Guild Wars 2

I think the most pronounced aspect they share is people and their somewhat unpredictable reactions to changes in the market. One aspect about video games that is absent obviously is if you go broke, you won’t go hungry or lose your house and so on. There’s very real issues you face in the real world that you simply don’t have in the video game world.

Can you specify the question, it’s rather broad.
You can always learn something by using a smaller simplified model, you just have to be careful about interpreting what you believe you learnt.

Question(s):
Does it, or does it not affect economical decisions that the participation at all is voluntary?
Does the virtual economy serve the same purpose as the real economy?

munkiman.3068:

I think the most pronounced aspect they share is people and their somewhat unpredictable reactions to changes in the market. One aspect about video games that is absent obviously is if you go broke, you won’t go hungry or lose your house and so on. There’s very real issues you face in the real world that you simply don’t have in the video game world.

That is only half true. :P
If I recall correctly in Aion the ‘rent’ for the biggest house is actually somewhere around 1million of their currency per week. They also have smaller house and apartments and I think one is free but you CAN lose your house in some games. Some games also require you to eat. Not sure if any MMO does.

The biggest difference is that in a game if you are broke it is perfectly fine to go and murders things for money. In real life this doesn’t work as well.

John Smith.4610:

can we learn more about our real world economies with more finite virtual economies?

The purpose of economics in the real world(IMO) is to squeeze efficiency out of human labor for the benefit of other humans with as little cost as possible. The way that translates to this game is how little can I pay someone to farm salvage X for me while I RP in divinity’s reach with the trading post window open and my credit card handy.

So, yea they’re pretty similar.

I agree with munkiman that one of the key differences is that your choices in a virtual economy don’t have the same impact on your life that choices in the real world do. Even if it impacts your avatar, every game has to allow a player to start from nothing or you would never be able to join the game after launch. A game wouldn’t be very successful if your account was deleted if your avatar starved to death.

Another key difference is the way the cost of creating value is simulated. In the real world there are investments in R&D to develop new products, infrastructure investments to set up new businesses, education investments to work in particular fields et. al. Games simulate different costs of items with rarity and sometimes fixed cost components that you can’t directly reduce the cost of by innovating or being more efficient.

I also think that games are different because everyone works for themselves. There are no 9-5 jobs where you collect a paycheck and let the owners of the company figure out whether your work is worth what they’re paying you.

I’ve got more ideas, but posting from my phone is a drag. I just lost a paragraph by touching the wrong spot on my screen, so I’ll leave the rest until I get home.

Khisanth.2948:

munkiman.3068:

I think the most pronounced aspect they share is people and their somewhat unpredictable reactions to changes in the market. One aspect about video games that is absent obviously is if you go broke, you won’t go hungry or lose your house and so on. There’s very real issues you face in the real world that you simply don’t have in the video game world.

That is only half true. :P
If I recall correctly in Aion the ‘rent’ for the biggest house is actually somewhere around 1million of their currency per week. They also have smaller house and apartments and I think one is free but you CAN lose your house in some games. Some games also require you to eat. Not sure if any MMO does.

The biggest difference is that in a game if you are broke it is perfectly fine to go and murders things for money. In real life this doesn’t work as well.

Well i really don’t think how earning your income is relevant to video game economics, however the comparison is amusing. I suppose you could hunt down woodland creatures and sell the fur and meat in the real world for cash though… But i digress.

As far as paying rent or starving to death, i wouldn’t play a game like that. I’m already “playing” life. The closest i might get to that would be minecraft.

I think there is potential for exploring various theories. In reality, the MMO game world is merely a model. The amount of benefit obtained from empirical data obtained from the MMO world model will only be as good as its general fidelity to the real world in key ways.

Let’s take Modern Monetary Theory as one example. Generally this economic theory breaks the macroeconomy into segments and applies accounting principles to the flow of money across the boundaries. Rather than treating money as a commodity, what’s more important in MMT is observing the flow and relative volumes. Think of water sloshing around between tanks. Maybe we can ask some meaningful questions about this:

1) Is there money involved? Yes, gold appears to be a currency.
2) What is the source of this money? Money is spontaneously generated by in-game activities, usually the destruction of various also spontaneously generated virtual non-agents (either NPC monsters or loot or both).
3) Why would someone want this money? There are various requirements placed on agents in the game, namely purchasing in-game goods and services from non-agents.
4) Why would someone NOT want this money? Unlike the real world, there is no fundamental tax placed on existence. Someone could stand 100% still and not create any need for the money.

And so on. One could analyze the money supply, look at the various rates of currency generation (inflow) and currency removal (since there’s no tax — really it’s only purchasing goods and services from NPCs and the transaction fees on certain player-to-player interactions), look at the overall way this drives behavior towards pursuit of the currency and then decide whether or not this is the state of the world as they want it.

Or you could try to model other theories, answer some basic questions and see if THAT gets you from point A to point B.

Anyhow, I suppose the tl;dr is that there is value in models, but only to the point where they are telling you useful information that will inform some policy or direction.

I would say that the primary way that MMO economies are similar to real world economies is the presence of lots and lots of people making independent decisions about how to spend their money. People who all have different (and this I think is key to lots of forum arguments) priorities and goals. Not only do they have different goals, but they have different preferences about how they want to meet those goals (Trading, Farming, Dungeons, etc.). Therefore, we can use theories developed in the real world to understand the behavior of aggregates of people in game.

To munkiman’s point about the lack of real consequences if you run out of money; yes, game economies have inherently lower stakes than the real world. However, players have strong emotional attachments to their characters and guilds, which makes them act like they matter a lot (thereby ‘raising the stakes’). Which for ANet is fantastic because it keeps people playing so they can keep making the game and paying their employees.

It’s true that GW2 doesn’t have any ‘mandatory or you die’ type expenses, but I think there’s a category of goods that are much like necessities. Things like armor repair and waypoint travel, while not strictly necessary to play, make it much harder if you don’t.

I take it John that this is an exceedingly general topic and we can use examples from a variety of games in this thread without issue?

For example game economies in various games are largely different.

Guild wars 2 economy is global the price of a good on one server or shard (whatever you want to call it) is the same across all servers. Also in game there is no such thing as a Divinities Reach market and a Lions Arch market. In guild wars 1 there were several local markets and price offerings can differ just between those markets and time of day.

One big example of this is Eve Online – where not only do you have a ‘free’ market in empire space but local markets in each region and even controlled markets in nullspace all marching along in some level of harmony. In that game you can actually make new markets and make money logistically.

I think in a video game you can look at an aspect of economic theory and examine how thousands of people’s interactions move a market. Of course it’s still an artificial environment but how is that different than studying bacteria in a petri dish and applying what you find there to the real world.

We’ve seen swings caused by influxes or sudden shortages of raw materials. We see changes in the market caused by shifts in actions (selling vs salvaging rares). It’s a global commodities market.

I personally think the GW2 economy is quite fascinating because of it’s incredibly efficiency of its global trading post. It means that market inefficiencies, to my knowledge, are nonexistant and any movement in the market is purely as a result of the collective actions of the entire playerbase.

I’m not economist, just an engineer, but we often do use ideal models to learn more about complex real systems. And I feel like this is the equivalent.

We have even seen panic buying on ectos because of an announced change, only for the price to crash afterward because it didn’t change supply all that much.

The way people/market react to news is very true IRL. The world chest nerf causes a bubble of the price of ecto. It’s very interesting how some news/rumors can cause a massive change in market.

Ursan.7846:

I personally think the GW2 economy is quite fascinating because of it’s incredibly efficiency of its global trading post. It means that market inefficiencies, to my knowledge, are nonexistant and any movement in the market is purely as a result of the collective actions of the entire playerbase.

I’m not economist, just an engineer, but we often do use ideal models to learn more about complex real systems. And I feel like this is the equivalent.

I feel the same way. I don’t have much curiosity about the real world market movements (even though I work as an engineer for a financial firm) because it’s just too complicated and complex to look at in the macro sense with any sort of confidence that you really know what’s going on.

I find the GW2 economy has abstracted out enough complexity without being so simplified as to be uninteresting. I imagine there is a lot you can extrapolate to real world markets.

First off, Economics is a field of many theories on how economies work. Many theories can show evidence as to why they are correct, even though the theory itself may be extremely different from another theory that can also show evidence in support of itself. Point being that there is no definitive ideological economic theory that has been proven to be “correct”, though some have been shown to be less correct than others.

Second, game economies are extremely limited in scope and many factors that play into real life economics have zero influence in a game. No one has to worry about basic human needs in an MMO economy. We don’t need shelter, food, water, health care, etc… Wealth in an MMO does not produce benefits for the economy. Wealthy players do not create jobs. They don’t create infrastructure. They don’t create investment opportunities. There usually is no ownership of land. Wealth doesn’t buy you a higher quality of life, lack of wealth doesn’t mean you can’t thrive or find happiness. Etc…

So, real world economic theories are a morass of often ideologically driven, often contrary models for trying to explain extremely complex systems of economic interactions. Most of the core driving factors of real world economies do not exist in a game economy. Thus, it seems pretty logical that going into managing a game economy, one would put ideology completely aside and be fully aware that the game economy may not evolve in a way that is in any real way analogous to real world economics.

That doesn’t mean it’s pointless to try to understand and manage a game economy. Not at all. However, observation of the economy and developing a theory of how that individual game’s economy functions trumps any thoughts or ideas one might have on real world economics. Game economies can’t prove RL theories, because the artificial system is exponentially more simple and more limited, as shown in a simplified manner above. What might be disastrous for a real world economy may be very beneficial for a game economy and vice versa. Leaving personal economic ideology behind, imo, is crucial to trying to understand and manage a game economy.

Ok. So, the wrong thing to do is to try to use the game economy as a testing ground for RL economic theories and ideology. What is the right thing to do? Well, supporting the over all design philosophy of the game is a good motivator. Ensuring players have fun is a good motivation. Allowing players to have things to work towards is good. Minimizing frustrations and ensuring that players feel that their play time is rewarding is a good motivation as well.

Really, balancing the economy to facilitate fun, motivating game play and minimizing frustrations should be key goals in managing a game economy. Inflation is often an enemy of fun, but sometimes it can be so much of a focus that rewards for game play are tightened too severely. Individuals who are able to accumulate large amounts of wealth may be seen as a sign that the economy needs to be tightened, but many players who play MMOs to accumulate wealth act as defacto money sinks, as the majority of the money they earn will never be spent, unless some high end, attractive money sinks exist in the game for them to spend their money on.

I think an MMO lends itself to centralized management than the real world does and accepting that wouldn’t make a game economist a communist or socialist. It would just make them a pragmatist when it comes to managing the extremely limited economy that exists in the game, plus the fact that the over-riding motivation is to ensure that the largest percentage of people playing the game have fun and remain customers. (In the case of GW2, overall fan base happiness and overall population numbers feed cash shop revenue. Even though only a certain percentage of players actually buy gems on a regular basis, all players contribute to the environment in which those willing to pay can find a game worth playing)!

Looking at GW2, I see a few current problems. Rewards for ordinary players are too limited. Serious deflationary pressures have ensured that most goods available for trade on the trading post can’t even fetch prices higher than what a vendor would provide, once TP fees are factored in. Certain high end items are so rare that they probably should never have been allowed to be traded, as they have just provided fertile ground for wealthy players to manipulate and profit to the detriment of the majority of the player base. Also, too few money sinks exist for the very wealthy targeted specifically at them, while some broad based money sinks are impacting the ability of the average player to fully enjoy the game. (Since inflation only really exists at the very high end of items on the Trading Post, while the rest of the player driven economy has become stagnant, current balancing of the inflow of wealth into the pockets of average players via ordinary game play has clearly become too severe. These players do not contribute to the inflationary niches in the market, they are priced too far out of those markets. However, they do find that their game play doesn’t feel very rewarding, which threatens their status as playing supporters of the game).

What real world economic theory should apply to GW2? If you paid any attention to my post, you’d know that the answer is none of them. The game economy is small enough to allow for very specific tuning and the overriding goal of managing the economy is to ensure that the economy supports, rather than impedes, the ability of as many people as possible to keep on enjoying the game.

The governing equations are identical. A robust model for a game economy also applies to the real economy. Many of the terms of those models are very different in scale. So you cannot directly translate ‘rules of thumb’ from one economy to another.

But all the pieces move in the same way in response to the same pressures, regardless of the economy.

Game economies are very useful in that regard, as they allow you to observe how an economy evolves without some of the really messy complications of, say, the US economy. Since the underlying dynamics are the same, you can absolutely apply those trends to more complicated models.

I’m appalled by some of the responses so far. There’s been so much attention devoted to this concept of “there are no basic needs for people in virtual economies” which in my mind is one of the more minor differences. Meanwhile no one is looking at the supply side of the equation at all it seems.

My #1 difference between real and virtual economies would be barriers to entry in markets. Sure in order to “produce” a lot of things you need to be level 80, but (at least from my perspective, perhaps John has more information on that point) the vast majority of economic impacting activities occur due to the actions of players who have access to at least 1 level 80 character. Yes, access to CoF P1 might be a barrier to entry for that “production” but overcoming that barrier to entry is incredibly simple. The same is true of having 400 in a crafting discipline. You don’t have to own manufacturing equipment, or staff a factory to create items in game. There’s no significant risks in entering any market. When a specific market dries up, players can easily and without significant cost transfer their effort to other markets seamlessly. These barriers to trade essentially don’t exist.

Perhaps building upon that last point, a lot of other features of real world economies are significantly different here. Arbitrage sets in very very quickly. There’s little to no variation in the access to information and knowledge about products in game. Outside of gray markets, there’s pretty much no deliberate price discrimination. There’s perfect conformity of goods.

There are some other significant, more structural, differences as well. There’s no innovation. Players can’t create “new” items or other goods in game (although there’s some limited market for innovative services) and as a result there’s no equivalent to patent or trademark systems which are necessary in real world economies.

Now, if you look at those descriptions very very closely, you may realize that virtual economies largely function like the economies taken as examples in your Econ 101 class. These are those grossly oversimplified scenarios encountered in those teaching courses to help educate students in a basic environment. The GW2 economy might be looked at from an econ perspective in the same way the mythical “infinite, frictionless surface” from a physics course. Does a real world economy really work like this? No, but that doesn’t make the application of theory worthless.

I think it’s worth considering real world economies when talking about game economies, since there are at least some parallels, but they should not be confused, because there are clear differences too. There are no “necessities,” for one thing. Food and shelter are both entirely optional, while most people in the real world spend the bulk of their income on fixed expenses, there’s almost nothing GW2 players must spend money on, maybe WPs, maybe repair costs, everything else is luxury.

It’s also something in which some people choose to make it a “full time” occupation, spending many hours a day on nothing but farming cash (in the legal sense), while other players treat the game as more of a hobby, playing maybe a few hours a week. Yet this latter group still wants to have fun, still wants for the “good things in life” to be within their reach. If the economy is allowed to be tailored to the former group’s means, then the latter group stands no chance of keeping up with them.

On the plus side, unlike in the real world, “the government” holds EVERY economic level. If more tungten is needed for production, ANet doesn’t need to find a new Tungsten mine, they just just make more tungsten. If people need more cars than the car companies are producing, ANet an just spawn more cars, no problem.

Supply is 100% in ANet’s control, so if they’re aware of the demand, and they should, they can provide supply as close or as far from demand as they choose. All scarcity is artificial. This is why people get upset with ANet when certain high-demand weapons and other gear rise to outrageous prices on the TP, because this is clearly an example of supply not coming even close to demand, which should signal ANet to pump up the supply on those goods increasing the rate at which they drop into the world, but so far that doesn’t seem to be happening.

Vine.7263:

I would say that the primary way that MMO economies are similar to real world economies is the presence of lots and lots of people making independent decisions about how to spend their money. People who all have different (and this I think is key to lots of forum arguments) priorities and goals. Not only do they have different goals, but they have different preferences about how they want to meet those goals (Trading, Farming, Dungeons, etc.). Therefore, we can use theories developed in the real world to understand the behavior of aggregates of people in game.

I think this is where GW2 in particular stands out from every other game out there. Because the market is across all of the servers, and the items are commodities instead of every piece of gear being unique we can really see the invisible hand at work. So much so that folks keep getting the idea that there is a mysterious cabal out there manipulating prices.

I think that having a virtual world where the changes are deliberate, and the goods and means of production are much more limited than the real world makes it easier to study how people respond to different market situations, and that might tell us something about the real world markets. In my opinion, it’s not so much that the theory developed in the real world can tell us something about the virtual economy, as it is the virtual economy can act as a model that can be used to validate or point out problems with those theories.

Ohoni.6057:

Supply is 100% in ANet’s control, so if they’re aware of the demand, and they should, they can provide supply as close or as far from demand as they choose. All scarcity is artificial. This is why people get upset with ANet when certain high-demand weapons and other gear rise to outrageous prices on the TP, because this is clearly an example of supply not coming even close to demand, which should signal ANet to pump up the supply on those goods increasing the rate at which they drop into the world, but so far that doesn’t seem to be happening.

I think that the problem with artificial scarcity is that folks don’t understand that scarcity of resources is absolutely essential for there to be a game economy, and I would contend, necessary to make a game like GW2 interesting. Yes ANet could flip a switch and increase the supply of anything, but it wouldn’t be good for the game.

The problem isn’t that ANet is being mean and not listening to their customers, the problem is that like kids that want to have ice cream and candy for dinner, folks don’t understand the negative impacts it would have if they got what they wanted. Sure, it is within Mom’s capability to feed her child ice cream every night, but she knows that while it would make the child happy in the short term, it wouldn’t be good in the long term.

(and I’m not saying that precursors don’t need tweaking, I’m just saying in general that artificial scarcity causes discontent because folks don’t understand it’s necessary)

Pandemoniac.4739:

Ohoni.6057:

Supply is 100% in ANet’s control, so if they’re aware of the demand, and they should, they can provide supply as close or as far from demand as they choose. All scarcity is artificial. This is why people get upset with ANet when certain high-demand weapons and other gear rise to outrageous prices on the TP, because this is clearly an example of supply not coming even close to demand, which should signal ANet to pump up the supply on those goods increasing the rate at which they drop into the world, but so far that doesn’t seem to be happening.

I think that the problem with artificial scarcity is that folks don’t understand that scarcity of resources is absolutely essential for there to be a game economy, and I would contend, necessary to make a game like GW2 interesting. Yes ANet could flip a switch and increase the supply of anything, but it wouldn’t be good for the game.

The problem isn’t that ANet is being mean and not listening to their customers, the problem is that like kids that want to have ice cream and candy for dinner, folks don’t understand the negative impacts it would have if they got what they wanted. Sure, it is within Mom’s capability to feed her child ice cream every night, but she knows that while it would make the child happy in the short term, it wouldn’t be good in the long term.

(and I’m not saying that precursors don’t need tweaking, I’m just saying in general that artificial scarcity causes discontent because folks don’t understand it’s necessary)

I like that analogy here very much. People see an extremely low supply for some items, and often realize that Anet could simply change a couple numbers in the code and flood the market. They don’t acknowledge that there are a lot of consequences that come with that behavior. Anet’s not holding those back on a whim. It’s not some sort of arbitrary decision they’re blindly sticking to. It’s not a mistake that just hasn’t been fixed. At the risk of appealing to authority, Anet simply “knows better” than the people with such complaints.

We need to tie back in that line of discussion with the topic of the thread.

Are there examples of artificial scarcity in real life? Or is the artificial scarcity of certain items in game a reflection on actual scarcity in real life?

Syeria.4812:

I like that analogy here very much. People see an extremely low supply for some items, and often realize that Anet could simply change a couple numbers in the code and flood the market. They don’t acknowledge that there are a lot of consequences that come with that behavior. Anet’s not holding those back on a whim. It’s not some sort of arbitrary decision they’re blindly sticking to. It’s not a mistake that just hasn’t been fixed. At the risk of appealing to authority, Anet simply “knows better” than the people with such complaints.

It’s not a yes or no, a black or white, or a flood or drought circumstance. The numbers can be adjusted across the spectrum so that maximum benefit w/ minimum issue can be achieved. I’m not saying they should do anything, just that if they do change anything it would not necessarily be 100% flood with lots of consequences.

Draygo.9473:

We need to tie back in that line of discussion with the topic of the thread.

Are there examples of artificial scarcity in real life? Or is the artificial scarcity of certain items in game a reflection on actual scarcity in real life?

Diamonds………….I won’t get into it as I have strong feelings about it….nor shall I try and make some correlation to the game economy.

Draygo.9473:

We need to tie back in that line of discussion with the topic of the thread.

Are there examples of artificial scarcity in real life? Or is the artificial scarcity of certain items in game a reflection on actual scarcity in real life?

As ES mentioned, diamonds are an item of artificial scarcity in real world economies. It could be argued that patents and other implemented monopoly scenarios essentially introduce artificial scarcity. Any price ceiling (electricity in certain US regions can be subject to these) would be a government imposed scarcity, preventing the market from expanding to the point where it efficiently satisfies demand. I’m sure some art markets endure artificial scarcity as well. If OPEC ever actually had members adhere to their production policies, we could potentially have artificial scarcity in markets dependent upon crude oil and crude oil products.

Obviously, none of these (except perhaps diamonds) are really exactly the same as the scarcity in GW2, but they’re similar.

Why not having and allowing some change converters turning gold into laurels or guild commendations at a Blackmarket NPC: 5g =>1laurel per day per account allowed // 15g=>1guild commendation per week per account allowed (2 possible gold sinks just saying) IG currencies converters
About the real world economy and in game economy: The real world economy need more gold sinks :http://en.wikipedia.org/wiki/Tobin_tax
At end in real world it’s harder to fix what is broke :p

Titan.3472:

Why not having and allowing some change converters turning gold into laurels or guild commendations: 5g =>1laurel // 10g=>1guild commendation (2 possible gold sinks just saying) IG currencies converters

This probably isn’t the right thread for this but:

Then why have the currencies at all? If there’s a easy, established method for turning gold into another currency, that defeats most of the purpose of the currency in the first place. Laurels/Commendations exist for two primary reasons, to provide a baseline reward to players for playing a certain amount each day (same reward playing 1 hour doing dailies as the guy who spent 8 hours playing received), and to limit the rate at which the items offered for these currencies can be attained. Allowing those currencies to be purchased with gold makes both of those features stop functioning.

I think that the problem with artificial scarcity is that folks don’t understand that scarcity of resources is absolutely essential for there to be a game economy, and I would contend, necessary to make a game like GW2 interesting. Yes ANet could flip a switch and increase the supply of anything, but it wouldn’t be good for the game.

That’s only important if one values the in-game economy as its own thing, rather than seeing it as a means to an end. The economy shouldn’t be an end to itself, it should just be a facilitator to allow players who have things they don’t want to get something back for them, and for players who don’t have things they want to be able to get those thing. It should not be a massive profit-make for ANYONE, it should a best be a way to make marginally higher profits than the vendors.

Basically, if any item sells for less than you could get on a vendor (after fees), then something is wrong with either the drop rates or the vendor prices. Conversely, if something sells for more than ten times the vendor purchase prices, then something is equally wrong with either the vendor prices or the drop rates. The TP should offer players a better deal than vendoring things, to encourage people to put their spare items on the TP and maintain a ready supply for those that want them, but it should not encourage people to “game” the market, buying low and selling high to actually turn money into more money.

Ohoni.6057:

Basically, if any item sells for less than you could get on a vendor (after fees), then something is wrong with either the drop rates or the vendor prices. Conversely, if something sells for more than ten times the vendor purchase prices, then something is equally wrong with either the vendor prices or the drop rates. The TP should offer players a better deal than vendoring things, to encourage people to put their spare items on the TP and maintain a ready supply for those that want them, but it should not encourage people to “game” the market, buying low and selling high to actually turn money into more money.

Why?

You list these things as absolute, self evident facts, but I think you’re begging the question here. Why is there inherently something wrong with a vendor price being higher than the TP price?

Draygo.9473:

We need to tie back in that line of discussion with the topic of the thread.

Are there examples of artificial scarcity in real life? Or is the artificial scarcity of certain items in game a reflection on actual scarcity in real life?

My point was (although I wasn’t explicit) that virtual economies are different because folks know that that resources are artificially limited, where in the real world no-one can wave a wand and make more oranges appear if this year’s orange crop has failed. I think it makes for a different dynamic.

Ohoni.6057:

Basically, if any item sells for less than you could get on a vendor (after fees), then something is wrong with either the drop rates or the vendor prices.

Well if an item sells for less than a vendor after TC fees it’s because there is a significant imbalance between supply and demand.

The demand could be low because there are similar items that are perceived as “better” by the players. Usually there are multiple variations of a weapon or piece of armor for a particular level, if the drop rate is equal then preference in stats or appearance can skew demand.

But excessive supply is usually the problem and it’s not because of drop rate. Usually. For instance a number of T5 common mats are created as a side effect by salvaging high level rare items for ectos. Light and medium armors give you cloth and leather and instead of taking the 30 seconds to realize that selling them at the TC is the wrong thing to do so trot over to a nearby vendor to sell it to them for a few copper more, it just gets added to the million plus pile at VP+1. What is interesting is this “irrational” behavior helps to reign in gold supply due to the TC fees acting as a sink rather than injecting new gold into the economy by selling it to a vendor.

Another source of supply is crafting. But why craft something that has no profit in it? Well there’s a secondary motivation, player XP and crafting skill XP. I can’t think of a real world example of this, a secondary direct benefit other than money.

So we have crafters producing items with limited regard whether the item is profitable or not as long as it helps them to level their skill and then simply dumping them at the TC to recover at least some of the cost. This is especially true with partially crafted goods. It’s usually cheaper now to buy an ingot than the ore or a plank rather than the logs. Extend this up to sword hilts and imbued plated dowels or partially crafted jewelry. They get made because they will help level the skill or level a character or satisfying the crafting daily and not because it’s filling a demand that’s profitable. Value isn’t being added in the crafting process, a lot of the time the opposite is true.

Ohoni.6057:

Basically, if any item sells for less than you could get on a vendor (after fees), then something is wrong with either the drop rates or the vendor prices. Conversely, if something sells for more than ten times the vendor purchase prices, then something is equally wrong with either the vendor prices or the drop rates. The TP should offer players a better deal than vendoring things, to encourage people to put their spare items on the TP and maintain a ready supply for those that want them, but it should not encourage people to “game” the market, buying low and selling high to actually turn money into more money.

Wait.

So you’re saying that if a player-driven price set by the market is different from an arbitrary value Anet set, there’s something wrong?

If that’s your definition of “Wrong,” I suppose, but it sounds absurd. Anet has no way of knowing how much things will be valued at exactly. Their system is set up so that players dictate prices. And for a majority of items, this is true.

As to the topic of artificial vs natural scarcity, whatever scarcity Anet creates is by definition artificial, since they are omnipotent in their game. However, scarcity is necessary in order for luxury goods to exists. To talk about whether this scarcity is artificial or natural is completely missing the point. The more important topic is scarcity itself, why it’s important, and why it exists (people spending time working towards highly-valued item = good for the game!)

Afya.5842:

The way people/market react to news is very true IRL. The world chest nerf causes a bubble of the price of ecto. It’s very interesting how some news/rumors can cause a massive change in market.

Just the other day there was a story about how a false news report from a hacked twitter account caused the markets to tank for a brief few moments.

http://thehill.com/blogs/regwatch/technology/296319-markets-watchdog-ap-twitter-hack-shows-need-for-new-oversight

One of the main difference and limitations of virtual economy is that it’s more or less “risk” free (in that you’re not really losing anything real, losing gold in game won’t mean you’ll have to sell your house or go bankrupt). Therefore, people are more loose with their decisions, investment, and choices and thus things are unlikely to be stable and is constantly fluctuating at higher rates then real world.

You list these things as absolute, self evident facts, but I think you’re begging the question here. Why is there inherently something wrong with a vendor price being higher than the TP price?

Because it goes against the purpose of the TP, which is to take unwanted items off the hands of players, and to provide desired items to players. Any element that gets in the way of that process is a corrosive element to the TP.

Items selling for less than the vendor price isn’t the worst thing that can happen on the TP, but it does represent at least a minor flaw. The glaring problems are items that sell for far too much, or items that are so volatile that people can buy them for one price, and sell them at a higher price to turn a profit. Balancing the vendor price to the TP price helps to decrease that sort of volatility.

So you’re saying that if a player-driven price set by the market is different from an arbitrary value Anet set, there’s something wrong?

Yes. If the player determined value is significantly lower then the arbitrary value, then that means that ANet is either providing too much of that item into the economy or has set their arbitrary value too high for it, and if the player determined value is significantly higher than the arbitrary value then that means that either ANet is not providing enough of that item into the economy or they have not set their arbitrary price high enough.

They can be forgiven for not correctly making their initial “guess” at the fair market value, but after that they have the tools to either change their vendor prices as they see fit, or change the drop rates as they see fit, either of which would bring the prices back towards balance. If a price remains out of balance of days, weeks, even months at a time, then it is because they have dropped the ball. It would even be possible for them to develop a mechanism by which the vendor prices would be automatically locked to TP prices, but with some measure of inertia and “fishy business alerts” built into it to prevent abuse.

Ohoni.6057:

You list these things as absolute, self evident facts, but I think you’re begging the question here. Why is there inherently something wrong with a vendor price being higher than the TP price?

Because it goes against the purpose of the TP, which is to take unwanted items off the hands of players, and to provide desired items to players. Any element that gets in the way of that process is a corrosive element to the TP.

Items selling for less than the vendor price isn’t the worst thing that can happen on the TP, but it does represent at least a minor flaw. The glaring problems are items that sell for far too much, or items that are so volatile that people can buy them for one price, and sell them at a higher price to turn a profit. Balancing the vendor price to the TP price helps to decrease that sort of volatility.

Those aren’t issues, those are opinions stated with a negative tone.

Why is it a problem that items can sell for more to an NPC than on the TP? How do these things cause a negative impact upon the function of the TP or the economy itself?

Ohoni.6057:

So you’re saying that if a player-driven price set by the market is different from an arbitrary value Anet set, there’s something wrong?

Yes. If the player determined value is significantly lower then the arbitrary value, then that means that ANet is either providing too much of that item into the economy or has set their arbitrary value too high for it, and if the player determined value is significantly higher than the arbitrary value then that means that either ANet is not providing enough of that item into the economy or they have not set their arbitrary price high enough.

They can be forgiven for not correctly making their initial “guess” at the fair market value, but after that they have the tools to either change their vendor prices as they see fit, or change the drop rates as they see fit, either of which would bring the prices back towards balance. If a price remains out of balance of days, weeks, even months at a time, then it is because they have dropped the ball. It would even be possible for them to develop a mechanism by which the vendor prices would be automatically locked to TP prices, but with some measure of inertia and “fishy business alerts” built into it to prevent abuse.

Or it could be that Anet understands how the currency supply functions. Gold sinks are not automatically “good.” Gold taps are not inherently “bad.” If items sell for more to the NPC than on the TP, that could simply mean that the currency has not yet inflated to the level Anet would like it to (or at the very least, a level they would consider to be acceptable). NPC prices higher than player offers allow for a self adjusting gold tap. As long as the aggregate price level is low, these items add currency to the money supply (while outright destroying the item in question) causing a small inflationary pressure. As inflation sets in, the value of these items will rise above the NPC price and this gold tap will automatically cease to provide its inflationary pressures.

Judging from the structure of the mystic forge and item promotion, I would be inclined to believe that prices have not risen to the level Anet intended, expected, or at least had prepared themselves for. Obviously this is just conjecture (and I’d be shocked if John came in and offered any sort of confirmation on this point) but it seems to be the intent is that item promotion of blue rarity items to green rarity should be profitable at the NPC price. We can see that green rarity items currently hover around the edge of this behavior (most items are hovering around break even depending upon usage).

It’s very very important to note some of the changes that could happen if the NPC price for blue rarity items were to be lowered to satisfy this “player defined price level.” Items whose values are currently set “too high” would plummet to the point where either their salvage value would exceed their sale price (in which case there would be an influx of salvage materials, driving down those raw material costs, and potentially reaching far enough to impart a deflationary pressure on the currency) or their MF promotion value would exceed their sale price (which would increase the availability of green items, driving down their value [which feeds back into blue rarity items until the price of those drops to the aforementioned salvage value], causing an increase in the availability of ectos and gold rarity items, driving down those prices, as well as sigils/runes/crafting materials potentially to the point of imparting overall deflationary pressures on the currency).

Think it’s a problem that crafting isn’t easily profitable? Well this just made it worse. CoF P1 or AC grinding an issue to you? Too bad, it’s now even more profitable, and Anet can’t do much to nerf it because they’re lacking sufficient gold taps. There’s a lot of effects this might have on the economy, and I’m really struggling to come up with any which might be considered “good things” to have change. Yes, this is potentially exaggerating the overall effects (although also potentially understating them instead), but if the change isn’t as dramatic as I just described, then why is it worth changing in the first place?

Syeria.4812:

Ohoni.6057:

Because it goes against the purpose of the TP, which is to take unwanted items off the hands of players, and to provide desired items to players. Any element that gets in the way of that process is a corrosive element to the TP.

Items selling for less than the vendor price isn’t the worst thing that can happen on the TP, but it does represent at least a minor flaw. The glaring problems are items that sell for far too much, or items that are so volatile that people can buy them for one price, and sell them at a higher price to turn a profit. Balancing the vendor price to the TP price helps to decrease that sort of volatility.

Those aren’t issues, those are opinions stated with a negative tone.

Why is it a problem that items can sell for more to an NPC than on the TP? How do these things cause a negative impact upon the function of the TP or the economy itself?

Additionally, why should vendors pay “fair market prices” for all goods. This would discourage people from using the TP to sell items and increase the supply of gold in the game. It is also likely that TP prices on desired items would rise as a response to the increased NPC “competition” for these items.

Why is it a problem that items can sell for more to an NPC than on the TP? How do these things cause a negative impact upon the function of the TP or the economy itself?

It’s not a problem that they can sell for more on the TP, they should sell for more. It’s a problem that it can sell for considerably more. It’s a problem when the player economy is significantly out of what with the stable global economy. It creates a gap in which hinjks can occur.

If items sell for more to the NPC than on the TP, that could simply mean that the currency has not yet inflated to the level Anet would like it to (or at the very least, a level they would consider to be acceptable).

I kind of doubt that, given the prices at the high end. If the floor hasn’t risen to the level they like in the past six months, it isn’t likely to get there any time soon, especially since more items get added to the TP every day and some have tens of thousands of copies of items no player needs more than one of.

Additionally, why should vendors pay “fair market prices” for all goods. This would discourage people from using the TP to sell items and increase the supply of gold in the game. It is also likely that TP prices on desired items would rise as a response to the increased NPC “competition” for these items.

They shouldn’t match, they should be close. The profit a player makes for selling an item for a vendor should be slightly less than the profit he would make from selling it on the TP (after taxes). This gives him good reason to sell it to other players on the TP rather than throw it away.

The more important factor though is to better manage the faucet, to make it so that if there are items selling for way above the reasonable vendor price, then more of them will filter into the world to increase supply. If demand is high enough for something that the price rises so far above vendor, then clearly the supply isn’t up to snuff.

Ohoni.6057:

It’s a problem when the player economy is significantly out of what with the stable global economy. It creates a gap in which hinjks can occur.

Wait. I thought the player economy IS the global economy.

Ohoni.6057:

This gives him good reason to sell it to other players on the TP rather than throw it away.

Since when did selling items to a vendor “throwing it away?”

It’s not.

Ohoni.6057:

The more important factor though is to better manage the faucet, to make it so that if there are items selling for way above the reasonable vendor price, then more of them will filter into the world to increase supply. If demand is high enough for something that the price rises so far above vendor, then clearly the supply isn’t up to snuff.

You seem to not like the existence, or even the concept of rare items.

What’s wrong with items being rare?

Wait. I thought the player economy IS the global economy.

The global economy includes the NPCs.

Since when did selling items to a vendor “throwing it away?”

It’s not.

If you sell an item to a player, you get money, he loses money, the item goes to him for whatever purpose he wants. If you sell an item to a vendor, you make money, the vendor loses nothing, the item is effectively destroyed. It’s no different than the “destroy” option except that you get some cash for it.

You seem to not like the existence, or even the concept of rare items.

What’s wrong with items being rare?

I like rare items, I hate super rare items. I think it’s fun to have some items show up more often than others, I don’t like having items being so rare that unless you’re very very lucky you could farm for weeks straight and never have it drop. In this game, rare items and standard mats have a reasonable drop rate. Exotics and rare mats have way too low a drop rate. Precursors are idiotically low. Lotto odds are no odds at all.

Ohoni.6057:

Why is it a problem that items can sell for more to an NPC than on the TP? How do these things cause a negative impact upon the function of the TP or the economy itself?

It’s not a problem that they can sell for more on the TP, they should sell for more. It’s a problem that it can sell for considerably more. It’s a problem when the player economy is significantly out of what with the stable global economy. It creates a gap in which hinjks can occur.

You keep claiming there’s “hinjks [sic]” that occur because of TP and NPC prices not being similar, but you’ve provide absolutely no argument as to why that would be, or why anyone would ever even consider this to be a problem. You have yet to establish a single issue other than “Ohoni thinks this is bad.”

You keep claiming there’s “hinjks [sic]” that occur because of TP and NPC prices not being similar, but you’ve provide absolutely no argument as to why that would be, or why anyone would ever even consider this to be a problem. You have yet to establish a single issue other than “Ohoni thinks this is bad.”

When there’s a huge discrepancy, it gives manipulators room to maneuver. The vendor price provides a “floor” for transactions, and keeping the floor as close to the ceiling as possible leaves less room to cause trouble. If the TP price is 15% higher than the vendor price, then it leaves room for everyone to get their beaks wet on a first sale. If the TP price is 200% higher than the vendor price, then it leaves a lot more room to buy low and sell high.

Ohoni.6057:

When there’s a huge discrepancy, it gives manipulators room to maneuver.

Thank goodness the global TP and the huge population interacting with it makes that method incredible difficult to earn a profit on.

I’m not sure why you keep on insisting that Anet setting arbitrary prices is a good idea, as opposed to a player-driven economy that we have right now.

Look, I’m not an economist. I don’t know the best methods for achieving an optimal economy, I just know an optimal economy when I see one and the current one is far from it. Too many items are selling for far too much. A lesser problem is that too many other things sell for far too little because there is no vendor price for them. How they solve it, up to them. I offered my suggestion but if that it’s the best one, fine by me. What’s important is that they do solve it, and what’s most important is that they don’t consider what we’ve got “solved.”

Ohoni,
Could you please describe what you believe an “optimal economy” looks like.

I think governments should take a closer look at MMO economies.

It would make for a great study into economics, and might give the two-party dumbtatorship ideas to fix the economy before they fall off the next fiscal cliff.

Ohoni.6057:

Look, I’m not an economist. I don’t know the best methods for achieving an optimal economy, I just know an optimal economy when I see one and the current one is far from it. Too many items are selling for far too much. A lesser problem is that too many other things sell for far too little because there is no vendor price for them. How they solve it, up to them. I offered my suggestion but if that it’s the best one, fine by me. What’s important is that they do solve it, and what’s most important is that they don’t consider what we’ve got “solved.”

In an attempt to get back on topic. You see this in all modern economies and it’s the same concept. Only the people that have the money to play in the top tier markets are playing around in them. It in some way benefits the average player if they happen to stumble on one of these top tier items. To give a light-hearted example, a friend of mine got a hold of a 1968 Shelby Mustang GT500 and promptly sold it for $100,000 USD. In correlation to that, several people i know in game got precursors and turned to sell them for a tidy sum.

I think John has mentioned (and i’m pretty sure he has far better numbers than what’s available to us) that the market isn’t being manipulated as much as some people tend to believe.

Ohoni.6057:

Look, I’m not an economist. I don’t know the best methods for achieving an optimal economy, I just know an optimal economy when I see one and the current one is far from it. Too many items are selling for far too much. A lesser problem is that too many other things sell for far too little because there is no vendor price for them.

Here’s the issue. You’re not an economist, and you don’t know an “optimal economy” when you see one.

This is a fantastic parallel between the virtual and a real world economy though. I’m actually really pleased with your quoted answer above though. Not because it’s accurate (it’s not), but because it really gets down and reveals the issue. I’ll admit I’ve been picking on you in this thread, but that’s mostly because you were willing to keep coming back from another angle at every juncture without devolving into typical internet “NO U”, insulting, or avoidance behavior.

Here’s the issue. People don’t “know a good economy when they see them.” Laymen especially don’t really understand what makes an economy good or bad, especially at a superficial level. What people see, and think to themselves as a “good” or “bad” economy is one in which their personal wants and needs are satisfied at a high level. But this is a judgment not on how well the economy is performing overall, it’s a judgment of how well the economy is satisfying one individual person’s unique preferences. You could have a terrible economy (let’s say one of hyper-inflation), but an individual in that economy who is fully self-sustaining and has no real wants that require them to interact with the currency market (and get what little they want/need via barter of excess goods) might see that economy as fine. Their desires (and the desires of those close enough to them for them to care about) are satisfied, so it’s working for them. A person who despises new technology or new things in general might consider an economy with absolutely no governmental protections for patents or other corporate secrets to be great. (I’m obviously oversimplifying this situation, but bear with me) Sure, innovation is going to fall off almost entirely, but prices will be lower as competition helps drive margins closer to zero because no company has a real advantage over another. That person’s wants and needs are being satisfied so they call it a “good economy.”

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