The Social Benefit Thread
For example: Pump and Dump.
Pump and Dump is the practice of buying a bunch of something, then releasing false information to the public about why it’s about to go up. If enough people believe it, it does go up, as lesser speculators drive the price up. The first buyer sells off to his marks and pockets his loot.
I put this one in the “not honest” category. Prices convey information, but in this case, the prices are simply conveying a lie. After the lie is exposed (ie. once the duped speculaters realize there’s nobody to sell to), they must take a loss.
There are a few third parties that potentially benefit. Producers who sold during this time accidentally get a piece of the manipulator’s action, so they git a bit of extra money. Buyers who get in after the market crashes get a lower price, as the higher price may have induced additional production, and the negative experience will definitely drive speculators away temporarily. However, this may also lower production for a time. So there’s both winners and losers… but I suspect the losses to be greater than the gains, overall.
Still, it would be impossible to consistently enforce a law against this practice. A widely known law against it would simply lull traders into a false sense of security, making them easier marks for those who are better at this tactic than the enforcers are at enforcing it. Further, it can be difficult to distinguish between a deliberate pump and an honest mistake, meaning the innocent are likely to be caught in the dragnet, discouraging the sharing of information generally.
Far better, IMO, to simply allow the practice, so that the less skilled pumpers can breed in traders generally a level of cynicism regarding “free information” that accurately reflects the dangers inherent in trading. Far better, of course, if we all simply behaved in an honest fashion (there are plenty of honest ways to make money, and the most skilled honest methods are, I believe, more effective than the most skilled dishonest ones)… but because that’s not going to happen, best not to pretend we can make it happen.
Though I suspect such a thread will degenerate quickly, I think it’s worth a try. I would like to host a debate (in its own thread, not as a derailment of another thread), between those who regard things like “market manipulation” and trade-based money making "schemes"as a dirty, unnecessary, if not downright criminal activity; and those of us (yes, I’m declaring my position at the outset) who believe any honestly made money as a just reward for something that is, ultimately, socially beneficial.
Basically, come in here and post some market tactic you consider socially irresponsible. I will then attempt either to explain who (beyond the trader himself) benefits from this activity, or to explain how it’s not an honest strategy, or how it’s not an effective strategy (though I will likely appeal to superior traders for that last part).
Assuming the thread does not become so flooded nobody can follow it, it could be fun.
good old fashion collusion, whereby a group of people conspire to manipulate prices or supply in their benefit, so as to control the market, mostly using in this game, their higher available capital to control things
For example: Pump and Dump.
Pump and Dump is the practice of buying a bunch of something, then releasing false information to the public about why it’s about to go up. If enough people believe it, it does go up, as lesser speculators drive the price up. The first buyer sells off to his marks and pockets his loot.
I put this one in the “not honest” category. Prices convey information, but in this case, the prices are simply conveying a lie. After the lie is exposed (ie. once the duped speculaters realize there’s nobody to sell to), they must take a loss.
There are a few third parties that potentially benefit. Producers who sold during this time accidentally get a piece of the manipulator’s action, so they git a bit of extra money. Buyers who get in after the market crashes get a lower price, as the higher price may have induced additional production, and the negative experience will definitely drive speculators away temporarily. However, this may also lower production for a time. So there’s both winners and losers… but I suspect the losses to be greater than the gains, overall.
Still, it would be impossible to consistently enforce a law against this practice. A widely known law against it would simply lull traders into a false sense of security, making them easier marks for those who are better at this tactic than the enforcers are at enforcing it. Further, it can be difficult to distinguish between a deliberate pump and an honest mistake, meaning the innocent are likely to be caught in the dragnet, discouraging the sharing of information generally.
Far better, IMO, to simply allow the practice, so that the less skilled pumpers can breed in traders generally a level of cynicism regarding “free information” that accurately reflects the dangers inherent in trading. Far better, of course, if we all simply behaved in an honest fashion (there are plenty of honest ways to make money, and the most skilled honest methods are, I believe, more effective than the most skilled dishonest ones)… but because that’s not going to happen, best not to pretend we can make it happen.
actually your reasoning why its good here is pretty weak, you merely try and say how it would be hard to enforce or try to say why it should be deregulated. What you are talking about here is basically called a con, whereby you trick people into believing something has value when you no it does not, and escaping with the money. It isnt social beneifical to anyone other than exploiters.
good old fashion collusion, whereby a group of people conspire to manipulate prices or supply in their benefit, so as to control the market, mostly using in this game, their higher available capital to control things
Explain to me how this works in the context of Guild Wars 2.
In the real world, this can create a temporary benefit. The owners of high value capital goods agree to restrict production to create “monopoly prices” and reap greater products than if they produced competitively. There are two problems with this strategy:
1. It can only work if demand is sufficiently inelastic in the price zone above the “perfect competition” market price. If it’s not, their efforts to raise the price will actually result in losses, not profits.
2. In the absence of violence aimed at preserving the cartel (usually from the government, often disguised as consumer protection), the cartel will soon be undermined by a combination of cheating from within (members selling on the side above their agreed-upon quota) and competition from without (as the profits draw new competitors into the field supplying either the same or competing goods). This may take longer if the necessary capital goods require large investments, but it does ultimately happen.
tl;dr: in the real world, in the absence of violent enforcement, this strategy does not actually work for long. (And where it does, it’s not the result of the collusion, but rather the violence; ie. it’s cleverly disguised banditry.)
It can’t work at all in GW2. The only “production goods” in this game are character levels and quickly maxed-out craft skills. IF someone artificially manipulates the price upward, there is no limit on how quickly crafters and farmers can fill the gap. Take the recent potato spike, for example. It wasn’t long before people were logging on alts in quick succession to restore supply.
Even in the precursors market, holding prices high only causes people to look ever harder for precursors, and those who find them but don’t need them can make bank selling them to the speculators… and there’s no guarantee they’ll actually make any money on them when its time to sell to the consumer (particularly when compared to high volume flipping).
tl;dr: The attempt benefits farmers and crafters in the short run, and producers in the long run (as it stimulate additional production that will enable more to use it), but I honestly don’t see how it can actually benefit the speculator.
I put this one in the “not honest” category.
Far better, of course, if we all simply behaved in an honest fashion
actually your reasoning why its good here is pretty weak, you merely try and say how it would be hard to enforce or try to say why it should be deregulated. What you are talking about here is basically called a con, whereby you trick people into believing something has value when you no it does not, and escaping with the money. It isnt social beneifical to anyone other than exploiters.
I should, perhaps, have left that part out, to avoid obscuring my central point.
good old fashion collusion, whereby a group of people conspire to manipulate prices or supply in their benefit, so as to control the market, mostly using in this game, their higher available capital to control things
Explain to me how this works in the context of Guild Wars 2.
In the real world, this can create a temporary benefit. The owners of high value capital goods agree to restrict production to create “monopoly prices” and reap greater products than if they produced competitively. There are two problems with this strategy:
1. It can only work if demand is sufficiently inelastic in the price zone above the “perfect competition” market price. If it’s not, their efforts to raise the price will actually result in losses, not profits.
2. In the absence of violence aimed at preserving the cartel (usually from the government, often disguised as consumer protection), the cartel will soon be undermined by a combination of cheating from within (members selling on the side above their agreed-upon quota) and competition from without (as the profits draw new competitors into the field supplying either the same or competing goods). This may take longer if the necessary capital goods require large investments, but it does ultimately happen.
tl;dr: in the real world, in the absence of violent enforcement, this strategy does not actually work for long. (And where it does, it’s not the result of the collusion, but rather the violence; ie. it’s cleverly disguised banditry.)
It can’t work at all in GW2. The only “production goods” in this game are character levels and quickly maxed-out craft skills. IF someone artificially manipulates the price upward, there is no limit on how quickly crafters and farmers can fill the gap. Take the recent potato spike, for example. It wasn’t long before people were logging on alts in quick succession to restore supply.
Even in the precursors market, holding prices high only causes people to look ever harder for precursors, and those who find them but don’t need them can make bank selling them to the speculators… and there’s no guarantee they’ll actually make any money on them when its time to sell to the consumer (particularly when compared to high volume flipping).
tl;dr: The attempt benefits farmers and crafters in the short run, and producers in the long run (as it stimulate additional production that will enable more to use it), but I honestly don’t see how it can actually benefit the speculator.
IRl its pretty easy to use collusion to control certain market values, In game its not as easy but it basically comes down to finding items which have a high barrier to entry and agreeing amongst those few who have access to those resources to control the output. Even if someone new enters the fray, it is most likely that they will join the syndicate, or at least price in the colluded range, because why would they not? Much like if precursors were being manipulated (hypothetically) the guy who finds one from a monster is most likely not going to price his at 100 gold lower just because he can, he will probably sell it at the market price.
Anyhow they main problem with your whole line of thinking is you are taking a debators stance rather than a scientific stance.
You have already decided what side you are on, and now want to see if you can argue a point on that side in any situation.
A scientist may make a hypothesis, but accepts that results may not turn out the way he plans, and if it does looks for a reason and a solution, instead of trying to argue the point.
Another flaw is that you are tying socially beneficial too closely with a possible benefit to a venture capitalist. These are not the same things.
For example most people would agree that relative peace is socially beneficial, however for a venture capitalist there definite benefits to war. You have to argue how these things help the game as a whole rather than just the ability to play the money game and win. Does how much of a luxury item precursors are actually make it more fun to fight large dragons? Does pumping and dumping increase how much people group up in the open world and how enjoyable it is?
truth is focusing on the economy in terms of making as much money as possible does not necessarily make the game/world better im not going to say it will always ruin it, but i dont think you can say its social benefits will outweigh its problems consistently, because what it boils down to, is its focus is not on social benefit.
Much like if precursors were being manipulated (hypothetically) the guy who finds one from a monster is most likely not going to price his at 100 gold lower just because he can, he will probably sell it at the market price.
Which is my point, exactly. There are so few potential buyers he’ll have to list slightly lower than the last guy. It all comes down to “when do they want their money.” The longer they’re willing to wait, the higher they’ll price it, but also, the more likely it’ll just sit there as inventory accumulates. If nobody buys, eventually, somebody is going to have to lower their prices. Meanwhile, the artificially higher price will direct farmers in that direction, increasing the quantity supplied. The problem isn’t greedy traders; the problem is insufficient supply, and absent direct A-Net action, my argument is that higher selling prices have the effect of increasing supply.
Of course, to the sellers (the original producers, not the speculators who buy from them), it’s no problem at all.
Anyhow they main problem with your whole line of thinking is you are taking a debators stance rather than a scientific stance.
You have already decided what side you are on, and now want to see if you can argue a point on that side in any situation.
A scientist may make a hypothesis, but accepts that results may not turn out the way he plans, and if it does looks for a reason and a solution, instead of trying to argue the point.
I would argue that an important component of the development of economic science is verbal logic. A debate, honestly conducted, is conducive to the development of that verbal logic. I am fully prepared to be convinced otherwise, and intend to use only truthful facts and reasoning, so far as I am able.
How else does one arrive at truth with regard to the study of a market economy? The system being studied is not composed of inanimate objects that rigidly obey physical laws; “an economy” is the sum of all human activity.
Another flaw is that you are tying socially beneficial too closely with a possible benefit to a venture capitalist.
Quite the contrary. As I said in another thread (another undercutting complaint thread) paraphrased: "So far as I’m concerned, you guys are my competitors; my allies are farmers, crafters, and consumers. I am fully prepared to screw you guys to the benefit of myself, my suppliers, and my customers.
What I am trying to demonstrate is that honest mercantile action (you’ll notice I exclude “pump and dump” from the heading “honest”) is beneficial to those three groups: the suppliers (crafters and farmers), the customers (people who are just getting their gear off the TP) and, of course, the trader himself.
the “kamikaze buyout” this sneaky individual decides to buyout every single one of a particular non-important item until there are none left. this happened to lemongrass last night and potato’s the night before, does he know something we don’t? are these items and possibly others the the next ‘charged lodestones’ to soon hit the market. how can we combat such individuals? will it ever stop, will he take our precious wood and ore next? only time will tell.. only time will tell.
I’d be more inclined to some bot/script running there actually.
I honestly don’t know how the potato buyer expects to make money doing that. Buy it all, farmers get in on it. Attempt to sell at a profit, maybe a few cooks and speculators take the bait. But as supply returns to market, I honestly think they’d end up selling back at a rate similar to what they bought it at… minus TP costs… if not LOWER due to extra supply from people who changed their farming habits.