Just a couple of problems with the Market Boards.

[Zigkid3]

Sadly, while trying to be clever and insulting, you are only prattling off the same tired arguments that have been shot down repeatedly in a number of other threads.

And since we are trading back handed insults, your writing is poor and your paragraphs could use better spacing and structure.

'kay.
(more characters)

[Xystic]

you ignore that fact that when ever items hit the magical equilibrium a single seller can cause that price to spiral out of control

Markets are like a tug-o-war. It is common for people to randomly join in and tug with consumers and suppliers each at one end. You get equilibrium when a certain number of suppliers and consumers stay constant. However, when those numbers change, the center of the rope shifts which can be used to represent the value of the product. In reality people on either side shift constantly.

There can never be such a thing as a static price when the consumers and suppliers constantly change.

Other community members must understand this as well. Undercutting is merely a sign of suppliers overwhelming the demand. If the demand was high, you would not even see undercutting, let alone, those products on the market board.

[Wazabi]

As always, and with many words, you ignore that fact that when ever items hit the magical equilibrium, a single seller can cause that price to spiral out of control.

As Xystic puts it, your definition of equilibrium seems to be a static price, but that is not the case.

Many misguided ideas about how the market works and how certain changes will affect the world comes from mis-intepretation or mis-understanding of some economic concepts. One single mis-interpretation can have a great impact on your conclusion. You seems to know a little about economics. If you have access to an economics professor, I'm sure he'll be more than willing to shed some light on this.

When a person undercuts by 50%, there are times that the horde will push the market price lower...that's what we call market momentum. However momentum is a short-run effect. Even at lower price, demand actually increase because the item is now affordable to more people. If it stays down at that price, that means people are still able to make a profit selling at 50% of the old price, and you were selling it too high to begin with.

Now, what's to say that your old price is the equilibrium or that the new undercut price is the equilibrium? Actually we as the players won't know unless we have the numbers and the mathematical skills to develop the model....at this point we can only guess by looking at how often an item clears the market at a certain price.

I'm indifferent towards tax at listing or tax at selling. You think that tax at listing will eliminate undercutting...but in reality, it only serves to hide undercutting. Supply and demand drives the price, tax...only a little. What will happen is that players will be more cautious about their pricing, and will try to sell at a price that has the highest probability of clearing the market, which means lower price...so Zigkid3 is right that it will drive the price towards equilibrium quicker. However, this also introduce what we call sticky price due to the cost associated with changing price (you were right about the real world relationship of this). What sticky price does is that the price level is less responsive towrads the change in supply/demand...meaning that if most people are posting at 100g now, but the equilibrium had shifted up/down, then the buyer/seller will lose out/gain...until the price level catches up to the new equilibrium.

So, it your motive of wanting a tax at listing is so that price level will hit equilibrium fast, kudos to you. If you want a tax at listing because you think it will eliminate undercutting and makes you able to sell your item for higher profit...then you're right for the wrong reason.

If I have to point of a problem with the market board, I would say it's the player's lack of understanding on how economics work. If you're still a student, just look around in your economic classroom and see how many people are dozing off...

[ShinkuTachi]

snip

I get what you're saying; and really, more than the undercutting bothering me, is the lack of stability the market on Hyperion has with many many items. The market here for a great deal of items just acts like a yo-yo; more-so than the usual, prices dropping a little on the weekends then climbing back up on the weekdays.

About blind auctions decreasing activity, I guess I can see it being slowed down. However, I can't really see it being altogether decreased when it's the only way to make sales, aside from NPC buybacks. Looking at FFXI, even with the use of 'Bazaars,' the blind AH still stayed very active. I guess it would need to be observed in a setting such as this with the lack of a 'Bazaar' option. Like I said though, I'm not saying that blind auctions are the only way or the right way to go, it's just the only way I'm familiar with personally. That's why I suggested that.

Unfortunately I've never played Eve or GW2 though. Could you explain to me how those work exactly?

I wish there was a log of what Ive sold. When I log on, and there might be 10 things sold from my retainer, but I never remember what they are.
A nice log would help that out !

IIRC, when you summon your retainer, an option to review the transaction history of items sold via said retainer is available. I don't remember exactly though, because I personally have never needed to use it. When I log on after maintenance though, I will check and see then update this post. Hopefully this will be what you are seeking.

EDIT: Yes, you can check your can check your sale history when you summon your retainer. It goes back 20 transactions.

[Wazabi]

Both EVE and GW2 has the most free market system I've seen, and is the closest to the stock market that we see. I'll start with the simpler one, GW2. The market is cross server, so every single player in the game participates in the market. You can put a sell order, and also a buy order, just like our stock market. The major departure from regular MMO market is the amount of players trading in the same market. Price still fluctuate, but always within a certain range, and this range also gradually decreases over time as more and more of the same item gets accumulated on the market. Not many complains about being undercut because the undercutting activity is hidden from view. Those players who wants quick cash who would had undercut the lowest price by 50% would had sold their item to the buy orders. For commodity items, you can generally see a narrow spread between buy and sell price.

EVE is similar in that it has a buy/sell order. Initially it was called a bid/ask price, but many non-financially attuned players found that confusing, so they changed it. Instead of only 1 global market, you have a market board for every single space station in the game (and there are hundreds of them). Certain stations naturally became a trade hub because of its strategic location at the trade crossroad. You can buy item from 1 station and sell it at another. The orders that you post can only be fulfilled at that station...so if I put a buy order at station A, other players have to come to station A to sell it for me. That adds logistics into the market equation in determining the price. Prices in 'safe' space are generally cheaper than prices in 'wild' space, or as we called it 0.0-sec because transporting goods to those station runs the risk of being pirated.

Throughout the years, price eventually stabalizes unless there's a shock such as the release of a new craftable/drop items or prior/after a major clan war (EVE).

For FF, we can't expect the market to stabalize with less than 2 months. I was in Malboro, where I experience the same market condition as yours. Now I've transfered to Tonberry, and I've noticed that price level has generally stabalized. A player in Malboro might cry about me undercutting and destroying the market and killing the economy when they sell their electrum ingot HQ at 1000-2000 and I sell it at 400...but in Ton, the price is generally at the 400-600 range...that's probably the real worth of Electrum ingot...and people often have a high opinion on the value of the goods they are selling.

Remember, the item you sell is only worth as much as the market is willing to pay for it...not how much you think it's worth, and certainly not how much time and gil you've spent to create it.

[Kazamoto]

As Xystic puts it, your definition of equilibrium seems to be a static price, but that is not the case.

I only defined it as such, in my example that assumed demand was unchanged and supply was only changed to a very minor extent.

However momentum is a short-run effect. Even at lower price, demand actually increase because the item is now affordable to more people.

In the real world this is true, there will always be more buyers and investors willing to buy items given the right price. In the game (and without buy order options) unless someone is regularly checking the prices, demand would not necessarily increase just because the price went down. This early on, there is only so many crafters, or people leveling certain classes that have need at any one point.

Just because the price of 'Woolen underpants of itchiness' has decreased, it does not mean that there are more people who are leveling underpants gnome of the correct level to use the item.

In a higher turn over market, there may be market speculators that buy up a stock at low price assuming the value will go up, I'm doing this with some items in preparation for 2.1

Another example at the far edge of reality.
If someone could catch syphilis for $100 yesterday, and $25 today, is there suddenly going to be a rush on getting syphilis? Or is syphilis demand going to stay low no matter the cost?

If it stays down at that price, that means people are still able to make a profit selling at 50% of the old price, and you were selling it too high to begin with.

This makes the assumption that when undercutting, people still pay attention to if they are profiting or not.

I'm indifferent towards tax at listing or tax at selling. You think that tax at listing will eliminate undercutting...but in reality, it only serves to hide undercutting. Supply and demand drives the price, tax...only a little.

What will happen is that players will be more cautious about their pricing, and will try to sell at a price that has the highest probability of clearing the market, which means lower price...so Zigkid3 is right that it will drive the price towards equilibrium quicker.

It would not eliminate undercutting, but it would reduce knee-jerk price adjustments. As I have said, even if supply and demand are driving the price, it only takes one person who does not care about their own profits, to cause a downward spiral and destabilize an item.

Some would argue that more cautious pricing is a good thing, as it prevents sellers from using exorbitant mark ups.

Zigkid3 has repeatedly said that a presale listing fee would slow the drive to equilibrium.

However, this also introduce what we call sticky price due to the cost associated with changing price (you were right about the real world relationship of this). What sticky price does is that the price level is less responsive towards the change in supply/demand...meaning that if most people are posting at 100g now, but the equilibrium had shifted up/down, then the buyer/seller will lose out/gain...until the price level catches up to the new equilibrium.

I think the market should be slightly less responsive, this way undercutters can have their stock bought out without crashing an items value, and sellers would have a more difficult time trying to spike the price of an item.

So, it your motive of wanting a tax at listing is so that price level will hit equilibrium fast, kudos to you. If you want a tax at listing because you think it will eliminate undercutting and makes you able to sell your item for higher profit...then you're right for the wrong reason.

The tax, or fee to use the market board service pre-sale would do both, but it would not eliminate undercutting. Nothing will stop under-cutters, but it will reduce their impact on the market.

If I have to point of a problem with the market board, I would say it's the player's lack of understanding on how economics work.

There is a difference between a lack of understanding and a willful ignorance.
When people don't care, issues are caused. Internets are serious business.
Altana, I miss the EvE markets sometimes. The Jita spam...

[bwalker36]

So Wazabi is definitely correct that it will not stop undercutters to have there be a listing fee. It should however reduce it slightly and also hopefully stop people from listing ridiculous things like allagan pieces.

Its quite obvious that undercutting will never go away and you need to be able to do it otherwise prices will never fluctuate. My issue is that two people in a quick battle can drive down the price because as Wazabi pointed out most people just don't know.

Say wazabi and I both want to sell an HQ Twinthread. We each only have one and want to sell it as soon as possible. We just keep perpetually undercutting each other every couple of minutes till we drive it down, and then all of a sudden a few more sellers come in see our prices and list without seeing that the real value is like 50% above ours but we just wanted a quick sale.

The market will correct it self, volatility in a market is normal and if prices are pushed down 50% in a day or an hour and you unload your goods at that level you are crazy in my opinion. People just don't understand how it works. Especially on high supply items, if I notice things are selling 25% less than they were the day before I'm not going to sell there. Its possible that we are moving towards a new moving average but most likely not. Most likely its a valley and the price will rebound again and that is where I will have my goods listed so they are already there as demand begins to clear out supply.

I just don't like how two people can go to war on an item and it will cause knee jerk market reactions because the majority looks strictly at the lowest price. If you had to pay 100gil or whatever every time you changed the price or listed an item you would not undercut by 1g. It serves no purpose you just lost 200 gil on your transaction. If people were smarter the listing fee would not be a big deal but most people as wazabi said don't udnerstand simple market mechanics. Its not even economics you need to know, just market ideas/mechanics.

If you want an idea look at the s&p over the last 30 years. There has only been 5 years where the market actually lost value as a whole. 25 years posted a gain even with inter year declines of up to 19%. Obviously the idea doesn't translate perfectly but I belive the idea that the retail investor (or average gamer) is always the last to the party. They buy at the highest and sell at the lowest and since there is no cost to playing really in the markets in game it just exponentially grows their ability to be dumb lol.

As I said volatility is normal and I'm okay with it, but I do believe there is more volatility than their should be. Let it also be known that I do not really have any true issues with the market as it is. While it could be improved it is a fair market and you just need to play it right.

[Ed_N_Ants]

No matter what you do people are going to under cut... I almost always undercut people, because I want to get a quick turn around on my mats... But once the price is listed thats where it stays if people undercut me then its just gonna take a little longer for my item to sell, which is no big deal... But on some things like armor and weapons, I put a fair price and thats the way it stays unless the market is over flooded with the item... I think its kinda silly to fight with some of these people who sell there stuff for under what the npc's sell it for... Hiding the prices for sellers is going to do nothing except make things harder to sell... People are gonna have to run to the board see the price then run to their retainer, its not going to stop anything that is happening now and definitely is not going to settle the economy... Supply and demand are the only things that are going to establish and settle the economy...

[Wazabi]

*snip*

Price is the biggest factor for demand. Supply does not change demand directly...but it affects the price the item is being sold at, and thus affects demand. There's also this thing called price elasticity where every item has different level of sesitivity to price changes. All these applies in the real world as much as in the game world. Players are faced with a choice then they open the market board to buy something. If its too high, they might choose to wait till the price drops or obtain it through other means. If it's very low, they might choose to buy up the item for consumptions later. If they urgently needs an item, they'll probably be willing to pay a higher price for it. That's why people are willing to pay more than 30g to buy hard leather when they are at Limsa or Girdania, but not in Uldah.

In the game world for the most part, it doesn't cost you anything to obtain a piece of raw material. The only thing you spend is your time to gather it....so 1g is still a profit for me. As for selling under the cost for crafted items, I've also gained xp for crafting the item...so in effect, I've derived some form of benefit from crafting the item, and therefore, I'm content to sell it at a lower than cost price.

From most of your post, you seemed concern about undercutters but to me it's just a natural human behaviour. I wouldn't ask for a system change that will only have a marginal effect on undercutting. Prices are going to stabalize eventually in a few months time when the server population stabalizes. Even if the game launches with tax on listing, people are still going to be complaining about undercutters...most are just looking for an excuse to vent their dislike of undercutters and punish them for hurting their personal profitability. What range of fluctuations do you consider to be stable? What about the next person?

Many players also claims that game economy does not mimic the real world...but the fact is it does. Though with different constraints, it still obeys the same fundamental rules. Thus far I've been able to provide a link of most 'abnormal' in-game phenomena with real economics theory.

Many people in the world, especially on the internet are ignorant or misguided depending on the topic at hand. I've learned to just work with that to my advantage.

Supply and demand are the only things that are going to establish and settle the economy...

I like this.

[Brises]

I think the problem is, there is no realistic overhead costs for the manufacturing process. Sure, if people are impatient, they can buy all their mats from the market board, but if people level gathering classes, and a few different crafting classes, they can make anything for nothing more than the cost to repair their gear. That means they can sell high level items for $20 gil if they want and they haven't lost anything. Now, if it cost $400 gil to manufacture a $500 item, then people would not benefit from undercutting more than a certain amount.

Also, the recommended sale price, is the same percent as the NPC vendor's buy back price. It's right about 2% of what items should cost. I agree that that should not be the recommended sale price on the market board. Multiply that by 50, then adjust up and down from there as needed. Many people are just selling stuff they crafted to get rid of it, and they just hit OK without setting a price at all.