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blankseplocked [Proposal] Fix EVE market imbalance
 
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Roonia
Posted - 2011.07.10 23:15:00 - [1]
 

Edited by: Roonia on 10/07/2011 23:15:48
CCP, could you please have your economic adviser read this. Thanks.

Players...Before you throw a fit please read the whole thing. This suggestion is not meant to take away your ability to throw away money! It will just prevent you from doing it at other people's expense as well.


One would assume that a market should be based on supply and demand of goods and price should increase or decrease according to these laws. Not only based on demand and supply but on the intensity of each. After 3 years of observation and extensively playing the EVE market, I came to the realization that this is not the case. What actually drives the prices is the people's lack of desire to maximize income and their ability to change the prices arbitrarily, which they do not do in real life because in real life you lose real money. Before you jump with objections, im going to give you my reasons why this is not the case.

Now, please tell me who in their right mind would take a 15% price cut on their shares in the real world and give up 15000 for every 100,000 they sell? Answer: Nobody.

Here are the symptons of the irregular and chaotic market:

1. People with lots of money who can cause a market price crash because they are willing to take huge losses for the hell of it. Who does that in real life? Not even the richest billionares.

2. Ignorance or spite driven enormous price drops kills the ability of real cost conscious manufacturers to make a profit.

3. Huge price drops in very short amounts of time which are not driven by supply or demand, but rather by 1 person.

My point here is not to make things more or less profitable for anything or anyone in particular but to balance the chaos which is the EVE market today, which under normal circumstances would be self balanced by fear of loss...which in EVE is nowhere near as RL money and must be enforced by rules.

Here are the main causes of this imbalance:

1. First and foremost, EVE is treated as a game, and thus prices not regarded as money. Consequentially, the EVE market cannot and will not behave like a real money market because its not...real money. Its ISK and treated as such. Now CCP's goal is to make the EVE market as realistic and balanced as possible, but they have missed a few key controls which are necessary as people dont really care about selling at the highest possible price but just cashing in their loot or production, even at a loss.

2. Secondly, the price of goods is not dictated by the need for them or the supply, by rather by impulsive individuals. This wiliness to forego income which cannot be controlled at the moment in EVE is the reason why the market does not work well.

3. The ability of 1 person to cause an instant price drop on any 1 or more items by any amount and the ability to set an arbitrary price or a market order. What nutcase would sell Crude Oil for 100 USD / barrel, when the price is 110? Nobody in RL would. In EVE they do simply because they dont care and can set any price for a sell order.

4. SUpply and demand playing a minor role overall and prices are being driven by the above factors instead of economic ones. The price increase and drops should be governed by the SPEED of demand and supply, rather than by 1 person deciding to put up 10 megathrons at 2 million below lowest market price. By SPEED of demand and supply i mean by how active the market is going down, meaning, you have 1000 people dropping their price by 0.01% every 5 minutes...the price will plummet. BUt its a collective trend driven by supply and demand..not by 1 person, who just screwed the whole market. If supply is tight, this will be unlikely to happen, however it does happen in EVE. If you have 12 Megathrons for sale at 90 million, and the daily deman is 50 megathrons, you will again have some guy who decides to sell his megas faster at 80 millon each, taking a 10 million opportunity loss on each one. Who in their right mind does that in RL? Answer: nobody.

Roonia
Posted - 2011.07.10 23:21:00 - [2]
 

Edited by: Roonia on 10/07/2011 23:26:57
Edited by: Roonia on 10/07/2011 23:24:20
In a real market economy people go broke and lose their shirt, in EVE they dont, they just drop prices below cost without knowing it, messing with the market prices beyond belief.

So long as the above conditions exist the EVE market will not behave as the real market.

My suggestions to place some controls and balance the market a bit would be as follows:

1. Regulate the amount by which players can drop the prices of an item on the market. I would put a maximum limit price drop of 0.10% of the lowest region price per order. Meaning, you cannot set a price lower than 99.90% of the lowest region price. So if the lowest price for some item is 100 isk, you cannot put yours up for sale lower than 99.90 ISK. Now here one would tread carefully as there are different prices in different regions of regions. So, if you are selling in a system where the lowest region price is farther than 5 jumps away, then your new benchmark price becomes the lowest price within 5 jumps. This would let you match prices that are higher in your particular part of the region. In the case of minerals and other low priced item, the increment will be a maximum of 0.01 ISK drop per changed order.

So this way, prices would drop ONLY IF you have a lot of people willing to change their prices very fast by 0.10% or 0.01 isk, basically a sustained collective trent, instead of giving 1 person the power to screw the market prices. ALso prices would rise if a lot of buyers are buying up the orders faster than the prices drop....which is what SHOULD happen but DOESNT. It doesnt happen because people are willing to undercut other people even in VERY HIGH DEMAND secenarios, thus causing prices to drop even then.

2. Create a contract type called WHOLESALE where players can set lower prices for multiples of the same item they wish to sell at a discount, instead of selling it on the market and screwing the whole market dynamics. Here they may sell ONLY 1 item type per contract and must sell a minium of 2 units. Here these people can set any price you want for your items. Give them away for free if you want without affecting the market trends.

Yes, the result of this rule would be consistently higher prices throughout EVE.

In my opinion, the above rules would:

1. Prevent 1 person from driving the market prices
2. Give people who are willing to take a small loss and sell their stuff the tools to do so without screwing everyone else who is willing to play the market game.
3. Place price controls which only allow drastic price movements if they are genuinely driven by market forces instead of individual preferences
4. Remove "price dumping" from the market...which is illegal in most countries AFAIK.

ShahFluffers
Ice Fire Warriors
Posted - 2011.07.11 07:22:00 - [3]
 

Edited by: ShahFluffers on 11/07/2011 07:25:58


Soooooooo... lemme get this straight...

you want to introduce what is tantamount to price fixing because you don't like how people treat the in-game market as a game.

Yeah, not buying it. If people want to ruin the profitability of others because they can... let them. This is the in-game economic version of "lock the victim's wreck in high-sec if he/she has been suicide ganked."

Bo Tosh
Posted - 2011.07.11 08:07:00 - [4]
 

I can't agree with you on this.

When you see someone list items at a very low price you see it as a negative. I see it as someone needing ISK quickly or ignorant of the items true value and thus as an opportunity to get hold of cheap stock that can be re-listed at a better price, shipped to a more profitable market or just stored until the price recovers.

Hieder
Valar Morghulis.
Get Off My Lawn
Posted - 2011.07.11 08:52:00 - [5]
 

I do not support this.

I think you are pretty far off on your theory of how pricing and value work. Supply and demand are only two factors. There is also time as a factor. Someone might sell something cheaper because they need the isk quicker. Compound this with market speculation as a factor. A player might see the impending market crash and offer their product at a very cheap price in order to sell out and cut losses. Market speculation also affects rising prices like when marketers prepare for hulkageddon. But what it all really comes down to is what something is worth. Sure, to some extent, players don't pay as much attention to the price of things, but it's because they have a surplus of isk. The same as real money, nobody wants isk, isk has no value to them, they want the things it can get them. So they let isk go at a rate slightly less than what the product is worth to them. Value is subjective though and it works both ways. I might have a bunch of product that has no value for me and I need isk quickly and really badly to buy the product that does have value to me while it is still at a low price.

You are taking the stance that market players are taking a loss when they set a low price, but you are not looking at it from a subjective standpoint. To them, it wasn't a loss, that's why they thought to do it. Let them punish themselves for not maximizing their gains. The invisible hand will balance it out like usual.

Mattio11
Quantum Cats Syndicate
Posted - 2011.07.11 11:16:00 - [6]
 

Edited by: Mattio11 on 11/07/2011 11:20:21
Originally by: Bo Tosh
I can't agree with you on this.

When you see someone list items at a very low price you see it as a negative. I see it as someone needing ISK quickly or ignorant of the items true value and thus as an opportunity to get hold of cheap stock that can be re-listed at a better price, shipped to a more profitable market or just stored until the price recovers.


Some prices don't recover though.. for example, Navy Dominix used to sell for around 420mil when I first started in the militia; then for a while they stabilised around 360mil... now you're lucky to get 320mil :(

Fed navy comets were at 27mil for a while.. not at 24 or less..

just means I gotta be patient, or smarter and sell drones or modules instead Rolling Eyes


**edit** or i could go around killing people flying navy dominix so they have to buy more - increasing demand, how fast they sell, and hopefully driving prices back up Laughing

Ranka Mei
Caldari
Posted - 2011.07.11 14:46:00 - [7]
 

Originally by: Hieder
You are taking the stance that market players are taking a loss when they set a low price, but you are not looking at it from a subjective standpoint. To them, it wasn't a loss, that's why they thought to do it. Let them punish themselves for not maximizing their gains. The invisible hand will balance it out like usual.

Precisely. And the OP should not fool himself into thinking this doesn't happen in real life. I personally know of 2 rivaling video stores nearby: one legit, the other, two doors further down the street, set up by a guy who doesn't like the owner of the other store. He rents his videos for a much lower prices. Estimated losses for him? Around $10,000,000 a year. May seem like a lot of money to us; but to some it's just pocket change to annoy a rival with.

Hence, not supported. Reason: market 'working as intended.'

Val'Dore
Word Bearers of Chaos
Word of Chaos Undivided
Posted - 2011.07.11 15:08:00 - [8]
 

EVE's market is effectively no different than real markets. With the exception of an abnormally high wealth to poor ratio.

Bagehi
Association of Commonwealth Enterprises
Posted - 2011.07.11 15:49:00 - [9]
 

Originally by: Roonia
Here are the symptons of the irregular and chaotic market:

1. People with lots of money who can cause a market price crash because they are willing to take huge losses for the hell of it. Who does that in real life? Not even the richest billionares.

Companies do this. It is called dumping. In extremely obvious cases, companies get in trouble for it.

Originally by: Roonia
2. Ignorance or spite driven enormous price drops kills the ability of real cost conscious manufacturers to make a profit.

Manufacturing in Eve has many flaws. The main one being the lack of differentiation, making most products stuck as large volume commodities (which IRL are often manipulated by those with vast capital), while others get crazy pricing consistent with precious commodities (and thus dramatic price fluctuations like we see with precious metals and gems).

Originally by: Roonia
3. Huge price drops in very short amounts of time which are not driven by supply or demand, but rather by 1 person.

Again, like real life, this is due to commoditization.

Originally by: Roonia
Here are the main causes of this imbalance:

1. First and foremost, EVE is treated as a game, and thus prices not regarded as money. Consequentially, the EVE market cannot and will not behave like a real money market because its not...real money. Its ISK and treated as such. Now CCP's goal is to make the EVE market as realistic and balanced as possible, but they have missed a few key controls which are necessary as people dont really care about selling at the highest possible price but just cashing in their loot or production, even at a loss.

Brokers run markets like games. Eve's market is very realistic when you realize that it is a commodity market.

Originally by: Roonia
2. Secondly, the price of goods is not dictated by the need for them or the supply, by rather by impulsive individuals. This wiliness to forego income which cannot be controlled at the moment in EVE is the reason why the market does not work well.

... like commodities. Check what is going on with Aluminum, Gold, Silver, Platinum, Diamonds, and Petroleum right now for real world examples of the market fluctuation you are complaining about.

Originally by: Roonia
3. The ability of 1 person to cause an instant price drop on any 1 or more items by any amount and the ability to set an arbitrary price or a market order. What nutcase would sell Crude Oil for 100 USD / barrel, when the price is 110? Nobody in RL would. In EVE they do simply because they dont care and can set any price for a sell order.

Actually, in the real world, there is sale price deviation. The "price" you see is nothing more than the last completed sale price. In Eve, any given commodity has less volume (mostly due to distributed sales) than IRL commodity sales. So the deviation is easier to see. Even in Jita, you find a 5-10% break between most buy/sell orders.

Rather than putting complicated price controls on the market, it would make more sense to broaden the ability to remotely buy items, thus removing a lot of the distribution deviation, thus tightening up sale deviation. The next step would be breaking the commoditization of sale items.

Mortimer Civeri
Gallente
Federal Navy Academy
Posted - 2011.07.11 16:56:00 - [10]
 

Don't like what your item is selling for? Buy them out and re-list, or move your stuff to where you would get a "fair price".

All I'm hearing from you is, "WAAAAH! Someone is undercutting the items I want to sell. I can't make a profit. CCP fix it please! WAAAH!"

Roonia
Posted - 2011.07.11 17:26:00 - [11]
 

Edited by: Roonia on 11/07/2011 17:29:10
I agree, companies do dumping its however not legal and usually results in intervention by the SEC. In EVE there is no SEC and no regulation on the market functionality to prevent dumping and market manipulation.
------------------------

I was expecting the CASH IN people to complain. People crashing the market because they want to cash in quickly is exactly what this post is about. Its like you crashing the auto market because you want to sell off your BMW really fast...never going to happen. Removing Quick cash people from the live market, removing their ability to affect it is what this post is about. So if your argument is that you want to cash in your stock of hurricanes fast, DO IT VIA CONTRACT.


--------------------------------------

Im not sure how many people know this but large volume special sales of oil, grain, coffee, gas, etc happen through special contracts. These are special discount or premium plus deals which are done between two or more individuals / companies who agree on certain terms. I do this for a living actually, and im very good at it and this is why I bring up the subject.

Selling items well below market prices exist in the real exchange markets but these orders are not public, they are only triggered once the market prices reach THAT PRICE. If the market price is 100 for an item, you CANNOT sell it at 95 on the market directly. You can only do it via contracts, called OPTIONS.

What drives the price down on the real market is the amount of sellers vs the buyers, not the seller dropping the price but the buyers offering less because of various reasons. Its the buyer who dictates the prices....you know...the BID (buyer) / ASK (seller).

To answer your commodity market fluctuation, EVE is not the case. Large price fluctuations in the real market happen due to special events, interpretations and such and are cause by large sell-offs or buy-outs AT MARKET PRICES which rise/fall based on the SPEED for demand or supply of each goods. Special events cause the SPEED at which supply and demand unfold to increase 10 times over.
You are never going to see someone just giving you a 10% discount on their oil shares. Its rather small increments moving the price down incredibly fast, across millions of transactions. Its not just ONE dumbass deciding to cash in quickly, which the above people dont get.

Selling items below market prices on a regular basis only happens in what we call sub-markets, like you trading your games in or selling your stereo. That and black markets, but cashing in quickly there, has no effect on the market. In EVE it does. EVE market is the above mixed with a semi-simulation of NYSE.

People needing ISK quickly is not a reason to screw with the market prices. Im not saying to now allow them to do it, im saying to remove them from live markets.

-----------------------------------

EVE's market is not realistic for a great many reasons, too many to list here.

-----------------------------------

Im not complaining about price fluctuations, im complaing about fluctuations happening for the wrong reasons in EVE, which Ive listed above. In commodities markets rules apply, very strict rules. No rules in EVE.

-----------------------------------

The price controls i proposed are very simple and would be extremely effective. They would prevent people from "dumping" crap on the market and playing by its rules if they want to participate in it. Contract it instead.

Your comments about deviation has nothing to do with what im talking about. THe buyers have the right offer what they want, seller the same. The Bid and Ask spread is dictated by market conditions and world events, not by a single individual (which can happen but its illegal).

------------------------------------

Being a commodity market does not change the rules. The forces are still the same. Read here. http://en.wikipedia.org/wiki/Commodity

Roonia
Posted - 2011.07.11 17:28:00 - [12]
 

Originally by: Mortimer Civeri
Don't like what your item is selling for? Buy them out and re-list, or move your stuff to where you would get a "fair price".

All I'm hearing from you is, "WAAAAH! Someone is undercutting the items I want to sell. I can't make a profit. CCP fix it please! WAAAH!"


This isnt about a fair price or the right price. Its about mechanics. Go to school or something...or STFU, troller.

Roonia
Posted - 2011.07.11 17:31:00 - [13]
 

Edited by: Roonia on 11/07/2011 17:31:43
Originally by: Hieder
I do not support this.

I think you are pretty far off on your theory of how pricing and value work. Supply and demand are only two factors. There is also time as a factor. Someone might sell something cheaper because they need the isk quicker. Compound this with market speculation as a factor. A player might see the impending market crash and offer their product at a very cheap price in order to sell out and cut losses. Market speculation also affects rising prices like when marketers prepare for hulkageddon. But what it all really comes down to is what something is worth. Sure, to some extent, players don't pay as much attention to the price of things, but it's because they have a surplus of isk. The same as real money, nobody wants isk, isk has no value to them, they want the things it can get them. So they let isk go at a rate slightly less than what the product is worth to them. Value is subjective though and it works both ways. I might have a bunch of product that has no value for me and I need isk quickly and really badly to buy the product that does have value to me while it is still at a low price.

You are taking the stance that market players are taking a loss when they set a low price, but you are not looking at it from a subjective standpoint. To them, it wasn't a loss, that's why they thought to do it. Let them punish themselves for not maximizing their gains. The invisible hand will balance it out like usual.


The big difference vs the real market is that there is no bankrupcy, there is no invisible hand. Please read my post again.

Roonia
Posted - 2011.07.11 17:36:00 - [14]
 

Originally by: Val'Dore
EVE's market is effectively no different than real markets. With the exception of an abnormally high wealth to poor ratio.


Um..no. Looks like you were never working in the real market.

ShahFluffers
Ice Fire Warriors
Posted - 2011.07.11 19:59:00 - [15]
 

You're still not presenting a convincing argument on WHY the system as it stands should be changed.
Right now... all I'm seeing is, "this is what's happening in EVE's market, it is bad, it needs to be more like the real world markets, introduce controls so people can't mess with it."

So I will ask...
WHY should people not be allowed to play games with or 'firesale' things on the market because it means little to them?

Llambda
Space Llama Industries
Posted - 2011.07.11 20:01:00 - [16]
 

Oh, look. It's another, "Other players aren't playing the way I want them to. Make them play the way I want them to," suggestion.

Rolling Eyes

Roonia
Posted - 2011.07.11 20:44:00 - [17]
 

Originally by: ShahFluffers
You're still not presenting a convincing argument on WHY the system as it stands should be changed.
Right now... all I'm seeing is, "this is what's happening in EVE's market, it is bad, it needs to be more like the real world markets, introduce controls so people can't mess with it."

So I will ask...
WHY should people not be allowed to play games with or 'firesale' things on the market because it means little to them?


Well, its kind of like WHY should people not be allowed to use doomsday weapons, cap ships, or bombs in high sec. Both questions have the same answer.

BALANCED GAME ENVIRONMENT

Bagehi
Association of Commonwealth Enterprises
Posted - 2011.07.11 20:56:00 - [18]
 

You are missing my point. The way to deal with this type of behavior is by reducing the 500,000 (estimate) different exchanges people can trade on in Eve. As the exchanges consolidate, the price fluctuations will decrease. I mean, if you are worried about dumping, let buy orders cover constellations by default and the purchases consolidate in the issuing system. Bang. Suddenly there are plenty of buy orders to soak up the small market dumps people do.

Besides, the market price for things in Eve is so ridiculously easy to manipulate with the current system, your suggestion would likely create an even bigger problem. Let's say I want to kill an alliance. If I have a couple billion isk, I could get into their region, buy all their preferred ammo, set sell orders and buy orders at a magnitude higher than a reasonable price, then invade. Suddenly, they are stuck with whatever ammo they have in their holds/hangars. Suddenly they are flat footed, unable to rearm to bash the couple dozen SBUs we dropped. With only a few billion isk, someone could seriously cripple almost any alliance in the game with your mechanic.

Lykouleon
Wildly Inappropriate
Goonswarm Federation
Posted - 2011.07.11 21:16:00 - [19]
 

Originally by: Roonia
BALANCED GAME ENVIRONMENT


Some of us think that Traditional economics are better suited for a hyper-capitalist game environment like EVE than Keynesian.

Deal with it. vOv

Roonia
Posted - 2011.07.11 21:31:00 - [20]
 

Originally by: Bagehi
You are missing my point. The way to deal with this type of behavior is by reducing the 500,000 (estimate) different exchanges people can trade on in Eve. As the exchanges consolidate, the price fluctuations will decrease. I mean, if you are worried about dumping, let buy orders cover constellations by default and the purchases consolidate in the issuing system. Bang. Suddenly there are plenty of buy orders to soak up the small market dumps people do.

Besides, the market price for things in Eve is so ridiculously easy to manipulate with the current system, your suggestion would likely create an even bigger problem. Let's say I want to kill an alliance. If I have a couple billion isk, I could get into their region, buy all their preferred ammo, set sell orders and buy orders at a magnitude higher than a reasonable price, then invade. Suddenly, they are stuck with whatever ammo they have in their holds/hangars. Suddenly they are flat footed, unable to rearm to bash the couple dozen SBUs we dropped. With only a few billion isk, someone could seriously cripple almost any alliance in the game with your mechanic.



Umm...i disagree. Consolidation of market hubs doesnt change anything. The behaviour i was talking about is strickly per sandbox system/region/universe. Having only 1 wont change anything. You have the mechanism which allows said behavior..

And the scenario you are suggesting is rather silly, so i wont comment on it anymore.

Haulie Berry
Posted - 2011.07.11 23:53:00 - [21]
 

Edited by: Haulie Berry on 12/07/2011 00:41:33
Rolling EyesRolling EyesRolling Eyes

You're still pushing this? Look, this is such a naively devised notion that it doesn't even begin to warrant the vaguest of consideration.

Quote:
1. Regulate the amount by which players can drop the prices of an item on the market. I would put a maximum limit price drop of 0.10% of the lowest region price per order. Meaning, you cannot set a price lower than 99.90% of the lowest region price.... So this way, prices would drop ONLY IF you have a lot of people willing to change their prices very fast by 0.10% or 0.01 isk, basically a sustained collective trent, instead of giving 1 person the power to screw the market prices.


This is... hilariously idiotic. So, what happens when some Jita trader with a few billion to spare decides to buy up all of the stock of, say, warp disruptor IIs, then puts up a single unit for a billion isk? What now? Someone is forced to buy that unit for a billion isk to fix the ****up your genius plan caused? Or, nobody gets to buy warp disruptor IIs until another 700+ orders are placed (which is how many it would take to bring the price back to where it presently is) to drop the price by a hair at a time? And, of course, everyone else gets to pay taxes on 1B*.99, 1B*.99^2, 1B*.99^3, etc., all the way down the line. The amount of tears you could wring out of people (for the low, low price of 5 billion isk) would be well worth it, and you would eventually get most, or possibly even in excess of 100%, of the money back.

What happens when they set the price to a trillion? Ten trillion? A hundred trillion?


Yeah, that would be so much better. You've totally prevented any one person from doing awful things to the market. Rolling Eyes


Omara Otawan
Posted - 2011.07.12 00:37:00 - [22]
 

Originally by: Haulie Berry

This is... hilariously idiotic.


Val'Dore
Word Bearers of Chaos
Word of Chaos Undivided
Posted - 2011.07.12 04:07:00 - [23]
 

Originally by: Roonia
Originally by: Val'Dore
EVE's market is effectively no different than real markets. With the exception of an abnormally high wealth to poor ratio.


Um..no. Looks like you were never working in the real market.


I know people who blow money playing with the market. For fun.


 

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