Game Economy and the gil redenomination

[Kerrigen]

Will you guys even remember how much you priced items during 1.XX when 2.0 lauches after (presumably) several months of downtime and a beta?

[Roaran]

He is operating on the assumption that the game economy will work exactly like a real life economy and balance itself.

I am operating on the assumption that in an economy where you can buy gil, behavior will not match the real world.

His assumption is 100% accurate. Understanding that though all economies have underlying differences Beijing is very different from Hong Kong, they are both 100% economies. Though FFXIV, being a video game based in a virtual reality, it is no less an economy. Gil is almost as real as dollars these days, as dollars are predominately handled electronically. The items being exchanged are tangible goods, and the exchanges are being handled between real people. Gil has value to these real people as it can get them things they want; just as dollars can be used to attain other goods. For some people gil is even more valuable than dollars, so they exchange their dollars for gil.

So, FFXIV does have an actual economy. How much does it resemble the United States or Beijing economy is a different question. Most people associate their understanding of equilibrium prices and the effects of supply and demand with free economies, not really understanding what a free economy is. Suffice to say, FFXIV is a fairly free economy, so you can expect it to behave in a similar fashion as other free economies. That is to say, prices will adjust based on supply and demand. But as in all economies, especially free ones, the humans acting in these economies are also free to act irrationally. But by and large, you can expect the same behavior as "real" free economies.

The points that I have, he refuses to acknowledge
-Gil-sellers reduced amount of gil will be important for about a day before they restock
-Market ward pricing will not be automatically adjusted
-Sellers will have no real reason to reduce their prices because someone will have enough gil to purchase what they are selling

Prices will take time to adjust, when sellers find out that for most people that price is simply impossible to sell at (as there is not enough gil), they will adjust their price. They are also free to keep the item selling at that price and never actually sell it ofcourse. That is acting irrationally though, and by and large that will not happen.

It is that last point that he so vehemently disagrees with. He thinks that no one will purchase the highly priced triple melded gear if the seller does not reduce their price.

There will be some willing and able to purchase at the old price, but not as many. Because the ease with which that materia is capable of being obtained is likely not changed, supply and demand will force prices down.

I say that the seller has no real incentive to do so. Most likely, they don't *need* the gil to survive, and will not be forced into lowering the price. People who bought gil before, will buy it again. Elite groups that kill high level nm's with rare drops will continue to corner the market on that, and they have no real incentive to lower their prices either. Crafters that have access to elite groups that spiritbond gear at a high rate will continue to double and triple meld gear using high level materia. Because they are supported by elite groups, they also will have no compelling reason to reduce their prices.

This is simply not true as I have already explained.

So I'd like to open the discussion into the above. Will the prices on market wards be lowered with regard to the highest priced items? Someone prove me wrong without getting mad at me and giving me the silent treatment.

Just tell him he's right, and give him a big hug. No more silent treatment.

[Reika]

........ video game economy will never be exactly like real life :/

[Matsume]

Economy real or fake is nothing you can accurately predict. People act with emotion, people remember previous pricing, they are psychologically programmed to pay/ask a certain price. Those habits will be really hard to break over even a few months.

An item selling for 2 million now will not instantly sell for 200k in the wards. To say with certainty that it will is just a guess.

It will probably start at 800k then maybe 500k then 400k - which is still DOUBLE its 1.0 price - and then maybe go down to 350k. Maybe even 300k. It may stay there for months.... forever. There will be lots of adjustments.

One thing is certain, is that things will not be selling for LESS than 1/10th. That being the case its more likely that they will be selling for more. We can all revisit this when the game launches in April XD

I personally side with this argument.

I will aslo redirect you to 996 posts on this topic in the original ARR Gil Reduction Thread.

Like Quesse explains, no one can accurately predict the future outcome of an economy. Anyone attempting to with certainty is fooling themselves and everyone around them. All you can do is speculate on this topic and talk of probable and possible outcomes but the truth will only be revealed by the actual event playings itself out.

[Roaran]

........ video game economy will never be exactly like real life :/

Video game economy is still an economy, and all that is true in general of all economies is true of all video game economies.

No economy is exactly like another, so for whichever economy you're drawing a comparsion, you will never have an exact match.. only similarities. It is those things that are true of all economies that these similarities are drawn.


The bottom line is, people are still trading... that is all you need for an economy. The items they are trading still hold value no less than anything else. I'm sure some people hold some of their 'rare' items as more valuable than a bowl of cereal which I'm sure many of you would say is more "real" than that gear. The fact that the currency is created by the developers of the video game and not some form of government makes no difference with regard to whether or not the game's economy is "real" or not.

[Roaran]

I personally side with this argument.

I will aslo redirect you to 996 posts on this topic in the original ARR Gil Reduction Thread.

Like Quesse explains, no one can accurately predict the future outcome of an economy. Anyone attempting to with certainty is fooling themselves and everyone around them. All you can do is speculate on this topic and talk of probable and possible outcomes but the truth will only be revealed by the actual event playings itself out.

I can predict with absolute certainty that prices will fall. Note that these are nominal prices. Real value is determined by more complex factors, and are thus less predictable. Being ignorant of cause and effect relationships does not make them impossible to predict for everyone. I cannot say what the real value of those items are going to be, I don't know how many Iron Ore it will take to purchase a certain piece of materia. But for anyone who has doubts about nominal prices rising or falling.... they will without a doubt fall. Some by more than others. None will fall exactly by 10%.

[Matsume]

I can predict with absolute certainty that prices will fall. Note that these are nominal prices. Real value is determined by more complex factors, and are thus less predictable. Being ignorant of cause and effect relationships does not make them impossible to predict for everyone. I cannot say what the real value of those items are going to be, I don't know how many Iron Ore it will take to purchase a certain piece of materia. But for anyone who has doubts about nominal prices rising or falling.... they will without a doubt fall. Some by more than others. None will fall exactly by 10%.

Thank you for pointing out the obvious...

No one is arguing against wether or not prices will fall. The question at hand is by how much, and that, my friend, cannot be predicted with certainty.

[Twiddle]

Will the prices on market wards be lowered with regard to the highest priced items? Someone prove me wrong without getting mad at me and giving me the silent treatment.

Ok here's my analogy... We currently have Pesos, in 2.0 we will have USD. When you go to buy something in the US, you have the exact same buying power with 4000Pesos as you do with 311.40USD. What you are asking is will people sell a 4000Pesos item for 4000USD? the answer is no. You can not ask 4,000,000 gil in 2.0, for an item that is currently selling for 4,000,000 gil. Try selling an item for x10 the value right now and see how well it sells. The idea is not that difficult.

[Promethevs]

Thank you for pointing out the obvious...

No one is arguing against wether or not prices will fall. The question at hand is by how much, and that, my friend, cannot be predicted with certainty.

What he's telling you is that it doesn't matter exactly how much, and that redenomination has no significant effect on how much. When something as trivial as relabeling "gil" as "x10gil" magically restores everyone to the 1.0 economy, it becomes clear that the force redenomination exerts on the economy is nothing more than psychological.

This includes the gold sellers' economy, because collective gold seller purchasing power and rate of acquisition of purchasing power remains consistent in ratio with the greater player base's, if not dropping if the player base increases.

A few months down the line when 1.0 is a distant memory, I think it would be safe to say that more tangible market forces will dominate, the same market forces that control your 1.0 economy, and all this complaining will be considered much ado about nothing. Your 1.0 economy itself is evidence that prevailing prices do not persist.

That being said, even with no redenomination your 2.0 market has the potential to look wildly different. The redenomination is a nonissue. Don't bother feeling cheated.

[Alhanelem]

98 posts and people still can't comprehend how this isn't going to be a big deal.

No one is arguing against wether or not prices will fall. The question at hand is by how much, and that, my friend, cannot be predicted with certainty.

Prices will rise and fall because of supply and demand- not because of the redenomination. Stuff is only worth what people will pay for it. Sure, some people will be douches and try to take advantage of the transition to raise the price on things, but since everyone's gil has been adjusted the same way, they will be just pricing themselves out of the market for the item they're selling. Eventually they'll be forced to lower their price until it reaches a point where it sels.

There is NO POINT WHATSOEVER in panicking about prices. Even if there are some anomalies in the first days (which there will be in part because the histories will be most likely wiped, and because demand for some items may change significantly), the market will correct itself over time as people decide how much they feel things are worth to them.

Take a college intro course in macroeconomics and you'll understand why this isn't a big deal.