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Auction Houses, Pricing, and UndercuttingFollow

#1 Dec 15 2010 at 9:07 AM Rating: Excellent
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Nobody can doubt that it sucks to have something you make be undercut after posting it in the AH (I know that happened to me a ton of times), but it's the price one pays for having a dynamic economy. I can't think of any robust economy in history that tried so robustly to avoid any kind of system of price signaling for buyers.

The problems that some had making money (though it was by no means impossible) in the later years of FFXI weren't really caused by the Auction House, the Auction House merely *reflected* the poor lack of currency management by SE. Gil sinks and merchant buying prices needed to be far more dynamic than they actually were and SE took a *lot* of currency off the market. Deflation is a killer in real life, but it's even more of a killer in an MMORPG that has a focus on everyone being a crafter. MMORPG currency is essentially fiat money and SE took little care to appropriately manage it.

In addition, the undercutting "problem" is a two-way street. Yes, you'll start to lose money if you just want to craft something popular over and over again, but the setting of prices by the market has an extremely beneficial effect on sellers as well. Uncertainty is a very important concept in any financial model and without any kind of price signals, crafting items for sale becomes even more of a gamble than the chance that you will be undercut in a few hours. If you have an item that is made of materials that may be worth somewhere between 50K and 100K and you can make a product from those materials that may be worth somewhere between 60K and 120K, you're essentially gambling.

Those worrying that buyers having information will reduce your profit have to recognize that it is a *feature* of a robust economy, not a bug. You're essentially monetizing a cumbersome and poorly conceived bit of programming which has created artificial inefficiencies of time and information. That was *always* bound to be ironed out in the long run, whether it be from SE fixing the problem or buyers simply refusing to go to the market wards - those profits were inevitably going to be temporary.
#2 Dec 15 2010 at 9:14 AM Rating: Decent
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Yes. It's like people complaining: "Oh, now nobody will eat our rotten bananas!"
#4 Dec 15 2010 at 9:41 AM Rating: Good
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Basically, only HQ items and materials for crafts will be items where you can make a profit. The rest you'll be losing gil, I'm already losing on gil on some items I make with this I might just stop making items altogether.
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#5 Dec 15 2010 at 9:49 AM Rating: Decent
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With the current pricewars on certain items I've found it's profitable to buy stacks and NPC them since some people just seem to sell things for 5g less than the guy standing next to them... I've made a tidy profit doing that sadly.
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#6 Dec 15 2010 at 9:54 AM Rating: Decent
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Well, what do you expect?
With everyone and his grandmother crafting like crazy...?
#7 Dec 15 2010 at 10:00 AM Rating: Good
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Real life time > Fake game money
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#8 Dec 15 2010 at 10:33 AM Rating: Excellent
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AkumaOokami wrote:
DSzymborski wrote:
Deflation is a killer in real life, but it's even more of a killer in an MMORPG



I feel like deflation in real life has a bigger effect.


Well, a bigger effect in absolute terms, sure, as it's real life. But in real-life deflation does eventually work its way out as the incentives to stop it are more solid. In an MMORPG, people experiencing a deflationary period don't have the same incentives - while they may be very invested in the game, there's always the option to stop playing or play another game. The ability to opt out of a game economy makes economic disruptions in an MMORPG worse in a *relative* fashion. Opting out of the real-life economy is a far more difficult task.

SE is missing an opportunity, because economic theories and prescriptions that are extremely complicated in real-life (economics is essentially a math-intensive social science, not really a hard science) are simpler in a game economy since the programmers have a great deal more power in determining the "rules" of the world.

Edited, Dec 15th 2010 11:34am by DSzymborski
#9 Dec 15 2010 at 12:36 PM Rating: Decent
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SabastianSeraph wrote:
Real life time > Fake game money


+10000000000
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#10 Dec 15 2010 at 2:21 PM Rating: Decent
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DSzymborski wrote:
SE is missing an opportunity, because economic theories and prescriptions that are extremely complicated in real-life (economics is essentially a math-intensive social science, not really a hard science) are simpler in a game economy since the programmers have a great deal more power in determining the "rules" of the world.


And can track everything as theres no under the table labor or sales, well aside from folks bartering.
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#11 Dec 15 2010 at 2:51 PM Rating: Excellent
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One of the key elements of a player-based economy is missing, and it is going to cause serious problems at some point. If XI was an indicator as to how long economy fails take to start seeign the results- I'd say sometime in the next 3 months is fair.

That key element is no way for the suppliers to measure actual supply or demand.

If you can't measure supply, all crafting careers are just time-bombs of failure. All the talk of undercutting and price history- these things are nothing compared to the handicap of not knowing if you are producing something that is already being sold by 300 people. It's what WILL cause the collapse of the economy. Once crafters are tired of blindly banging their heads into walls, and are stuck with overstock, they will of course stop crafting. No one is going to go kill mobs all day for no reason if there isn't SP or drops or SOME reason, you don't even bother with that mob. Same goes for crafting, if there's no reason, or it becomes more trouble than it's worth, it's REAL easy to take up a DoW job in this game.

Now demand is a bit less of a threat, but a threat none the less. We can somewhat measure demand from shouting, LS chatter, and what we personally are selling, but we have no real way of knowing if those bits of info we are picking up from personal circles are indicative of the whole server and/or big picture.

The term Supply and Demand is thrown around a lot when discussing the root of XIV's economy. This game actually goes out of it's way to obscure the current supply situation from players . So only with 1/2 the equation for us to work with, guess what is inevitable?

No one is asking for a clone of the AH in XI, but an AH is needed in this type of player controlled economy.
No one player is EVER going to have only one,two,three,four, or even five types of items to sell, and no sane player is going to want to be juggling 7 retainer bazaars. So having the players setting up stores as the exclusive means of commerce will not work. In the end it will always result in the mess the market wards are now - 1500 variety stores, and needing to spend too much time browsing through them.



Edited, Dec 15th 2010 3:56pm by Restyoneck
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