Penalize players who adjust their prices too frequently

[Toranja]

That is still micro. Never use politics as an excuse in economics. Every time a market deviates from the competitive model, you have reason to interfere - that is, every single time in the real world.

Players are still learning what the equilibria prices are. If they can freely change their prices to get a feel of the market, this will go along much faster. But bear in mind this is a very complicated process, mainly because of heterogeneous agents, but it will be much easier to learn and for everything to fall in place once the bulk of the crafting population has reached L50.

But I have to admit... it is possible that sticky prices (this suggestion adds inertia to prices) could help. But, as an observer, I'm not that interested. I've already been seeing RMTers anchoring prices in Leviathan for weeks now.

[Wazabi]

That is still micro. Never use politics as an excuse in economics. Every time a market deviates from the competitive model, you have reason to interfere - that is, every single time in the real world.

Players are still learning what the equilibria prices are. If they can freely change their prices to get a feel of the market, this will go along much faster. But bear in mind this is a very complicated process, mainly because of heterogeneous agents, but it will be much easier to learn and for everything to fall in place once the bulk of the crafting population has reached L50.

But I have to admit... it is possible that sticky prices (this suggestion adds inertia to prices) could help. But, as an observer, I'm not that interested. I've already been seeing RMTers anchoring prices in Leviathan for weeks now.

=off topic=
Well...I don't agree on government inteference, but I do see the neccesity of it on times. Agriculture subsidies in the US and some other large country is done to secure their own food source in case of conflict, so bad for economy, but good for the security of the nation. And due to sticky price and price inertia/momentum, government needs both fiscal & monetery policy to put a break on that (though the timing is another matter).

=on topic=
I'm all in for free price adjustment as it improves market liquidity.

[Kazamoto]

I'm all in for free price adjustment as it improves market liquidity.

While it seems counter intuitive, sometimes a market can be too liquid, preventing stabilization.

And thats the issue we have now, overly liquid market running down our legs after some bad Mexican food.

[Zigkid3]

While it seems counter intuitive, sometimes a market can be too liquid, preventing stabilization.

Oh boy, please explain I'd love to hear this.

[Xystic]

Oh boy, please explain I'd love to hear this.

Hmph, I would like to as well. I would like to know what is causing him to come to this sort of reasoning.

[Kazamoto]

A single sellers post, can disproportionally affect the average cost of an item because of the chain reaction undercutting we are currently seeing.

If there is an item with 5 stacks on the market, and a single seller undercuts by half, most of the sellers will then match or undercut that single new seller.

SUPPLY was not greatly increased, demand is unchanged, but the value as determined by market dropped significantly.

The only logic followed by most sellers now is:
Buyer wants to buy lowest price Item.
Lowest price item will sell first.
I must sell at lowest price.


Zigkid constantly believes in the powers of supply and demand over the powers of human nature.
All it takes is a single seller, even selling a single item, to cause a chain reaction of undercuts (were people smarter they would buy out the undercutter and relist, but they dont).

If there were a penalty, or anything to discourage matching or undercutting the lowest price, it would weaken human nature and give the supply/demand curve a chance.

Equilibrium is the word Zigkid uses over and over.
But when the price swings wildly, constantly, how is that equilibrium?

A note, for the most part, I sell crafting mats, ingots, leathers, lumber etc, I'm also a gatherer so my margins are good.
But when x leather which sold for 250g yesterday, and 250g last week, drops to 80g today, then 120g tomorrow, and gets back to 250g next week and stays steady, then the next day drops to 80 again, how is that equilibrium?

[Zigkid3]

A single sellers post, can disproportionally affect the average cost of an item because of the chain reaction undercutting we are currently seeing.

If there is an item with 5 stacks on the market, and a single seller undercuts by half, most of the sellers will then match or undercut that single new seller.

SUPPLY was not greatly increased, demand is unchanged, but the value as determined by market dropped significantly.

The only logic followed by most sellers now is:
Buyer wants to buy lowest price Item.
Lowest price item will sell first.
I must sell at lowest price.


Zigkid constantly believes in the powers of supply and demand over the powers of human nature.
All it takes is a single seller, even selling a single item, to cause a chain reaction of undercuts (were people smarter they would buy out the undercutter and relist, but they dont).

If there were a penalty, or anything to discourage matching or undercutting the lowest price, it would weaken human nature and give the supply/demand curve a chance.

Equilibrium is the word Zigkid uses over and over.
But when the price swings wildly, constantly, how is that equilibrium?

A note, for the most part, I sell crafting mats, ingots, leathers, lumber etc, I'm also a gatherer so my margins are good.
But when x leather which sold for 250g yesterday, and 250g last week, drops to 80g today, then 120g tomorrow, and gets back to 250g next week and stays steady, then the next day drops to 80 again, how is that equilibrium?

It's funny how you can't see that supply and demand takes into account human nature.
If there a ton, and I mean a TON of an item, but no one wants it, what will happen? If there's an item that is super rare and everyone needs it, what will happen?

On to the single undercutter you mentioned. it's been established that a value of an item on individual basis is subjective, the market value being a collection of what everyone values them for. So if someone undercuts someone else, they value that item less. if people constantly undercut each other then those people are willing and able to drop their price to beat the competition. you are right that the amount supplied and demand have not changed in quantity. However supply has definitely changed, not as a shift, but a change in the slope of the supply curve in order to fix itself to what it should be.

a chain reaction of undercuts is a good thing because it allows the market to fix itself to any changes at a faster pace. With a limit on adjusting prices, the market will adjust to changes at a slower pace, this is bad because the market value will not reflect the actual values of what items should be and it can cause major gaps in pricing which would make price fluctuations even worse.

freely adjustable market:
supply 1000g>>>>>>>>>>>>>>>500g<demand

limits on adjusting prices:
supply 1000g...............900g...............800g.................600g.............550g..........500g<demand

there's a rough example on what it would look like. in the first example people will constantly undercut at a fast rate to reach demand. In the 2nd example people will still undercut each other regardless the undercutting won't go away but now it takes a longer time to reach equilibrium.

As for your example, you are under the assumption that supply is always the same and that demand is always the same and thus the price should always be the same. However supply and demand is always changing, always, because of this the equilibrium needs to adjust accordingly. In a fast and liquid market it is able to do so, in a slow market which you're proposing it is not able to do so. Say someone comes up to buy a bunch of X items, that person has increased the demand and decreased the supply so the equilibrium has changed. Say someone floods the market with an item, they have increased supply and thus prices will drop. As a living economy these changes are always happening. However this is assuming the case that one individual can have a significant impact on the market and not taking into account what other people in the market are doing. if there was an in game change however, like a patch, that effected everyone and the whole market then the equilibrium will change accordingly. in a liquid market, the prices can reflect these changes and adjust to the new equilibrium faster. In a slow market which is what you want, the prices will not match that actual supply/demand for an item and will have price gaps. These drastic changes that you see are probably from items with very few suppliers and little demand so the market for those specific items hasn't been well established. But with a market that has 40 suppliers, and the trade history shows people buying it constantly then you'll see that the prices are relatively close to one another.

[Toranja]

While it seems counter intuitive, sometimes a market can be too liquid, preventing stabilization.

And thats the issue we have now, overly liquid market running down our legs after some bad Mexican food.

I would have a very hard time telling a story about how excess liquidity leads to price destabilization.

However, I can tell a convincing one about incomplete information or deficient information processing or a couple of other interesting things that lead to over-correction.

Now, read your post and point to me where exactly is the liquidity at play.

[Wazabi]

A single sellers post, can disproportionally affect the average cost of an item...

Equilibrium is the word Zigkid uses over and over.
But when the price swings wildly, constantly, how is that equilibrium?

Here's a ref link on my answer to that in another of your post:
http://forum.square-enix.com/ffxiv/t...18#post1475418

In short, you've got the wrong idea on what equilibrium price is, hence the way you derive your conclusion. Equilibrium price is not static...and if we dig deeper, there's a short-run equilibrium, and a long-run equilibrium. And, price momentum can also disrupt the price away from the equilibrium, and there will also be sudden price cuts below the equilibrium price. If the price drops from 250g to 80g, then went back up to 250g for a few days, then repeats again, that suggest that the equilibrium is probably near 250g...and the 80g sales is just someone trying to cash out on their inventory. It is normal. The link above also explains a little about the good and bad of tax at listing, and why it won't fix undercutting.

Liquidity in market transaction is generally a good thing in that it drives prices towards equilibrium faster, towards stabalization, and reduces stock holding risk. However, it also serves to propagate crisis that are derived from other factors such as shocks in money supply....but in this case it was not the market liquidity that causes the de-stabalization, but the shock in money supply.

I tried not to put out too many technical terms on this, but then I would have to probably write a whole chapter to explain it in plain english.

[Ryuko]

I usually only adjust my price about once every other day... maybe even less than that. The people who are so desperate to get their item sold ASAP are actually harming others because it necessarily drives the price down. Unfortunately, you can't control other people. We have to live with what they do. I am not in desperate need of money since there really isn't a lot to drop your money on right now... so I am slowly working my way up. I am also wary because people who make money 'too fast' may be flagged as RMT which will result in an unapologetic 'investigation' ban. So, I'll leave items on my retainers for weeks (checking them every now and then so it never times out). I really don't know why people feel the need to hoard so much money right now anyway. We can't even get individual housing for 6+ months.