Deflation hits

[Mafdet de Leone]

Originally posted by Kingbobb
Reflan, the risk in your action is that by lowering the price, you risk "educating" the buyer market, meaning that if you lower your price to drive an undercutter out of the market, the buying market may start to percieve that the item you're now underselling has a lower value. And other sellers may perceive this as well, and end up lowering their price as well. The end effect is that the market value of the good will have fallen, and mostly due directly to your aggressive competitiveness.

Not necessarily. The bazaar market fluctuates both short term and long term. It depends on the circumstances.

Yes, there will be those who are influenced by undercutters and mark their wares accordingly, and there those who will continue to price their wares at the price they believe they should get.

And, taking your example, the opposite applies as well, if we follow your logic. If someone prices their wares high, then someone will see it and price their stuff just as high, etc. etc. ad naseum. In this case, it is the buyer, not the seller who stands to lose more.

However, as a counterexample to your statement:
alchemy SoW potions.
Just read the boards here to get some sort of idea of how the shamans are pricing their potions.

The old price of SoW was about 100 pp per 10 doser. You will see arguments on both sides of lowering prices anywhere to 75-85 pp, and those who will ONLY sell at 100pp.

Both sides contend that they continue to make sales at their specific prices; some slower than others.

There are those who will continue to want to sell their Item_01 for any margin of profit, and those that will wait until someone buys it at *their* specified price.

[kiztent]

Originally posted by Mafdet de Leone
And, taking your example, the opposite applies as well, if we follow your logic. If someone prices their wares high, then someone will see it and price their stuff just as high, etc. etc. ad naseum. In this case, it is the buyer, not the seller who stands to lose more.

It's true, but, if there are no willing buyers, the price will move down.

Consider pricing into an unknown market (that is, an item that you don't know the value of) where:

1 - 2 people are selling at 100pp and 1 person is selling at 1000pp and

2 - 2 people are selling at 1000pp and 1 person is selling at 100pp

Either way, a seller who is entering the market will tend to price at the lowest price.

If you have a conception of what price you want, you will tend to look at the number for sale at the lowest price instead of the lowest price. If you want 500pp to make an item and there are 2 people selling 15 at 100pp -- you won't make the item, no matter how many are selling for 1k. I wouldn't anyway. I believe with perfect information, prices tend to go down in the long run.

[andyhre]

So I think I've mentioned that in real-life I am an economist. I don't publish much, but my employer would like me to do so. So, this thread is massively intriguing to me. It hits on cartel theory, oligopoly pricing, something called "conscious parallelism" (where people price knowing the other guy will respond, but do not collude). And the economics impact of asymmetric and imperfect information.

So this is something I wish I knew more about: what was the world like before the bazaar? I only started playing in February of 2003, but I get the impression that in the wild and wooly days of the East Commonland tunnels' auctions, prices tended to be higher.

My gut instinct is the Bazaar is pro-consumer because it helps buyers understand the nature of supply much better and slowly over time educate the market much better than the ad hoc auction system would have. So if my understanding of how prices behaved in "the old days" is correct (i.e., a wider range of prices at generally higher levels), this would be consistent with my instinct.

I can tell you I'd love to find a way to turn this into an academic paper. I could expense my EQ bills, and in fact justify getting a second computer for a "research bot."

So if you all want to help me grope toward an understanding of the impact of the market on prices, and a way to document it, I'd be thrilled.


Plus I'd love to give credit to people with names like Kiztent, Mafdet de Leone, etc., and see what the journal thought.

[Mafdet de Leone]

Originally posted by kiztent
It's true, but, if there are no willing buyers, the price will move down.

I think this holds true for any item. It's what the market is willing to bear.

Consider pricing into an unknown market (that is, an item that you don't know the value of) where:

1 - 2 people are selling at 100pp and 1 person is selling at 1000pp and

2 - 2 people are selling at 1000pp and 1 person is selling at 100pp

Either way, a seller who is entering the market will tend to price at the lowest price.

If you have a conception of what price you want, you will tend to look at the number for sale at the lowest price instead of the lowest price. If you want 500pp to make an item and there are 2 people selling 15 at 100pp -- you won't make the item, no matter how many are selling for 1k. I wouldn't anyway. I believe with perfect information, prices tend to go down in the long run.

I happen to agree with you here, especially with the Bazaar, which is a Pro-Consumer market, versus the old EC tunnels, which was pro-seller.

However, I disagree tthat "a seller who is entering the market will tend to price at the lowest price", holds 100% true...ESPECIALLY. with your second example. For me, if I see 1 person pricing for 100 pp, and everyone else sellinig for 1k pp, I am going to price towards the 1k pp, because that person might be just liquidating their assets, and isn't 100% indicative of the worth of the item in question.

But, overall, I do agree, in a pro-consumer market, like the bazaar, pricees WILL tend to go down, esp. with the influx of mor and more ppl making similar items.

One point I'd like to make:
We're all looking at this from the seller's PoV.

If we look at the consumer PoV, we'll see that s/he is probably doing the same thing that we, as sellers, are when pricing our items.

As a consumer and buyer, I TEND to wait to find the lowest price on a given item, whether it be food, drink, armor, weapons, or spells.

AND it also depends on whether I, as a consumer, want something NOW and how "rare" I feel an item is.

+ If ITEM_XX comes up, and it's rarely in the bazaar and priced high, I'll buy it dependinig on whether or not I REALLY want it (versus saving my pp for sometthihng else) AND if I have the pp for it. If those two conditions are not met, I won't buy.

+ If ITEM_YY comes into the bazaar, and several ppl have it for close enough prices, I'll do one two things:
a) Buy from the lowest price vendor
b) Wait until it's priced lower, because I only want to spend X amount of pp for it (and that's how much I think it's worth), and it's priced Y amount. (And, frankly, by waiting, i've saved a lot of pp, because I *know* as a consumer, SOMEONE will sell it for cheaper JUST to get rid of it).

So, when I price things on my mule, I look at it from as a buyer too.

a) How much are other ppl selling in the bazaar? Are their prices reasonable?

b) How much would *I* pay for such an item?

c) What is my cost/profit ratio, and what is the "least" and "most" amount of profit I am willing to make, WHILE keeping in mind part B.

d) Am I willing to wait on selling it to make X profit? (esp if things are priced lower in the bazaar at that point)?

[Mafdet de Leone]

Originally posted by andyhre
So this is something I wish I knew more about: what was the world like before the bazaar? I only started playing in February of 2003, but I get the impression that in the wild and wooly days of the East Commonland tunnels' auctions, prices tended to be higher.

My gut instinct is the Bazaar is pro-consumer because it helps buyers understand the nature of supply much better and slowly over time educate the market much better than the ad hoc auction system would have. So if my understanding of how prices behaved in "the old days" is correct (i.e., a wider range of prices at generally higher levels), this would be consistent with my instinct.

I can tell you I'd love to find a way to turn this into an academic paper. I could expense my EQ bills, and in fact justify getting a second computer for a "research bot."

So if you all want to help me grope toward an understanding of the impact of the market on prices, and a way to document it, I'd be thrilled.

Plus I'd love to give credit to people with names like Kiztent, Mafdet de Leone, etc., and see what the journal thought.

Aye, it is more pro-consumer than the old-EC tunnels.

In the old EC market, prices tended to be higher, because of the supply was a bit more limited versus demand. You weren't sure when you were going to see Item_01 again or for what price.

Also, in the EC market, there were more trades than you currrently have in the bazaar. For example:
Folks might trade Item_04 + Item_56 and XXpp for your Item101. You might also get a lot more haggling in terms of prices and/or trades. Because, you HAD to be present 100% of the time in order to make a sale.

I find traders in the bazaar are not as willing to haggle or trade for items. I am sure there is still that going on, but I find it less prevelant in the bazaar. You leave your trader on, go AFK, and folks can choose to buy or not. If someone wants to trade, you have the option of responding to them or not.

I akin this to Flea Market versus Store type mentality.

LOL, and I'd LOVE to see this as a paper. It'd be interesting.

Also, someone has written something to this affect last year, IIRC:

During the past year, nearly 16,000 people have downloaded a 40-page economic analysis of EverQuest, Sony's popular online fantasy world of Norrath. "Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier," by California State Fullerton economics professor Edward Castronova, is the No. 1 article in the history of the Economics
Research Network, an Internet library of tens of thousands of professional journals and research papers in economics. The article, which you can download here, not only outpaces the online works of every Nobel laureate, it is also the fourth-most popular article on the entire Social Science Research Network, which contains more than 75,000 professional articles and
abstracts in range of social sciences.

Do a search on Everquest Economics on Google.

[andyhre]

I've read the paper by Edward Castronova several times. Its main focus is on exploring the exchange rate between the platinum piece and the U.S. dollar, which is interesting. He also suggests several other paper topics, none of which thrill me. he also had the disadvantage to write pre-Luclin and thus pre-Bazaar.

I want to do a detailed study of the principles of antitrust economics and industrial organzaition in the Norrath economy, looking at things like:

Cartels and Barriers to entry. Do sickle makers collude actively? Can they keep the price of sickles above a competitive level without colluding?
Price Wars. if a price war erupts, what stops it? Can markets regain super-competitive prices?
The Make vs. Buy decision (e.g., should you farm your own components or buy pre-made leather padding)
Does the lack of an automated market for bags help/hurt sellers/buyers.
The Role of Brand: Why do Lammies sell for more than arguably better, equally or more scarce weapons?

These are all really microeconomic topics, more or less, and Castronova was askign more macroeconomic or even sociological questions like the exchange rate question or issues like whether people consider themselves residents of Norrath or Earth. I personally find that less interesting than how people choose their prices. But maybe that's because I'm a microeconomist and this all seems like the best real economy simulator I could imagine. thousands of people PAYING to develop a set of values for imaginary items and then PAYING for the additional chance to swap them in a market. I drool over the thought of pitching a study to SOE. I just need to think through it some more, which I keep saying I will do, but playing the game seems to get in the way somehow. I wonder why.

[Monodon]

Haggle

Aye,

I was fortunate enough to have experienced the old EC market. It ws truly the way eq was initially intended to be... INTERATIVE AND SOCIAL. In these days of the bazaar you rarely have the opportunity to tal to the person you are buying from. People camp their lvl 1 mules in trader mode while they play their main toon on a seperate account.

At the risk of a bit of nostalgia... I MISS THE EC TUNNEL.
Granted prices may have been a bit higher, but you were much more likely to be able to barter for goods with goods. THere was rarely a flood of any single item on the market because as stated "you had to be there". It felt more in character to be talking to the person you were dealing with.

The bazaar has unfortunately taken us away from that social atmosphere (I won't even get started on the fact that the bazaar was a marketing ploy to force us to buy Luclin). Of course many people would disagree with me. They would say that the bazaar allows the player to spend more time actually grouping and such. We have the AFKers that have a second acound specifically for trading. Bah, if I wanted to deal with an NPC, I'd deal with an NPC. I personally would rather buy from somone that I know is there. As a smith I do all my tradeing on my main toon. I find that many people want to deal with the actual craftsman and not some bot toon. This means that I have logged an insane amount of time on that one toon, but I have sold much of my wares to people specifically because they wanted to deal with a person.

The way I see it is that we have moved from a barter system to a more modern Walmart system that seems a tad out of place for the theme of the game. IMO

It is also important to consider that while it appears that prices have dropped since the bazaar went live, there have also been multiple expansions with bigger and better drops. These new items have simply shifted the value of the old items down a notch or two. It's like when a new processor is introduced to the computer market. The price of the older chips goes down. There is a certain ceiling on what consumers are willing to pay for items. When an item first hits the maret it may be priced at the ceiling. This will push the old top item down peg or two, hich if you're the little guy, isn't so terrible.

Of course this isn't to say that the constant competition to sell identical items when the buyer can check prices with the competition hasn't had an effect. Rather I think that it is a combination.

All in all, I miss the old days just because of the major social interaction. I say we start a revolution and have everyon use PoK as the new EC. Heck, I already do. I find I sell far more stuff far more quickly in PoK than in the bazaar.

Just my
200 cp

[Kingbobb]

I, too, miss the "true" market of the pre-bazaar days. I never had the money to buy more than a few items in the EC tunnel, but prices did seem to be a bit higher, on higher end items. On the other hand, tradeskill supplies were less costly, although they were also in less demand.

Overall, the bazaar takes 90% of the interaction out of EQ. It's like going to the mall, when you used to have to go to the Sunday farmer's market. Things look snazzier, there's a lot more to buy, but you really lose out on face-face interaction with the person who made or found the item you're buying. It may be an example of when SOE should have ignored the demands of the players. Just because a lot of people want something, doesn't mean we should get it.

[Sylphan]

I'm afraid the deflation is more than just people dumping skillup attempts. It's affected the entirety of the high end markets (things that sell for 10k and up). I think the lack of cash loot in PoP has actually reduced the money supply. And then the Ornate craze drained a lot of bank accounts too. It probably drained more accounts than it raised, with the difference going to ebay.

My favorite indicator is Golden Efreeti Boots. I've had them as part of my 'skillup suit' of high-int items for ages, and still do. They sold for close to 3k in the pre-kunark era and still sold for 3k in the beginning of the PoP era... and stayed pretty consistent in between. That's a LONG time in EQ terms. But in recent months they've gotten cheaper, at least down to 2500 and sometimes 2k.

Ornate armor has had a huge effect on all high-end stuff this month. People sell the armor they replace. For six months or so I've been able to list all the enchanter items that cost 4444 or up with no overflow (before that I used 3333). Now I get overflow even at 8888... I don't know what I'll do after 9999. It's apparently because there's a ton of folks dumping their obsolete hand-held pottery focus items and visible armor in the 10k to 25k range.

And people who buy ornate armor run out of money for other high-end stuff too. For instance, ornate robe patterns are definitely not common, nor are there many robes in the pocket zones. But the price for Robe of Ancient Earth has dropped to maybe a quarter of what it was a month ago, and is still in a downward spiral with the number on the market increasing each week, not decreasing. I actually tried to talk some folks into selling me one for 100k a month ago but the various sellers had talked to eachother and saw no reason to go that low. Today I see a bunch of them in bazaar at 40k and some at 30k. I even found some of the parts for sale (rare that they'd get sold) and attempted to make my own.

There is a possible explanation for that last example. Perhaps tradeskill drops were increased at the same time ornate drops were increased. I've noticed the same slight increase of parts coming from Storms, BoT, and other spots. But that still argues in the same direction -- increased supply is bound to lead to deflation. The number of people doing Aid Grimel has no effect on those markets -- it's the parts that are rare not the skill.

There are a few other items that suddenly became common when ornate started dropping -- Tactician's Bulwark is a good example. They just started popping up at a tremendous rate at the same time as ornate. But older, unreplacable, things are dropping in price too without a change in supply, and I don't just mean level 3 focus items. Zlandicar's Heart, Amulet of Necropotence (which in theory is even more useful than it used to be), Square Helm, even Boots of Flowing Slime are finally getting cheaper, even when there's only one or two on the market at a time.

[Lothay]

This thread is more suited to the General forum where:

1. More people will see it.
2. May have some commentary.

I'm intrigued and fascinated by the various factors involved. In "real life" I'm a computer programmer and occasional entrepreneur, so the questions raised and answered by this discussion are of deep interest to me.

[Kingbobb]

The increase in ornate drops has had a drastic effect on the high end market. That doesn't surprise me that much, as there's only so much upper level plat. to go around, and if you really want to spend 50K on that ornate mold, you're going to have to bypass the 4-5 pieces of cultural you could have bought with that 50K. So sellers of player-made gear see their market stagnate, and lower their prices.

What does surprise me is that, on E'Ci, you can find the other component parts for ornate armor (the plate and chain, mostly, but I also see the leather and silk components as well) on the market in good supply and cheap. With the molds and patterns selling for 50K+, you can get the temper/agent and metal/silk/skin for 500pp each. Given that selling the components is the only Bazaar method for GM tradeskillers to make a profit off the Ornate market, I'd expect to see these ingredient prices be ten times what they are.

[kiztent]

The way I look at it is that the game has removed annoyances as time went on. Headed to NFP (which was the market zone on my old server) was annoying. Why was it annoying?

Spam. There was no way to search what was for sale, so people had to shout their goods out. You had to watch the spam fly by and see if you recognized the name of an item that was an upgrade that you could afford. Or you could add to the spam by shouting what items you needed and could afford. Plus shouts for heals, sows, other buffs, beggers - after all everyone trading was at the keys.

Lag. Both parties needed to be online, and the shouting was tremendous. Performance sucked. It was even worse at the bank since everyone would be encumbered and packed around the bankers exchanging coin and items.

Faction. Maybe this was a NFP thing and wasn't a problem in EC, but you'd see people wacking guards all the time, adding to the spam.

People are not good negotiators - evne worse, they think they ARE good negotiators. Assuming you didn't have someone who was delusional about the price their goods commanded - and there was no way to easily check it - they had read somewhere that making the first offer was bad. This led to the standard response to "how much for the clay guardian shield" to be "offer plz". They had a price in mind, it was probably reasonable, but God forbid they should actually tell you. You had to go through a 10 minute dance to get a price out of them, then start negotiating if you didn't like it (or you could make an offer and go through the same dance). I would just lowball an insane price, they'd say it was too low, give me their price and generally I'd take it. Yay. Minutes wasted - remember there are no chat windows so you have tells in the middle of MASSIVE auction spam that you have to read and respond to, and hope they saw it.

Now, when they set up their trader, they can see if what they are selling is being sold elsewhere, how many are for sale and at what price. Personally, I liked ripping off the inept sellers, but I hated the time it took. Time that could be spent on something more enjoyable than negotiating with a buffon. And judging by the number of people that don't negotiate (you still can after all), I'm led to believe that I'm pretty solidly in the majority of people that don't like being tied to my computer trying to get someone to admit to a price they would pay and waiting for hours of end reading rapidly scrolling text to find the item I want.

As for the drop in prices, it's many fold.

First, there's an easy way to gauge supply and current pricing. I can see who is selling what for how much. In NFP, people just listed items, almost never prices.

Second, pricing is more persistant - that is, I leave my trader up all night. So if you zone in to the bazaar, you'll see my mana vial prices, unless I've been bought out.

Third, general mudflation. There are better drops in game and it's easier to get the older drops (juggs used to be a 3-4 group raid, now you can single group it easily).

I could probably dig up logs from when NFP was still the place to shop - will have to check when I get home if you are interested.

[windeliane]

Just a few words. The main fact about the bazaar up to me is that buyers and sellers can "compare". So the price adjustment (balance) will be much faster than previously in EC. Proof : the site dedicated to EQ prices disappeared when bazaar went live. Before we needed a tool to get an idea of these price, now the bazaar is the tool.

About sickles, no way you can't collude when too many people are involved. And a difference with RL is some people are selling with very different motivation the same objects, not only to make money; i mean profit. Someone raising tradeskill for the Grimel quest just want to get rid fast of the object, because he has certainly a huge amount of money already and he just needs room in his bank. So he can sell for cheap, losing money, whatever price is already in bazaar.

I rarely do sickles now. But i do some in one case : when there is none in bazaar and some people are auctionning 2 or 3 days in a row for that. Then i do a stack or 2 of combines and i sell them 2.5k a unit. And they sell very well in this case...

[andaerice]

I'll have to throw in my 2cp for what I've seen as the biggest reason for deflation: Inability to use the bazaar window.

Say someone is out and ended up with a bunch of mammoth meat from a merchant find or helping a friend or what not, and turns these into HMP. Later that day they put these all up on trader. They do a bazaar search to see what the going rate is and see...

HMP - 3p
HMP - 3p5g
HMP - 4p
HMP - 6p
HMP - 6p
HMP - 7p

So to get rid of the HMP quickly, they put the 480 they made up for 3pp. Problem comes that if they had pulled the bazaar window slider over just a bit more they would have seen...

HMP (1) - 3p
HMP (3) - 3p5g
HMP (7) - 4p
HMP (214) - 6p
HMP (170) - 6p
HMP (225) - 7p

Hardly anyone buys consumables in less than a stack, so the person could just as easily set a price of something like 5p5g and sold just as many without badly deflating the market, and still give their potential buyers a deal. (and made an extra 1.2k profit)

I see it more often with armor. Someone wins a roll and gets an ornate tunic pattern, then decides to make some newbie happy by selling their old acrylia tunic for next to nothing. Meanwhile, the master tailor sees the tunic price and thinks this is the going rate and matches it with the 30 they made that day. A quick look at the sellers inventory would show that the person selling cheap tunic probably has no skills at all, but instead deflation happens.

[kiztent]

Originally posted by andaerice
HMP (1) - 3p
HMP (3) - 3p5g
HMP (7) - 4p
HMP (214) - 6p
HMP (170) - 6p
HMP (225) - 7p

Must be nice. On my server the lowest price is usually the one with 400 or so, and the higher prices are sub-stack vendors that haven't got the clue that a skiller is trashing the market and are going to be sitting on inventory a LOOONG time.