure (which GW2 is honestly pretty bad at) and the design of the economy (which is outstanding). They work together to create the game experience, and a strength or weakness in one, while it can prop up or tear down a game, does not necessarily translate into the same in the other.

Well said Ensign. I knew at some point there’s be a post exactly like this.

I took a look at his other puplished “papers” he links to at the top of that article… well, suffice to say, from a brief browse, would have to agree with Ensign. Not to mention the “papers” aren’t really up to academic or research standards.

For example:
http://gameful.org/group/games-for-change/forum/topics/gold-selling-in-guild-wars-2

He may be a gaming industry professional, but there’s not a lot in his on-line persona or Linked-In profile to suggest he’s an “economist”.

Please correct me if I’m mistaken.

Not an economist, but that doesn’t mean he doesn’t have valid points.

His point about how gold buying/selling for real money inflicts damage on your end game reward structure is spot on. Now, in fairness, you can’t stop this; if you didn’t have the gem to gold exchange you’d have even more traffic being routed to 3rd party gold sellers.

However, there is far too much emphasis on coin in the end game, as opposed to karma or skill points – a mistake in the reward structure design, though not with the economy.

@Ensign I was careful to limit my critique specifically to his publicly available credentials. As I mentioned, he does posses a good deal of game industry experience. Apparently he completed pre-doctorial studies in Economics, so, one can assume he’s has some degree of competency in the field.

I’m not detracting away from his opinions, and have no issues discussing their merits.

However, as I, and others above, have mentioned, his conclusions presented in the original article are questionable. The only evidence he provides is observational and theoretical at best. Which, for what it’s worth, is about the same as so many other Tom, kitten and Harrys frequently posting here about price manipulation, market manipulation, exuberant prices, etc. Offering up little more then anecdotal evidence they observed.

It may very well be that the pre-endgame economy is “broken” as presented, however, it is presented as if this is somehow representative of the entire economy. Which I would daresay, it isn’t. I would love to see some actual data from Mr. Smtih showing a break down of economic trends as a function of item level/Tier. I would wager transactions of the T6 mats, ectos and lodestone markets alone (not inclusive of exotics, or legendaries) would dwarf the other markets. Analysis of these markets would have been more representative of the health economy as opposed to the very limited market slice depicted in the article.

I would expect someone versed in academic research to offer up a more structured, and more importantly, a well substantiated case before presenting such a “conclusive” finding.

And on a side note, taken from a reply in the article I posted:

I would add that Arena.net did contact me to run their monetization last year, then abruptly changed their minds and went with someone else. This seemed odd to me since no one else really understands these things yet. It also seems odd to me that companies think this is the job of one person, which makes as much sense as saying a project of that size should only have one designer on staff. They still are not weighting the value of monetization properly. A project of this size is more work that two people like me can probably do without an assistant, since you need one person focusing on the monetization side and another working with the design team to strengthen the virtual economy on the other side so that the whole thing does not blow up when China gears up to rock your economy.

Perhaps his opinion isn’t entirely unbiased….. But I would argue “someone else” has a pretty good understanding of how these things work….

Mourningcry.9428:

I took a look at his other puplished “papers” he links to at the top of that article… well, suffice to say, from a brief browse, would have to agree with Ensign. Not to mention the “papers” aren’t really up to academic or research standards.

For example:
http://gameful.org/group/games-for-change/forum/topics/gold-selling-in-guild-wars-2

He may be a gaming industry professional, but there’s not a lot in his on-line persona or Linked-In profile to suggest he’s an “economist”.

Please correct me if I’m mistaken.

I wonder why some of you are so hung up on economic semantics as if out of hubris. It is not like our current theory of economics is that perfect anyway.

I am not belittling economics here but I believe that our current theories of economics are sorely incomplete. I quote what Dr. David Suzuki said:

Remember that we are only one of perhaps 30 million species on the planet. Yet we only measure economic value by how useful something is for us. If we can find ways to make a buck on a natural “resource” that’s all we need to exploit it.

We pay little attention to the incredible complexity and interdependence of components of ecosystems of which we, as biological beings, remain a part. And we have almost no idea what the consequences of a vast human population making enormous demands will have on the biosphere.

In economics, the bottom line is profit.

Judith Maxwell, president of the Economic Council of Canada, admitted in an interview that economists simply haven’t paid attention to ecological factors. Economists consider the environment to be essentially limitless, endless, self-renewing and free.

As the eminent Stanford ecologist, Paul Ehrlich remarked: “Economists are one of the last groups of professionals on earth who still believe in perpetual motion machines.”

But the fact is, we live in a finite world, human beings are now the most numerous large mammal and our numbers are increasing explosively. Our technological inventions permit extraction of resources at a horrifying rate. To economists, this simply offers greater opportunity to expand markets and increase profit.

In economics, the role performed by components of natural communities is of no importance. So, for example, a standing forest provides numerous ecological “services” such as inhibition of erosion, landslides, fires and floods while cleansing the air, modulating climate and weather, supporting wildlife and maintaining genetic diversity. And I haven’t even considered the spiritual value of forests for human beings.

Yet to economists, these are “externalities” to their calculations. As the head of a multinational forest company remarked, “a tree has value once it’s cut down.” That’s a classic economic perspective.

Economists live in a land of make-believe. They aim at steady growth in consumption, material goods, wealth and profit as if it can be sustained indefinitely. And they have faith that human ingenuity will open up new frontiers for steady expansion while providing endless solutions to problems we create.

Having said that, a virtual economy is probably more applicable to current economic theories than an actual one is.

@DarkSpirit

In attempts to keep this discussion on target, perhaps you’d like to continue the discussion in a more appropriate topic dedicated to just this:

https://forum-en.gw2archive.eu/forum/game/bltc/Virtual-economies-and-real-world-applications/first#post1900895

Mourningcry.9428:

However, as I, and others above, have mentioned, his conclusions presented in the original article are questionable. The only evidence he provides is observational and theoretical at best.

…what kinds of evidence can you present that are neither observational nor theoretical?

Honestly I don’t disagree with any of the conclusions he lays out in the article about the GW2 reward structure. It not not very good – it is particularly bad for leveling gear, and not all that much better even at 80. I’m mostly disagreeing with calling the author an economist (particularly after that cringe-inducing introduction) and drawing a distinction between a poor reward structure in the game design and the strong economic structures in this game that have made the actual trading part of the game much stronger than anything else you find in industry.

Mourningcry.9428:

Analysis of these markets would have been more representative of the health economy as opposed to the very limited market slice depicted in the article.

The error of the article is in calling the market unhealthy when the junk markets aren’t moving. The actual market part of the economy is incredibly robust; prices have been relatively stable, there’s an enormous amount of trade, and prices react very quickly to shocks. Honestly it’s a model for the industry.

The reward structure though? Put it this way, they had to patch an ascended item system onto the game on short notice after release because their end game reward design had failed hard, and they were losing players like crazy as a result. That’s the sort of thing the article is trying to call attention to, and it’s spot on in that regard.

Mourningcry.9428:

And on a side note, taken from a reply in the article I posted:

Staggering hubris aside (roll out your Dunning-Kruger references here) I agree entirely that it’s surprising how few resources game companies put into the design of their micropayment, reward, and economic systems. These these are so key to the long run success and profitability of a title, yet unlike so many other businesses that will spend large amounts of time putting together long term revenue projections and researching optimal price points for various products, game companies seem to be content to throw darts at a board and hope for the best when it comes to getting paid.

There is a review on Gamasutra by Ramin Skokrizade. He has used games to model real economies and is semi famous for his work on Eve.

http://gamasutra.com/blogs/RaminShokrizade/20130426/191346/Guild_Wars_2_Economy_Review.php

While he has valid points it would be good to see what other players think about it.

My test avatar was a Sylvari elementalist. ... Every time you are defeated in battle (which happens fairly often when soloing)

Karma, despite being more rare than copper

Wat.

He focuses on crafting too much, and imo experience isn’t that valueless - with enough skill points, you can craft items that are really expensive.

Over 1000 players took the time to sell this item on the auction house at a premium of 1 copper coin over what any npc vendor would pay them. Given that the auction house charges 5%, these players are actually losing at least 4% of the value of their goods by joining the economy.

That doesn’t mean the economy is broken, that means people are stupid.

The item economy is so bad that essentially all items of white, blue, and green quality are junk items. There is a “sell junk” button that lets you sell all items that have no game use. If this button sold all white, blue, and green quality items (which was all the items I encountered up to L64) with one click, this would have been more useful.

Obviously, he never tried salvaging.

They even hired a conventional economist late in the development cycle, implying that they realized that this was important to the product success. Unfortunately, this seems to have been too little, too late.

Judging by the numbers, GW2 is doing pretty well.

The comments are actually more readworthy than the "review".

He does not have a strong grasp of mechanisms in the game it seems. I get the impression he did a grind advance on crafting instead of creation which gives better exp. That said I would love to play a game without junk being central to drops.

Iruwen.3164:

My test avatar was a Sylvari elementalist. … Every time you are defeated in battle (which happens fairly often when soloing)

Wat.

Shootsfoot.9276:

“Goods are so badly flooded that it is much cheaper to just sell your equipment and buy new equipment instead of repairing it when it gets damaged.”

Um, what?

Karizee.8076:

Dystopiq.5218:

Goods are so badly flooded that it is much cheaper to just sell your equipment and buy new equipment instead of repairing it when it gets damaged.

Not letting that guy balance my checkbook lol.

Which part of this do you guys not understand? With a few exceptions (i.e. exotics, rares, and small pockets of blue/green gear that sell at much higher than vendor cost), you would be better off buying replacement gear than repairing it in the pre-endgame. This is compounded by the fact that it costs the same to repair both a damaged item and a broken item.

Compare:

Your level XX, fine/masterwork helm is damaged. You fix it, costing you 4 copper plus 2 copper per item level. Your net cost is anywhere from 6 copper to 164 copper.

Your level XX, fine/masterwork helm is damaged. You sell it to vendor for Y copper and buy the very same helm off the TP for Y+1 copper. Your net cost is 1 copper.

Some higher level masterwork armor pieces are actually more than 1 copper above vendor price, but the repair price is still on par or higher than the difference between TP sell order price and vendor price, let alone the difference between TP buy order price and vendor price.

When you have 80s and run dungeons regularly, it ends up being chump change to repair your non-80s’ equipment but the point still stands that buying a new piece of armor is usually cheaper than repairing it. Again, this is for PRE-endgame, as in the gear you use while leveling up, not your level 80 exotic gear.