Thread: Things to address in 2.0: Open Descending Price Auction will not work

By closed price system, do you mean something like FFXI, where you can't see the actual sale price?

Yes that's what I meant.

Originally Posted by Asiaine

Thank you for pointing that out. I had not noticed it was also used directly in a cane.

Note that the plank is a dated item, and the chips only for Smoked Raptor and a Basilisk Leather recipe that is not only dated but utterly worthless.

Originally Posted by Roaran

By closed price system, do you mean something like FFXI, where you can't see the actual sale price?

You always saw the actual sale price in FFXI. What you never got to see was the *offer* price.

Originally Posted by lucas_b

Yes that's what I meant.

The only problem is, hiding the prices doesn't stop the downward trend in prices, it can only slow it down; and, sometimes, speed it up.

Let's say you have a quantity of 50 cobalt plates to sell, and the going price for a single cobalt plate is 15,000 gil. You might think to yourself, "Nice 750,000g worth in cobalt plate." However, the period of time between each sale for a cobalt plate is three days. So, unless you want to spend 150 days waiting for your inventory to clear, something needs to change. The only option available to decrease the period between sales is to lower the price. So, for example, at 10,000g cobalt plates sell at a rate of two every day. Instead of 150 days, your inventory can clear in 25 days.

Now, let's introduce three other competitors, each selling the same quantity of cobalt plates. Together, all four of you are selling 200 cobalt plates at 10,000g; however, at a rate of two sales per day, it would take 100 days for all of you to exhaust your inventory. Obviously if you wanted to clear your inventory in 25 days you would most certainly be displeased with your competition. In order to increase sales, you must decrease prices yet again.

This is where the game of undercutting begins. If each competitor sold their prices slightly differently and as follows: 9,000g, 9,100g, 9900g, and 10,000g. The period between sales may not be too different, perhaps 2.1 per day; however, the person with the lowest price exhausts their inventory the fastest. Whereas, the person with the highest prices exhausts their inventory once the entire 100 day period is over. Obviously people place value in obtaining sales quickly, so they undercut. If the person selling at 9,000g were to continually resupply the market with cobalt plate, none of the others might ever see a single sale.

Let's say you are the one selling at 10,000g and you have been selling at that price long before these other assholes started undercutting you. You have three options: Lower your prices, shift production to some other item, or drop out of the market. (You could try killing your competitors, and it has been successful in the past; but let us assume you're not the murdering type.)

If you drop out of the market, you most likely do not think the quantity of gil you would be earning is worth your time.

By shifting production to something else, you can retain profits. An example of shifted production would be machines taking the place of workers in an assembly line. When the workers can no longer compete or do not want to work for next to nothing wages, they do not suddenly become useless, but instead they eventually go to work somewhere else satisfying a different need or want of the consumers.

By lowering your prices, you signal that you are still profitable and are still willing to produce at your new price.

Now, I want to address your suggestion, and why it will not help. The reasoning up to this point will help demonstrate more precisely why.

If there were hidden prices, you would not know your competitor's prices right away. But you will eventually, and you will eventually know if they are undercutting you and by how much. Rather than obtaining this information from your competitors themselves, you gain it through the price history.

All you achieve by hiding the prices is slowing the process of supply meeting demand. Because the total amount of inventory across all sellers does not change, it will still take the same period of time to liquidate the inventories. All it serves to do is slow down the process of you either dominating the market at the lowest price or you making the decision to shift or drop out. The only possible benefit to anyone is one of chance. The chance that for some short time your price is lowest, and the sales are for a short time direct to you. Once people notice sales are being made and their goods are not the ones sold, they will realize you have a lower price; and they will have to guess your price, they may choose 10g under yours or they might choose 2,000g under.

Finally, in addition, hidden prices serve one more unintended function; which is to introduce tedium.

Imagine if you were to translate a hidden price system to your local grocery store. For each item, you had to offer a price and haggle with the clerk. Some people start low and work their way up to ensure they guess the correct price. In this case they lose the time spent playing a guessing game. Some people may just bid high in order to get in and out of the store more quickly. In this case they are paying to keep the time they would otherwise be forced to spend playing the guessing game.

In either case, the consumer is burdened with the costs of both time and money. What purpose does the hidden prices serve in this case? Obviously, if it serves anyone, it is the few sellers who offer at the lowest price, but gain from the consumer what they otherwise would not. It is a game of chance, where everyone loses at the benefit of a few lucky individuals.

Furthermore, perhaps some preference should be given to sellers instead of buyers? You suggested that buyers are unfairly benefiting from the current system, but, remember, we are all buyers. Your transactions for the moment may be selling 90% and 10% buying, but you do not gain gil with the sole purpose of its collection do you? Eventually you will wish to purchase something with that gil. And it is then, that you will want prices as low as possible.

Leveling any craft has been made far too easy by today's standards. You can pour as little as 1mil into crafting and would rocket you to at least lv35-40. The fact that FFXIV encourages it's players to craft and even have multiple crafts is just crazy... The supply outweighs the demand right now. And yes will continue as the game gets more players and even after the server merge. More options for spirit bonding may be a way to solve this since the "High profit" items are always stocked. A good way of looking at incentivising is broadening the materia obtainment to other pieces of equipment (seems unbalanced at the moment). Basic materials are too easily obtainable from leves which in my opinion should be exclusively gather obtained. There are a lot of good points brought up in this thread and we do need to solve our economy problem.

Originally Posted by AmandaHuggenkiss

Example:
Item usually sells for 5k.
You post it for 3k.
I bid usual price of 5k.
You steal 2k from me.
No thank you.

But it did sell at the market price... ^^;
The seller even risked 2K profit to make that sale.