AO economics for n00bs & fr00bs alike

[LordLucan]

Nice post, but can't really see the point in it. Maybe I'm just being stupid, but I can't really see how what you're saying invalidates making a comparison between a RL supply and demand model and the games. I'm not an economist (just a mathematician ) but to me, in RL, more supply = lower prices (assuming same demand). In game, the same. Other side of the coin, more demand = higher prices (assuming supply doesn't increase). I can't see how this is different from RL and AO. As I said, not an economist, never studied supply & demand, but my extremely limited understanding of it is based on those two facts. Nothing in your post really changes that view. But a nice post anyway.

As far as I can see, the stuff about luxuries is just a red herring as far as I can see. One mans luxury is anothers necessity. It's all relative.

[Dextar]

As far as I can see, the stuff about luxuries is just a red herring as far as I can see. One mans luxury is anothers necessity. It's all relative.

And there my friend you have identified the xfactor in all equations dealing with humans.

Emotion.

One of the reasons economics is not cut and dried math is because it deals with humans and we are emotional beings. Logic, in many situations, is thrown aside for immediate self gratification which is based totally on emotion.

And AO operates exactly like RL in that very fashion.

[Darkbeak]

One thing to add:
Since about 1910 there is the value judgement debate in humanities.

a) If someone says *xy is overpriced*, that is a value judgement. Value judgements are individual, subjective beliefs based on education, cultural environment, parentage, needs etc etc. (same goes for *xy is a basic need* or *xy is a luxury*)

b) If someone says *due to the current situation of asymmetric knowledge and individual supply and demand situation, the price of xy was z* it is an explanation of a transaction.

The problem is, that a) cant be proven or falsified.

When you say something is overpriced, you have an idea of the true price . However, such a thing doesnt exist. And every explanation of why something is overpriced is a fake. You can say that you believe that things should be such and such, but you cant support that belief by an argumentational string following a true/false logic.

Same thing happened during the early medieval ages, when some theologists tried to mathematically prove that God exists.

So in the end, the 2 argumentations simply dont match. One is talking about what he believes and the other one is talking about what he observes and they will never agree. Problem is, that the one believing is trying to support his beliefs with what he observes and the one observing is trying to support his observation with what he believes.

So to a) if you believe, due to you moral structures, that everyone should have the same goods and everything should be obtainable by everyone, i can answer you, that due to my moral structures, i believe that the rare and in my eyes valuable things should only be owned by a few. Both beliefs have their merit, and we will never agree.

to b) if you think prices will stay as they are due to the mechanisms at work atm, i think that prices will go down within the next 2 months due to the mechanisms at work. In 2 months we will know for sure that one of us was wrong and the other one was right.

[-Plexor-]

Interesting original post. The AO economy is very different from real world economics, but it does follow many of the basics such as supply and demand, money supply, inflation etc. Of course in real life it's not quite so easy to make money so easily.

Unfortunate that the thread has been derailed so much.

Just because an individual considers certain items or services to be luxuries because people living in third world countries don't have them doesn't mean that he/she is correct. In economics these would not be classed as luxury items.

Seems to me that one poster on this thread is trying very hard to demonstrate their superior intelligence yet hasn't managed to contribute anything to the thread of worth. I think at this point silence may make you look wiser

[Anorah]

You have shown your ignorance to any problems outside your doorstep too.

[Duzytato]

Nice post Alien Child. I agree 100%..

[-Plexor-]

You have shown your ignorance to any problems outside your doorstep too.

The topic of this thread is not world poverty. Living conditions in other countries is not the topic of this thread. The thread is about the economy of AO. Please point out to me where I have show ignorance of other countries?

What I said is that in the field of economics the items you reffered to are not classed as luxury goods. Your own personal opinions are irrelevant to this.

Caring about the living conditions of poor people in third world countries is a completely seperate issue that you seem to be trying to involve in this thread for some bizarre reason. Maybe a more constructive use of your time would be going and making a donation to help them?

[Duzytato]

Lets all hold hands and sing Kumbaya! This whole luxury/neccesity argument is silly. Of course things are viewed differently in a third world country. It doesn't mean things like hammers and shoes and bikes and jobs are luxuries. In this day and age in industrialized countries, they are necessities. Period. End of story. Food and water are basic needs. In my country, you need money for food and water. To get money you need a job, to get a job you need transportation, etc.. So most things you use to legally attain the food and water becomes a necessity as well.

Back to the AO discussion. Alien Child is correct. EVERYTHING is a luxury. The game AO itself is a luxury.. So how can anything in a game thats a luxury, be a necessity? Thats a better question than arguing luxury vs necessity in RL terms..

[Dextar]

In my country, you need money for food and water. To get money you need a job, to get a job you need transportation, etc.. So most things you use to legally attain the food and water becomes a necessity as well.

Fascinating. This country you live in, is there no rivers or oceans or forests or meadows?

[-Plexor-]

In my country, you need money for food and water. To get money you need a job, to get a job you need transportation, etc.. So most things you use to legally attain the food and water becomes a necessity as well.

Fascinating. This country you live in, is there no rivers or oceans or forests or meadows?

So you drink seawater and eat grass and leaves? I'm really not sure what point you are trying to make or why.

[Grey216]

Nice post, but can't really see the point in it. Maybe I'm just being stupid, but I can't really see how what you're saying invalidates making a comparison between a RL supply and demand model and the games. I'm not an economist (just a mathematician ) but to me, in RL, more supply = lower prices (assuming same demand). In game, the same. Other side of the coin, more demand = higher prices (assuming supply doesn't increase). I can't see how this is different from RL and AO. As I said, not an economist, never studied supply & demand, but my extremely limited understanding of it is based on those two facts. Nothing in your post really changes that view. But a nice post anyway.

As far as I can see, the stuff about luxuries is just a red herring as far as I can see. One mans luxury is anothers necessity. It's all relative.

Agreed, the the point about luxuries/necessities really has no bearing on whether supply/demand works in AO. What if he's right, and everything in AO is a luxury? Well so what, there are a lot of luxuries in real life too, and the concepts of supply and demand can be used to analyze their pricing.

I suppose you could say a necessity is something with a vertical demand curve---a good that people will buy about the same amount of no matter how much it costs (within wide limits). In that case shoes and such would be considered necessities in developed countries. But then AO would have its own "necessities" like first aid stims and treatment kits, SL nanos, certain class weapons (JSPP/JEPP, SPB), carb plates, and containers. So again AO supply/demand seems like RL supply/demand.

So I'm not sure what the original post is saying.. If it's trying to show that reallife-style supply and demand don't apply to AO I don't think it's persuasive. But it does bring up some interesting ideas on cash farming.

[Duzytato]

In my country, you need money for food and water. To get money you need a job, to get a job you need transportation, etc.. So most things you use to legally attain the food and water becomes a necessity as well.

Fascinating. This country you live in, is there no rivers or oceans or forests or meadows?

Sure there is that. If I were to sustain myself on that water and food, I would STILL have to come up with MONEY to pay doctor bills after I poison myself. Its alot cheaper to buy food and water that gives me the least chance of getting sick. In an industrialized country its impossible for everyone to sustain on food and water from natural environments. If it were, then I'd buy your argument that purchasing food and water is a luxury.

[jokzer]

Lets all hold hands and sing Kumbaya!

Ehh... Be very, very careful what you wish for, you might get it..

Like Grey216 and LordLucan I fail to see a clear and final view of the divergence between the economies in RL and AO.
One thing that makes it hard for me to believe that such a divergence exists is that the same people inhabit both worlds and we don't change that much when we travel between them after all.

[Teljanin]

There is an aspect of the AO economy which it seems to me that a lot of these threads touch on but rarely delve into that I think merits discussion: The AO economy is inherently inflationary. Were it not for the cap on the number of credits you can possess, the price of rare items would have long since spiralled into truly absurd looking numbers.

Some people think it already has because to them 500 million credits seems like an insurmountable obstacle to attaining "ubah" gear. But I said "absurd looking" for a reason. As the number of credits increases - which it always does - it is only natural that the prices people are willing to pay for the best items goes up. In the final accounting, it really doesn't matter how many zeroes are on the end of a price. If there were less inflationary pressure, there would be fewer of them but the number would still be high relative to the average player's credit balance.

I expect that the recent moves to create more money sinks and tamp down on inflation (yes, I am talking about the ingot nerf) will result in a medium- to long-term reduction in inflation. Prices will still seem outrageous to some but that will always be the case - unless we all start playing Communist Utopia Online.

In any event, I found the original post very thought-provoking (some of the responses less so) but I think it overstates the difference between RL and AO in terms of luxury items. In truth, while one may make a value judgment that a great many AO items are luxuries and therefore not comparable to RL economics, a more accurate model would be to reserve the word 'luxury' for the truly exceptional items and think of the more prosaic items as 'basic goods' - a middle ground between luxuries and necessities.

I commute an hour each way to my job, so I would argue that a car is a necessity not a luxury (and spare me complaints about what you perceive to be my indifference to third-world privation, that subject isn't even remotely related to the topic at hand which is how an advanced technology economy on a virtual planet relates to the advanced technology economy in the RL world of the people that play this game. I see no point in debating the relative nature of luxury v. basic necessities in a thread about a virtual economy, so I won't). If I want to engage in my chosen profession and continue to be employed by the entity that cuts my paycheck, I have to be able to travel 50 miles in about an hour every day and there aren't any trains or buses that travel the route. So, while some people will always insist that an automobile is, by definition, a luxury, I would argue that it is a basic good that forms an essential part of my ability to earn a living and maintain the standard of living to which I am accustomed.

Compare to an AO profession, an Agent say.... In order to function as an Agent, the toon has to have a rifle. Any old rifle will do, provided it performs the basic functions of a rifle. Excepting the odd player has taken the road less travelled with his Agent and doesn't use one, a rifle is not a "luxury" for an Agent. A QL 200 Perennium is, however. And prices for those, relative to other rifles, are correspondingly higher.

Returning to RL, the same logic applies to my car. Any car that will reliably travel 50 miles each way five days a week is sufficient to meet my commuting needs. I can get to work in almost any six year-old Honda. Ergo, a top-of-the-line Lexus would be a luxury, but the six year-old Honda would not be.

I think this model applies very well to the AO economy. There's a lot more inflation in AO than the real world and RL goods rarely get "nerfed", so prices fluctuate more in Ao. But otherwise the anology works.

[Anorah]

There are 6 billion different kinds of rifles in AO, just as there is 6 billion different kinds of food on this planet, so saying an agent's rifle isn't a luxury does not put everything into consideration.

[DJLost]

My pixels cost more then your pixels!

Screw the economy, it's already screwing you. Nothing like having to transfer cash of off two characters to buy one thing. That's insane. It's absolutely nuts that to get a luxury item (for example QL 150 + SupBrainSymb) I am going to have to farm more then a starving etheopian during rainy season (no offense to any starving etheopians or those who feel they are starving etheopians because they send money to them).

In real life, I'm considered lower middle class by my income. In AO I'm considered gimped because in real life (due to economics .. and the job I took to overcome those economics)I don't have massive amounts of time to kill mob X over and over again trying to get Item Y so I can sell it to Player A and get some amount of credits in my attempt to reach Goal 1 (rinse and repeat this process as many times as it take to get to Goal 1) and become ungimped (at least to the general public)

I could directly kill Monster Z that is holding Goal 1, I really could. I could kill him/it/she/neuter so many times that when it showed up and I was there it would just apologize for inconviencing me and die on the spot. I could do these things, but due to the economy, I can't.

Ex:

Soldier X needs cash to support his alt of the week, or to buy a shiny new alien weapon. He thinks and thinks and knowing that at his above 150 level that most things which would give him exp and money are going to be tedious and boring to kill possibly and have no garuntee of droping anything worth crap. So he thinks and think and realizes that if he just killed Unique Mob C about 10 times he could have enough of Overpriced Item 1 that by undercutting everyone else and selling all 10 he could get his coveted Shiny Alien Rifle Type - JackAss. So he goes and sits his toon down in front of spot where Unique Mob C lives, and waits. When Mob C spawns, he spends thirty seconds annahliating it, collects Overpriced Item 1, sets his alarm clock for the next spawn time, sits down and logs off (most likely to go start a new Alt of the Week which will at some point need another overpriced item). Alarm goes off, Solider wakes up, and careful not to make too much noise (lest his parents know he's up this late on a school night) he logs on, waits three minutes and then kills Unique Mob C when it spawns (only 9 times to go). Rinse and repeat this cycle.

Meanwhile our intrepid hero (me) has decided that I am going to kill Unique Mob one, and decide to go sit at the spawn point for an hour or two while I work on other stuff on the computer (alt - tab is great isn't it?). It's nearing hour two and I'm trying to decide if I have the patience for hour three or not; but realizing that #1. I love a challange...this creature would be hard for me to kill, and #2. I don't have the patience to farm the 20 million + credits it would take me to buy this thing.
Amazingly, suddenly it spawns! I'm actually happy I waited, now I can say I earned something. This is something that I actually look forward to, it's the challange of the MMORGP and one of the reasons I still play.


Somewhere in a bedroom, there is someone with no life sitting down at their computer in fuzzy bunny slippers with a can of of Diet coke and some hostess cupcakes is waiting for the alien symbol to disappear so they can grab another quick 20 million worth of an item they can't use.

I start buffing up to take this bastard down, and grab some coffee because Im in for a long fight (Doctors dont kill things too quick if you didn't know)....

I engauge Unique Mob 1, slow him, DoT him and start shooting him. I know that this is going to be tricky trying to keep my nano pool up high enough to handle any healing and to keep everything running on him. The health bar drops the first smidgen...and it gives me hope.

The sound of an FA is unmistakable from any noise that my toon makes in a fight. The sigh of the health bar dropping like a college girl on free shot night is another sign that I am about to be OD'd, KS'd and greatly pissed off. I try running away, thinking that if I have established Aggro maybe I can get it to follow me and I can keep killing this thing is peace somewhere else. It doesn't occurr to me that Mr. Fancy Pants will just follow me and keep killing it while I conviently kite it for him.
It's at these moments I wish for a 'Crat so I could just charm the thing, lead it away and wait for this guy to leave.

It's all over in under two minutes. One dead Unique Mob, one guy looting something that should have been mine, and one very pissed off me. I could send tells, threaten with some crap about reporting...but its Anarchy Online, not Lets Play Fair online. I would think there is honor or something, some I'll help you, you help me...ect. But there isn't. I did send a tell asking if he needed Unique Item 1, or if I could have it while he had the rest of the loot (seemed fair to me). I get told that if I want said item it will be on sale at the special price of (just under 20 million) in his shop later today.

I fly away, wondering why the hell I just wasted three hours of my life waiting to try and actually accomplish something when I could have just killed Rabid Bunnies or somethign and gotten exp. I go on my way, trying to figure out how many backpacks of blood plasma I need to convert to afford this thing. Thats just what I wanted to do, sit down for hours (again) but this time just work on my carpal tunnel. I guess I'll just work my way through life without Overpriced Item 1 or maybe someone will give me a nice tip for SFA, screw it.

So there goes the economy, supply and demand. This person holds the supply, I have a demand for it, however at his prices (even though they undercut the other 3 I can find on the global) I can't afford it without jacking up prices for anything worth value I might try and sell to someone else. I would just farm more and more of valuable stuff, but a limited amount of gaming time availible makes it so I can't do that constantly unless I just want to burn myself out. I would do missions constantly, but that grows boring when your soloing (not to mention kind of slow for a doc).

This is the very basis of the AO economy. Hence I can get a Alien Energy Pistol at 254 QL for 100K, because no one wants it due to the insane requirements. But I can't get a regular Alien Pistol for under ten million within a usable QL which makes them a luxury item and something I can't spare the credits for.

High Demand, Low Supply, Monopoly on product all leads to jacked up prices which leads to jacked up prices on other stuff which leads to constant farming, hording and camping.

Welcome to a scantily clad version of an almost out of control capitalist economic model.

[Dextar]

It's all over in under two minutes. One dead Unique Mob, one guy looting something that should have been mine, and one very pissed off me. I could send tells, threaten with some crap about reporting...but its Anarchy Online, not Lets Play Fair online.


I believe the sentiment you are expressing is "To the victor belongs the spoils."

He wins because he has put in the time and effort to do just that...

much like real life.

[Duzytato]

I don't doubt there is kill stealing going on, but as long as its allowed then you should be prepared for it. Now you were going after the unique mob to get a specific item because you didn't want to pay for it. Some other person logged in and OD'd you for the item. As if its somehow their fault that they are stronger than you. All of this still revolves around something you WANT, not something you NEED.

How else would you propose this scenario be resolved? You assume this other player was farming the unique, but what if they were trying for weeks to get the unique and finally got it by ODing you? No one ever rants on a scenario where someone has been trying for weeks on end to get the unique. Its always the stereotypical person with a Diet Coke and eating a cheeseburger, in their underwear, who is just funding an alt.

OD is the only way to go. If you switch it to first hit, some lowbie can watch a team of six prepare to fight a unique, get the first hit and let the team of 6 take down the mob.

[Alienchild]

Some idiot(s?) do not understand that luxury is relative (and dont give me that "everything is relative"... its not), and that since I was adressing people who not only have a computer, but also have time to play and PAY for AO, I was adressing people who's idea of luxury are mostly the same as mine are. Please stop to try and torpedo this thread.

READ
To everyone who do not agree with me about the whole supply & demand thing, let me tell you a few things that I have learned and believe in. Remember though; economics, as with many other things, are subject to personal opinion and beliefs. It is a highly complex matter, and most of the time you just hit the nail by pure chance. Still, there are some fundamental truths about economics;

Supply and demand are not the "lowest" layer of economics. In fact, economics are not a layer, not a pyramid of cause and effect. Instead, it's a highly intricate system of loops that cross in on themselves and split out into other areas. There are things happening that are unpredictable, and vice versa. On the large scale though, RL economics can be partly predictable because we have certain goals that we all need to fulfill. Basic needs. Luxury. Call it whatever the %#"¤#" you want. There are also expectations. And there are consequences if expectations or demands are not met. This is part of what keeps our economy stable.

I said that supply and demand are now the lowest layer of economics. That also means that - disregarding the pyramid model - supply and demand do not alone drive a market. In fact, in certain cases supply and demand can get put a bit to the side when - for instance, there is a huge inflation. Look at germany after the war. People had to cash in their paycheck and use the money straight away before they got home, or else it would be worthless. An extreme event, sure, but it goes to show what an economy without a stable - the word escape me atm, but I believe there is an american saying that goes something like "the value of a dollar" that sums it up. If that value is not stable, prices will not be stable... the market in a whole will not be stable.

Combine this unstable cashflow in AO with people being able to spend all their cash in one day "just for the heck of it"... or perhaps even because they want to quit or because they just bought a gazillion or ebay... you realize that economics in AO is nothing at all like in the real world. Heh, you just can't buy real cash on ebay. Well, unless it's a collectors coin or something

actually, when I come to think of it... would be cool to try and auction a dollar on ebay.

[DJLost]

(before fingers start smoldering, none of this is a flame, this is a point - counter point discussion)

Now you were going after the unique mob to get a specific item because you didn't want to pay for it

.
I seem to have forgotten that paying for things became the standard practice in MMROPGs and it is something I will have to get used to. It is a battle of the fittest, just like real life except you don't need a college degree to succeed here, just a large amount of free time.

Some other person logged in and OD'd you for the item. As if its somehow their fault that they are stronger than you. All of this still revolves around something you WANT, not something you NEED.

True, I should just make some DD class and PL it up high enough to where my damage is good enough I don't have to worry about it. I really should stop challenging myself and trying to kill stuff on my own since Docs weren't mean to solo. In fact I think I'll retire him all together.

How else would you propose this scenario be resolved? You assume this other player was farming the unique, but what if they were trying for weeks to get the unique and finally got it by ODing you?

See the last paragraph where he says that I can pick it up in his shop the for the special price of just under 20,000,000.

Now if he was waiting to kill the damn thing and had locked up his character for days just to try and find this thing then thats that..well he got his goal and Kudo's to him.

No one ever rants on a scenario where someone has been trying for weeks on end to get the unique. Its always the stereotypical person with a Diet Coke and eating a cheeseburger, in their underwear, who is just funding an alt.

This is true and it was unfair of me to stereotype and to all you people in your underware with a diet coke and a cheeseburger, I give my deepest apologies.

Whoever they are and whatever they do, it doesn't matter. It's not the point and it detracted from what I was saying (it was intended to provide humor but obvsiously got someone a little riled up...sorry).

OD is the only way to go. If you switch it to first hit, some lowbie can watch a team of six prepare to fight a unique, get the first hit and let the team of 6 take down the mob.

It doesn't have to be switched to first hit, hell the system doesn't have to be changed at all. I was just explaining why the economy is the way it is. If you took my example as your reason to defend people who wander around all day OD'ing people just because they can (my pixels are bigger then yours) then by all means start a new thread about it.

By the way OD isn't the only freaking way to go. Maybe people being polite would be a route as well. But hey, that's not the mentality...and it never will be. There is no items given out because people are helpful or kind. There is no uberness given to treating others how you want to be treated...so there is really no reason to be, unless you want some respect. Then again, when you turn off the computer, no one behind the screen exists anymore, or ever really did in the first place.

It's not a system change, or an economy change...it's a mindset change.

...my two cents.