A massive issue with current markets and how to really fix it.

[HurtigeKarl]

Not sure where you're getting this 3k per minute figure. I certainly don't make 90k running AK in 30 minutes.

If you are running AK for Philosophy stones, you are not being efficient. Given 37500 gil per 125 tomestones, doing Wanderer's Palace Speed run at 10 minutes (yes full relic, and know how), you would earn 37500*100/(125 *10) gil per minute = 3000 gil per minute.

Also since it wasn't obvious before: the explicit numbers themselves are pretty much irrelevant, I only used numbers matching the tome-runs and HQ 1 star market from a few weeks back to avoid too much mathematical abstraction, since I know that many players in general are not able to handle too much abstraction. I could have done the whole argumentation using no explicit numbers, so please see past the numbers and look at the argument. Don't let the trees stop you from seeing the forest.

out of those theoretical 10 people willing to buy between 3,000-50,000. they aren't all going to buy anything below 50k. some of them may have a limit where they are willing to spend 3k, some might be willing to spend 10k, some might be willing to spend 20k, some might be willing to spend 50k. as you get high and higher in person, there will be less people willing to pay that price. just because its listed at 49k doesn't mean all 10 will still buy it. people can always look at the history as well and notice there's a huge price gap between 16.8k and 39k to know they're getting stiffed and will wait for lower prices. Hence why the demand curve is downward sloping.

Except the situation I describe is precisely the one where during a wide price interval the demand practically doesn't change. I.e. practically a vertical line in the demand curve between the price points price=a gil and price=b gil. Where b > a and (b -a) >> L. L here refers to a width.

How accuretely this describes the real market is of course another matter. What I showed was that given certain assumptions, the 1-gil-undercutting artificially keeps the price above equilibrium price.
That's a problem. One important goal of the market designers should be to design the rules of the market in such way that the equilibrium price is reached sufficiently quickly.

One way, that I mentioned before, to test if the equilibrium price is currently met, is by making a large undercut. If other people follow you and the demand doesn't bounce back to the old prices, it means that the previous price was above equilibrium price. Certain sellers may see this as "crashing the market".

When I can so easily singlehandily "destroy" a market for the sellers by drastically lowering their market margins by doing large undercuts, it means that they were previously artificially attempting to maintain a price that was higher than the equilibrium price. That's a problem from the buyers.

An interesting scenario to keep in mind is that if there only 1-gil undercutters in a market and they all know that 15% of the time they will sell at a profit that gives them 1000% of the profit they would have received if they had sold their at equilbrium price, then they will keep doing the 1-gil undercutting, because on average they earn more by doing fewer sales above equilibrium price than more sales at equilbrium price. This strategy is viable partially because there is no readjusting fee.

As long as people can freely adjust prices it can reach equilibrium faster. If there's a tax/limit on price adjustments it'll actually slow the process of reaching equilibrium and cause the market to perform less efficiently and it won't mirror current market prices as well, and cause more price gaps.

As long as prices can be adjusted freely, there will be more adjustments, but if the size of the adjustments aren't large enough, the travel towards equilibrium per time unit will actually be slower than in the case where they aren't allowed to adjust freely. It is important to realize that many small adjustments do not necessarely added together be larger than one big adjustment.

Furthermore, at the point where adjusting freely becomes faster for the travel towards equilibrium, the price may already be close enough to equilibrium that it doesn't matter so much anymore to travel even closer to equilibrium.

Yes auctions create a minimum for incriments, but there are also auctions that don't. people will still do this in those auctions as well because its a waste of time to go back and forth. thats why people will undercut by more than 1 gil, so that way they can drive away more competition so they won't need to check back constantly which will actually save them time, time to make more money.

Depends on how much they consider their time is worth and how much time an adjustment takes as well as how their strategy reduces the final price at which the item is sold. Also a lot of human psychology involved, some may feel embarrassed by doing small incremements. In an auction there is no really good reason against implementing a such "minimum incremement" rule either officially or unofficially; one unofficial way to do so is to simply not invite the person later for other events.