No, you’re right, this is not the real world…but people’s behaviour are similar. They prefer cheaper goods, and I don’t think you are going to deny that. As for the tp, even though it is not real, it does follow economic principle. Now, seems that you think under cutting is bad for the economy, and that the 5% listing fee is also bad. How?
@Y u mad its vydia.6324
There are a lot of things in economics that are misunderstood by many people. It’s not that Dishconnected wants to bring out the technicalities….but it is necessary to explain the mechanism in hopes that you will understand. Your aggressive attitude doesn’t help making your point across.
As John says, you’re complaining about what you expect things to work in a game who’s main selling point is that it is different. If you cannot find an item that can sell for a profit, then either try harder or quit the market. Many of us here have no problem making money form the TP. Also, you probably came with the expectation that crafted item will make you big money….but A-net had specifically made sure that this was not the case. If you don’t need an item and can’t sell for a good price, vendor it.
The global market of this game throws a lot of the habits that many players have learned from other MMO out of the window. Many are still struggling trying to learn the system…though those who have real life trading experience will find this a familiar ground.
@masterpyro
“The problem with the TP is that it is the only economy and it spoon feeds buyers with the lowest prices automatically. Even if I wanted to pay more, it would still give me the cheapest one anyway.”
So you’re saying you will willingly pay more to buy a homogeneous good? And say if it is allowed…do you think a significant proportion of the player will behave like you? And how would that change the economy?
Continuous undercutting leads to no fun for you…then you shouldn’t play the market if its no fun. I find it fun to undercut and sell my stuffs first before others and still walk out with a profit. The underlying problem is not weather it takes time to research or not…it’s on a rational person’s preference… low price is always better than a higher price..that simple.
You still haven’t explain your contradiction.
The biggest advantage of a large market is that it is significantly hard for a single player to move the market. Players that took advantage of that in MMO with smaller market might suddenly find themselves at a level playing field here. It isn’t this TP that’s broken…it’s all the other small market that allows for such exploit.
In a small market, say 20000 players. There are 20000 potential consumers, and 20000 potential suppliers. Here, it’s 2 million. It’s easy to get an impression of the market being flooded…especially since TP weren’t up in wk1.
Another poster argues that late implementation of TP hurts the economy. How? The market may start out different due to excess inventory…but it clears itself in the long run.
Another question I would like to ask is how do you define a stabilized market? I’ll bet most would think when it stays at the same price all the time. Price will always fluctuates. I would say as long as the variance (sigma square for the mathematically inclined) of the price is consistently at a certain level, then market has stabilized. Now this may or may not be the market equilibrium as I think it’s almost impossible to have a situation where supply exactly equals demand…but we may have something near it.
If you have any arguments against what I’ve said, I’ll be glad to hear it…but please justify your point if possible.
If no one wants the item then it will never sell anyway, no matter the price.
It’s not even possible to sell below vendor.. The buyers are unable to purchase that item. If it sells then there is a bug that will be fixed.
I don’t mean remove later and sell to vendor, all im saying is sell it at the current price on the market, dont take the extra time to enter in the vendor price and ruin things for people that could make a profit from the item.
You are contradicting yourself. Undercutting doesn’t spoil the market. If many people are willing to sell at a lower price than you, that means you priced it too high to begin with. You alone do not determine the market price. It’s determined by the action of all the buyers and seller. If you’re in the minority that thinks an item should be priced higher than all the undercutter, too bad for you. Either revise your price, or just leave it there and hope that the price will go up to that level.
People who complain about 1c undercutting must not have bought stocks/foreign currencies/bonds etc in real life. That is exactly how real world economics/finance work. Hyper-trading by large financial firms work at extremely small differences in prices.
If you have problem with 1c undercutting then you don’t understand economics nor human behaviour.
People who complain about 1c undercutting must not had sold anything in a competitive environment before…but definately had bought many under the same environment and you won’t hear them complain.
I ask this: “How many people had tried to hunt for a lower price for something that they wanted to buy?” Did you complain about undercutting? No because it doesn’t matter to you…undercutting benefits you at that time.
Now in an MMO, it’s probably the first time you are actually selling something under a competitive environment…you failed to compete…and you blame the system that you had been “benefiting” all these time?
Take this as an indication that you do not know how to trade and brush up on it. This is also why so many small businesses fails in the real world.
This thread should be closed.
I think it is pretty stable now. There will be macroeconomic shocks that we can’t predict or prevent…but overall it’s pretty good. Also, I’m surprised at the speed which the market digest new information.
Jealousy and failure to admit that you are bad at something are quite often the hidden motivation that drives any cries for changes.
@taikanaru
In single player game there is only 1 living person in the market, and anything sold spawns money into the world to only 1 person, you.
In GW2 there are 2 million living person. Money doesn’t spawn in player to player trade…so no infinite money. If a player wants to sell below vendor for whatever reasons, then the one buying it makes a profit by buying and selling to vendor…I don’t see anything wrong in that…as long as someone is willing to sell. It is not broken, and I’m afraid you failed to take the human factor and dynamics into account in your analysis.
@aeon
Could you elaborate more on your proposals on how to implement it and how would it affect the dynamics of the economy? No disrespect…but your reply seems less than coherent to me and it is hard to determine your message here.
If my memory is correct, You are talking about Scott sumner? He’s a monetary theorist, that proposes using a different metric extracted from the market to set monetary policy. So…I can’t see the link here between increasing the money supply which does not change the purchasing power of players and Sumner’s work… And how would this help prevent market saturation in a new market.
You can’t sell and you want to change the mechanism? If you do not understand how the market work, I suggest don’t play it…just trade for what you need. You’ll end up losing more often than you win.
As long as money spawned into the world is greater than money winked, there won’t be deflation. These parameters are easily observable by dev. If that happens, just increase drop rate of junk. The game is still new, plenty of player activity generating income. Just look at a session of your play time, and count how much gold you make after it is sink. If that’s CONSISTENTLY negative, then there’s a possibility that there is an inflation. If it applies to everyone, then there’s definitely an inflation. If it is just you…well…you know where the problem is.
The market is not experiencing a deFlation.
@ y u mad
Anything that mo one wants to pay much to buy is trash. You either make peace with it or can argue about the technicalities all day. In any game, there are trash. I don’t see how having trash and not having trash significantly changes my play.
Buy order and sell order alone doesn’t tell you the demand of an item. I suggest brushing up your knowledge on how supply and demand works before arguing it here.
TP is for people to sell items that are in demand. Everygame have trash loot to fill your bag space. The items you’re talking about will have a value if leveling weren’t so easy…then again…making it hard a different group of ppl gets upset.
I would like to see a nerf on drop rate though…but it will probably makes making money harder for a lot of people as they can no longer vendor drops.
join a guild. Pugs are unreliable.
Interesting…I like the way you view things even though I don’t agree with some of them.
The reason for multiple stock exchange is due to the listing requirements. NASDAQ and NYSE has very different requirements. Reason there aren’t 1 big global stock exchange could be that. As to why there aren’t many tiny stock exchange is that it’s a large capital investment to start a stock exchange…and if you’re tiny, then you probably can’t offer a lot of options to investor…like mom/pop retail vs wall mart.
Yes, there are more opportunities in smaller market that only a small subset of player can monetize it…often at the expanse of other players. Trading is a zero sum game. Now I understand what you’re trying to convey.
because you don’t need to slot low tier ruby into your gear to make you perform significantly better…and you’ll probably out-level your item in an hour? I haven’t slotted anything into anything…only started doing this on my lv80 gear.
@Lunesta.3742
You’re right in the sense that if all the price of goods are decreasing, it “could” be an indication of deflation, meaning they sink too much money. However as an individual player, I doubt we are able to observe the price change of every single item. If some item’s price are decreasing (say fine mats) and some others are raising, then it could be just a demand/supply shift. I believe John Smith will be looking at those data and determine the causes, and address them accordingly.
PS: I would never argue business strategy with you.
@Elusive.9162
Deflationary pressure from gold sink kicks in IF the game sinks more gold/hr than gold generated per hour from player activity. In that case, then yes. But if that’s not the case, gold sink only slows down inflation.
The event that TP isn’t up at the beginning causes a buildup of stock. Couple that with a fresh market where no one knows how to price their goods…it’s hard to distinguish between how much of the price difference is caused by stock buildup, how much is due to mis-price, and how much is due to actual supply/demand. I can’t give you an answer how long it will take for market to ‘self-fix’…and it is exactly because that can’t be determined, you won’t be able to determine how long to disable gold sink to accelerate that process either…just best just let it fix itself over time.
Ultimately though, there won’t be much effect at a relative level because it impacts every player. If you remove the sink, more money makes it into the game, inflationary pressure will just inflate the price…so relatively speaking your purchasing power remains the same. You are making 100c now, and purchasing something at 10c. When you’re making 200c without money sink, inflationary pressure will push the price of the goods to 20c.
@Findecano.8124
I agree that crafting could use an overhaul to provide more utility and increase the complexity.
I disagree on server (smaller) market self regulates better. I think both will self regulate the same (it’s just a different environment but the same economic mechanism that regulates them), but it is the general benefit to the players that is different here. The biggest advantage of a large market is competition. That makes controlling AND profiting the market extremely difficult for any single person. Due to the volume of trade, price adjustments on supply and demand happens very quickly. That being said, I would like to hear your opinion on how exactly does a small market self-regulates better.
Compare 3 hypothetical economy, on the price of say…copper ore which say today is worth 20c:
Econ 1
No sink. 1 Month later, 200c
Econ 2
all the current sinks except 15% fees on TP. 1 Month later, 40c
Econ 3
current state with all sink. 1 Month later, 21c?
Keep in mind there’s no upward bound for making money…and money is always created. WP and repair is insignificant. On any 1 play session…I’ll probably only spend 3s repairing(assuming I die at all), and 3s wp. Just by vendoring items, I make much much more than that. A poorly controlled inflation will wreck havoc on price, causing it to wildly fluctuate because people don’t know what price to expect. A controlled and steady inflation significantly reduces that.
CPI is being collected only at certain interval…and only on a basket of goods (food and common household item). If GW2 has food/water/electricity/cellphones, then yes.
Even then, it is constantly changing…which by your logic that at different hours of the day we’ll have multiple inflation and deflation? The value used specifically are being crunch out from statistical analysis to remove the “noise” of fluctuation. So observing 1 instance of price (or multiple and taking the average) and jump on to conclusion is inaccurate.
Money supply plays a significant role in determining the price of a goods among other factors.
Most people sees something disadvantages to them, then thinks of a reason to justify that it is the mechanism or something else that result in their failure to achieve a goal. This is often accompanied by an observation and a qualitative judgement.
Difference of a research minded person is that they will take this qualitative judgement, and run it through theories and see if it holds. In addition, they will also see if it holds quantitatively. This often requires critical analysis and some math skills.
Most started of with the wrong definition. Everyone speculates when they buy something. Controlling the market is the issue here. Examples of someone is controlling the market raise are invalid as it’s either the person misunderstood the mechanism (seeing 2000k buy/sell orders as being from 1 person), or simply don’t understand what causes the fluctuation in price.
Deflation = When the total amount of currency/capita decreases. Only John will know the exact number, but I don’t think it’s happening as players are making money every single minute.
Price decrease/increase = what you see in wk1 and wk2. It can be a result of deflation, but that’s not the case here. As more players are participating in the market, the supply and demand of certain goods starts to change. These changes are reflected in the final transacting price in the market.
Gold is scarce = completion of an event gives you 15s rather than 15g
Result: you see smaller currency numbers in GW2 as compared to other game. Think of it as the Japanese Yen and USD.
Money can be scarce if you don’t know how to make it. I have to postphone my grandmaster trait manual because of a stupid trade that causes me to loose quite a lot of money… just control your spending.
For everyone that complains that the economy is terrible, I’ll bet there are a few others that says otherwise. Just because you’re at the bottom end of the economic ladder doesn’t means its broken…maybe its just you?
Personally I like the idea. However, it will invite a a swarm of complains from players who doesn’t have the knack for trading and losses money trying to do so, but wanted the achievement none the less.
Some of the things in this game are designed for players who are willing to spend time achieving it (cultural armor/legendry), enjoy the challenge (dungeon/world map completion) or a combination of two. Then there are some who doesn’t have the skill/time/patient that will complain about it being too hard to achieve and demand the bar be lowered when it is obviously not these things are obviously not intended for them. They feel that since they pay for the game they are entitled to be handed everything the game has to offer at their designated difficulty level… Might as well lower the passing marks for exams from 70 to 0 so that everyone pass, everyone gets a medal, and everyone is happy.
The economist has spoken….
It all depends on your trading strategy. What you say is valid. But another may see a lost in opportunity for investing in stock that sits in your bank for a long period doing nothing. If I can make more money and are willing to spend time to do frequent trade, then that’s not a good idea. If I’m not willing to spend time or are not making a lot doing frequent trade, then yes.
But think of it this way as well…some items are expansive now because everyone needs it for crafting…and when everyone is done with that in the future, even inflation might not bring the price higher.
These bloody economic thing is always better illustrated with a graph. Since you’ve posted the deadweight picture, lets just use that. For now, ignore the deadweight and price ceiling…I’ll get on to that later.
Lets say the intersection is the equilibrium price (Call it point E), which in this case happens to be the vendor price (or vendor +1), @ 20. In this equilibrium, demand is 72. Say some stock disappears for some reason…the supply of the item in the market is reduced, and hence the demand should rise, and so should the price. But since as the price rises, demand reduces as well (that’s why price is endogeneous), then imagine a point at E that “jumps” to point A on the demand curve where the price=24, qty demand=44. The supply curve is also affected. Rise in price also increases the amount that people wants to sell (since it’s above vendor, they will sell it to the market, that’s where the increase comes from), so another point jumps from E to B on supply curve where price = 24, supply qty = 100. All this happens the instance the stock disappears.
Now push the play button. We have a situation where supply is higher than demand…sellers will undercut each other to get their item to sell first…given time, both point A and B will move towards point E at equilibrium. The higher than vendor price will not persist. The only way for it to be at higher vendor price is a shift of either curve…through new recipes or changes in drop probability.
Now, on to deadweight. You’ve misinterpreted the graph. The graph shows a price ceiling…we have a price floor. If the price floor is below point E, there’s no difference since it’s below equilibrium price…so it’s effect won’t kick in. Now lets examine if it is above equilibrium.
Imagine now that the equilibrium point E is no longer the vendor price..but rather it is the real equilibrium price of an item. Draw a price floor above point E, at the price of 21, the vendor price. Because of the price floor above equilibrium price, the demand is reduced. Also, consumer surplus is also not as much as without the price floor. There’s also a deadweight loss similar to your graph.
Tax should not be interpreted in the context of consumer/producer surplus as the cost of bearing the tax is actually split between buyer and seller (too mathematical to be discussed here), where as a price ceiling/floor is absolute. But suffice to say, tax will reduce the utility (an abstract of happiness if you would) of both parties. However, tax also reduces variation from speculation, which will increase the utility of both parties…so if the net effect is positive, then tax do more good than harm.
@razac
Because of gold sink, you just have to be more careful on the purchases you make, or improve your efficiency in generating wealth. You can buy pretty much most gears from tp quite cheap thanks to competition. Mats are expansive because a lot of people are crafting. You don’t even need to buy anything and can still reach lv 80. My first purchase of gear from tp was at lv 80 as I know that’s gonna last me a while. It’s all about not being a spendthrift. If you insist on wanting to participate in activities that requires a lot of gold, you’ll just have to put in effort to earn it like in real life.
Every mmo has gold seller. Does this one has more gold seller than other mmo? I don’t think any of us can give a definite answer…and that’s not something that we can do anything about other than not to buy gold.
Moneysink=inflation control…must like the expansive cultural armor. Neccesary mechanism as John smith stated.
TP. Does the price in this tp fluctuates more than other? If yes, by how much? Also, is it due to the game being new? In a game where you can sell without a fee, it’s easier to speculate…price fluctuates even more. Price difference of buy ans sell here due to the fees, most are roughly 15% or less else it’s an opportunity for profit. Offer below vendor price is not allowed…
So, anything else?
Any artificially designed market/mechanism will have its constrains and imperfection. Just need to find the most efficient way to make the most out of it…that’s the key to everything.
@Maxster.4521
Any investments or speculation involves 2 factor: expected return, and risk (standard deviation). Most of us work it out intuitively, but professional investors quantify these things. Inclusion of a fee reduces the expected return, requiring a larger upward movement of price in order to break even or make profits, while incurring an automatic lost upon purchasing.
Removing fees makes it easier to make profit from upward price movements…hence less risk involved. Now put this into the context of cornering the market to artificially raise the price. With the fee, the speculator needs to raise the price by x% (transaction fee) more…is that harder or easier? Then we have a market of 2 million participants (rather than 20000) to move the price back to it’s “fair” value (equilibrium or whatever you want to call it). This is a reason that there were cries to increase a higher transaction cost on forex to reduce speculative activity.
Any market that is not perfectly efficient encourages speculation. Speculators spends time to extracts/knows information that is not available to the public, or create the opportunity…or just simply taking risk. These action generate a possibility of greater reward to those who knows how to do it…off course they are encouraged to do so..not just here, but in any game. Warren Buffet admitted that if the market were efficient, he wouldn’t have been what he is today.
Unfortunately, a perfectly efficient market is just a theoretical concept…it doesn’t exist in the real world. Anyone that can design such a market is worthy of a nobel prize.
You kinda have to anticipate the price of an item. One way to do it is to keep a log of prices you see, analyses it and see if you can figure out what’s a low price and what’s a high price.
Another way is to look for wide spreads that is more than 15%, put in a buy order, then sell it when it fills. Careful though that if the spread closes, you might end up losing money.
Another is to buy up semi-finished goods as they are usually cheaper than the cost of materials to make it, assemble them into a finished product, and sell it.
There are other ways around…you just have to be creative and patient, and willing to put in effort.
@Ziggy
We’re making progress here. I’m not so much interested in the changes in mechanism. Rather, I’m more interested in the underlying theory. I’ve spoken to a fellow classmate earlier about our debate, and he pointed out a good point that I’ve overlooked: The way the curves shifts.
Supply and Demand is a function of price. Through the function, you draw the curve. However, price is an endogenous factor…thus changes in price doesn’t shift the curve…instead the point just moves along the curve. Can’t believe I overlooked this…would had made explanations easier. Now, you were talking about stock. Changes in stock changes the price…reducing stock raises the price…raising the price result in a point that moves along the demand curve, and another point that moves along the supply curve to the now higher price. At this higher price, the demanded quantity reduces, but supply quantity increases, and the 2 points will eventually converges to the intersect of the curve, which is equilibrium.
Question now is what determines the equilibrium? That depends on what will cause the curve to shift. These are exogenous factors. Introduction of a new recipe that requires the item will shift the demand curve to the right, more demand at any given price. Reducing the drop rate will shift the supply curve to the left.
Note that there is a small difference in MMO and real world. In real world, supply will adjust accordingly to the price (hence moving along the supply line)…but in MMO…it is semi-independent of the price…in that weather an item sells for 10 or 100, the supply is still the same because the loot generation doesn’t change. Only changes is if price is low, more will be vendor-ed or salvaged (depending on how low)…which moves the point along the supply curve.
Can you understand the dynamics I’ve described? That is the reason no changes whatsoever will affect the price unless the changes are exogenous factors.
*a small caveat to that: removing transaction price theoretically reduces the cost of selling, hence we should see prices being 15% cheaper…but it introduces a lot of variation to the market, not necessarily a good thing
*I like how this is going…it is a good mental exercise to test my own understanding of economics theory.
A simple fix for 1c micro-cutting that would greatly improve the high-end market! Discussions within!
Posted by: Wazabi.1439
@ziggy
I’m doing postgrad in economics.
John Smith pretty much sums it up… If you value your item at 100, that’s your bottom line that you’re willing to part with the item. You can sell it at 150, or 100. If you sell it at 150, and assuming free adjustment, undercutting will result in you selling at 100. If it goes below that, you won’t want to sell it. Without free adjustment, you can either set your price at 100 to begin with….or just undercut the current lowest price if it’s higher than 100…again…people can still undercut you. If you can adjust for free, then so can they, so it doesn’t change anything. Yes it could push the price down from competition…but that’s not the main factor of determining price…how much an item eventually sells is determined by how much demand and how much supply there is. Most people confuses the short run (SR)price and the long run (LR)price. Short run price can fluctuate due to imperfect information. No one knows specifically how much supply there is, and how much demand there is…hence the price in short run will fluctuate around a certain long run equilibrium value….but given sufficient time, price will gravitate towards that. I can look at the market of an item now and sell something for 100c, then maybe 5 minutes later at 105c…neither are the LR equilibrium price. But if the real value (not known to us) is 102 (lets say), then eventually LR price will gravitate towards that assuming a constant rate of supply and demand.
(edited by Wazabi.1439)
Dude…I’m a foreigner… Lol.
A simple fix for 1c micro-cutting that would greatly improve the high-end market! Discussions within!
Posted by: Wazabi.1439
If you can adjust for free, so can everyone. Doesn’t change the fact you aare second, so it doesn’t address the problem(which i don see it as a problem to begin with) you intend to solve.
Second, fees attached to posting discourage speculation, encourages careful pricing. Removing it does e opposite.
Third, timed expiry affects the stock of the item, not supply source, hence only short run price increase, but in the long run price still determined by demand and supply.
For details read the last few of my post here
And, an economic textbook for reference, specifically chapters on supply, demand, equilibrium price, price elasticity, perfect competition, long run and short run dynamics would greatly help.
What you propose is poorly thought, brings little to no improvement, and will actually screw up the market by making speculation easier.
Constructive enough?
(edited by Wazabi.1439)
A simple fix for 1c micro-cutting that would greatly improve the high-end market! Discussions within!
Posted by: Wazabi.1439
Read some of my post to realize how flawed your idea is…that’s constructive.
I totally understand his point…but unfortunately he doesn’t understand economics.
What you and he says happens only under the assumption that everyone will want to undercut. Tell me, will that be true? Only reason someone wants to sell lower is because they have no confidence to sell at a higher price, or that they need the cash fast. If there are sufficient demand for an item, and insufficient demand, what you say won’t happen. There will be fluctuations, and undercutting will only help lower for a short duration. In short, equilibrium price is not affected by that.
However, making transaction cost lower makes speculation easier…which creates a larger variation on price, and increases the probability of someone cornering the market, all bad for the overall players. This is the most significant reason to not allow reporting without cost.
Best way to let a market run is without any restrictions, a true free market. Let the competition sort out the supply and demand price. Inclusive more mechanism and restrictions only impedes the efficiency of the market.
Do you know reducing transaction cost makes speculation easier? How do you intend to address that?
And do you know how price is determined by supply/demand and all these undercutting is just white noise fluctuations? How does that affect the price in e long run?
A simple fix for 1c micro-cutting that would greatly improve the high-end market! Discussions within!
Posted by: Wazabi.1439
Amen to that…
Omg….the amount of failure in economic education…
Answer me this oh economics expert…what’s stopping me from udder cutting you once you’ve adjusted your price for free? I dare anyone who proposes free relisting to Answer my question to justify it…don’t side step it.
And are you not the idiot that puts it 1c below someone else?
I think it’s the lack of economics understanding of most people. GW2 strikes most as a casual game, and Eve as a hardcore. People who goes into Eve fully knows what to expect and are ready to take the challenge…can’t say the same for GW2.
Is it even possible to not be the first one to post?
A simple fix for 1c micro-cutting that would greatly improve the high-end market! Discussions within!
Posted by: Wazabi.1439
Omg…. I’m having midterm tommorow and you are giving me nightmare…