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Thursday, April 12, 2007
General economic equilibrium in World of Warcraft
One of my strange hobbies, besides playing MMORPGs, is economics. And as many MMORPGs have some sort of player-run economy, there is often opportunity to combine these two hobbies, by looking at the virtual economies of a game like World of Warcraft. Economics can explain a lot of the phenomena of a player-run virtual economy, for example auction house prices. And that isn't as simple as it often looks.
Most people are aware of the laws of supply and demand. Primal air is more valuable than primal shadow, because the motes of air drop at fewer places than the motes of shadow, and the primal air is used more frequently in crafting recipes. Thus for primal air the supply is low and the demand high, causing high prices. Primal shadow are nearly worthless, because the supply is high and the demand low.
But what is more difficult to understand is the general level of auction house prices, effects like inflation or deflation. To understand this you need to understand general economic equilibrium theory. And because most people don't understand that, you can read a lot of nonsense being told about inflation in MMORPGs.
Stated in simple terms, general economic equilibrium in World of Warcraft means that an hour of your time is worth a fixed amount of gold pieces. An hour spent killing the best possible monsters for cash, or spent for farming tradeable goods like primals, or spent gathering herbs or ores should in the end give you the same amount of value. If killing monsters for cash gave you more gold per hour than the farming of primals, somebody needing primals would rather farm gold and buy the primals on the auction house. This would decrease supply and increase demand of primals, so their auction house price would rise, until the equilibrium is reached again, and one hour farming gold or primals is worth the same. Of course that assumes that people are intelligent and always do it the most profitable and fastest way, but as long as there are enough intelligent people out there, the general economic equilibrium plays a big role in determining auction house prices.
That is most visible if you go nowadays to the auction house and check the price for low level fungible trade goods, like wool cloth or copper. With nearly everybody having characters that would easily be able to farm wool cloth, and most people being far too advanced in their tradeskills to still use wool, you might expect wool cloth to be very cheap. But if you actually want to buy some, you'd find that wool costs a lot more than you thought on an older server. That is because high-level characters don't find wool cloth on the mobs they kill for other purposes. If a high-level player wants wool, he would need to deliberately farm it. And while killing the level 20ish humanoid mobs that drop wool is fast for a high-level character, he would first need some time to travel to a location where to find those. He might be able to gather 100 wool cloth in an hour, but during this hour he could have earned a lot of gold by killing mobs in Outland, and so a stack of wool is suddenly worth a couple of gold pieces. The Burning Crusade increased the amount of gold you can farm per hour from monsters, and thus ended up increasing all the auction house prices for gathered goods, because one hour of gathering time is now worth more. This of course helps new players, because they can sell the wool they gather for much more than it was worth when everybody was low level.
So if one hour of your time is worth the same, whatever you farm, does that mean there is no room in World of Warcraft for clever money-making? Fortunately not so. What you need to do is to identify situations where the situation is out of equilibrium, and use that situation for arbitrage advantage. For example when making money gathering herbs the equilibrium price is reached because the more people are gathering herbs at the same time, the longer it takes to gather a given quantity, which keeps the prices high. But the equilibrium price is an average over all the hours of a week, and at some times there are considerably less people gathering herbs than at other times. So if you gather either add very odd hours (4 am gathering session anyone?), or during times when all those raiders are busy in Karazhan, you get more herbs per hour, and thus better profits than if you gathered at times when everybody else is doing it too.
Curiously the laws of economics also tell us that the effect of gold farmers on the economy is often misunderstood. You can often find people complaining that gold farming would bring more money into the economy, thus raising prices. But that is only the case if the gold farmers are grinding cash or items sold to NPC vendors. In reality gold farmers aren't farming gold itself, but are busy gathering items that sell well to other players, the same herbs and primals that regular players gather. That can be very annoying if you are a regular player, because you arrive at lets say the elemental plateau in Nagrand because you need primal airs and find that the place is totally overcamped, and it is hard to tag any air elementals, with so many farmers around. But if you consider the effect of this on AH prices, you'll realize that gold farmers grinding primals is actually *lowering* the general price level for primals, not increasing it. By perma-camping they maximize the supply of the primals. And as long as they make their gold by selling primals to other players, and not getting fresh cash from mobs, the money supply remains unchanged. Whatever inflation you observed in the last few months is more likely to stem from The Burning Crusade's increased hourly gold income to regular players, than from any gold farming.
- posted by Tobold @ 10:06 AM Permanent Link
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This was an AWEOMSE post Tobold. I'm interested in economics, but not to the point where I'd say I'm a hobbyist. I find things like futures markets entertaining, and I wonder how well the economies of older, established servers would serve as sandboxes for testing different economic models.
One of the things I find interesting is the difference in attitudes between people who treat in game money like real money (me for example; I hate spending it because I spent so much time earning it) and those who spend it like fake money (a guy in my guild who spends, spends, spends, and then borrows more from guildies).
Thanks again for this post. I've been reading your site for a while, and this post has instantly become one of my favorites.
One of the things I find interesting is the difference in attitudes between people who treat in game money like real money (me for example; I hate spending it because I spent so much time earning it) and those who spend it like fake money (a guy in my guild who spends, spends, spends, and then borrows more from guildies).
Thanks again for this post. I've been reading your site for a while, and this post has instantly become one of my favorites.
@Tobold
For example when making money gathering herbs the equilibrium price is reached[...]
I'm no native english speaker but aren't there any words missing?
I just don't get any sense in that sentence part. ;)
Apart from that very interesting article. :)
For example when making money gathering herbs the equilibrium price is reached[...]
I'm no native english speaker but aren't there any words missing?
I just don't get any sense in that sentence part. ;)
Apart from that very interesting article. :)
# posted by 
: 12/4/07 14:46
: 12/4/07 14:46
Hmmm, there might be a comma missing or something. I admit I'm a bit shaky on comma rules in English, as that isn't my native language either.
The idea I wanted to express there is that there is an "equilibrium price" for a gathered rare herb, lets say Terocone. This equilibrium appears because on the one side a lack of supply drives prices in the auction house up, making it interesting to gather Terocones. But on the other side of the equilibrium the more people gather it at the same time, the less herbs each of them finds per hour, making gathering Terocones tedious and unprofitable. As soon as there are "enough" people gathering the herb, it becomes more interesting to do another money farming activity, and buying the herb than gathering it yourself. But if you were willing to gather the herb at 4 am in the morning, where few other people are online, the equilibrium might be shifted to a higher price level, and you'd make a nice profit. Not that I'd recommend missing sleep over WoW.
The idea I wanted to express there is that there is an "equilibrium price" for a gathered rare herb, lets say Terocone. This equilibrium appears because on the one side a lack of supply drives prices in the auction house up, making it interesting to gather Terocones. But on the other side of the equilibrium the more people gather it at the same time, the less herbs each of them finds per hour, making gathering Terocones tedious and unprofitable. As soon as there are "enough" people gathering the herb, it becomes more interesting to do another money farming activity, and buying the herb than gathering it yourself. But if you were willing to gather the herb at 4 am in the morning, where few other people are online, the equilibrium might be shifted to a higher price level, and you'd make a nice profit. Not that I'd recommend missing sleep over WoW.
i'm a bit rusty in that region, but i'm always wondering why mobs are actually our national treasury. they are providing us the money.
as i was thinking lately, is there, will there be a mmorpg without such a thing. where there are only ore-veins, skins and more raw material. in the end a bs may decide to produce money instead of weapons and becoming a banker.
not to mention a breeding-policy of mobs. if you kill a "spawn" of monsters it will be dead for a month or so. however if you keep some alive they will produce offspring in a week and that can be killed. (same with wood etc.)
not sure how to handle veins.
would be interesting, but prolly some will corner the market.
as i was thinking lately, is there, will there be a mmorpg without such a thing. where there are only ore-veins, skins and more raw material. in the end a bs may decide to produce money instead of weapons and becoming a banker.
not to mention a breeding-policy of mobs. if you kill a "spawn" of monsters it will be dead for a month or so. however if you keep some alive they will produce offspring in a week and that can be killed. (same with wood etc.)
not sure how to handle veins.
would be interesting, but prolly some will corner the market.
I find this post rather interesting due to the timing. I never played the AH game before. Leveling up engineering and alchemy I always bought mats on the AH and was pissed at the price at higher level mats...but I never farmed goods because it seemed boring.
Recently I took up jewel crafting and mining on my mage. At level 130 in jewelcrating, I wasn't moving foward spending my own money on mats....I had already spent close to 200 gold. So I started mining.
Leveling up mining(250 now) I'd say I get about 40 mithril ore per hour. I can sell mithril bars on the AH for about .5g each. The past few days there have been no mithril on the AH so I managed to sell them for about 1g each. I put up one stack of 10 for 10g. I only put up one stack. It sells with in minutes, usually to the same person...when I put up stacks of 20 mithril bars for 20g, no one buys it. I'm the only one with mithril bars on the AH it seems, so making the supply seem low really helps players to buy it. When I first got high enough to farm mithril I put up 6 stacks of 20 and they didn't sell until I lowered the price to .5g.
But to related to the actual post....I make about 40g an hour farming mithril, give or take if anyone else has mithril on the ah, because I always try and sell mine lower to get the item to move. I make about 40g per hour in the outland doing quests and killing mobs.
Thats equilibrium that tobold was talking about. It makes sence...if more people go and farm mithril the price comes down...then mithril farmers move to a different means to make 40g per hour, perhaps thorium....whatever it is there is now less mithril so the price goes back up to 40g per hour....I never thought of it this way but it makes perfect sence....you can also make 40g per hour farming wool cloth. The balance will shift only if there is some idiot who decides to sell mithril for 200g per bar....and there are idiots who buy it for 200g per bar.....which hopefully wont happen. I know...Don Imus told me so.
Recently I took up jewel crafting and mining on my mage. At level 130 in jewelcrating, I wasn't moving foward spending my own money on mats....I had already spent close to 200 gold. So I started mining.
Leveling up mining(250 now) I'd say I get about 40 mithril ore per hour. I can sell mithril bars on the AH for about .5g each. The past few days there have been no mithril on the AH so I managed to sell them for about 1g each. I put up one stack of 10 for 10g. I only put up one stack. It sells with in minutes, usually to the same person...when I put up stacks of 20 mithril bars for 20g, no one buys it. I'm the only one with mithril bars on the AH it seems, so making the supply seem low really helps players to buy it. When I first got high enough to farm mithril I put up 6 stacks of 20 and they didn't sell until I lowered the price to .5g.
But to related to the actual post....I make about 40g an hour farming mithril, give or take if anyone else has mithril on the ah, because I always try and sell mine lower to get the item to move. I make about 40g per hour in the outland doing quests and killing mobs.
Thats equilibrium that tobold was talking about. It makes sence...if more people go and farm mithril the price comes down...then mithril farmers move to a different means to make 40g per hour, perhaps thorium....whatever it is there is now less mithril so the price goes back up to 40g per hour....I never thought of it this way but it makes perfect sence....you can also make 40g per hour farming wool cloth. The balance will shift only if there is some idiot who decides to sell mithril for 200g per bar....and there are idiots who buy it for 200g per bar.....which hopefully wont happen. I know...Don Imus told me so.
I didn't know english wasn't your primary language. You type it better than the vast majority of people who have been speaking/typing it all their lives. Which leads to a fun side conversation about how many people who speak English as a second language speak better than your average American *shrug*.
Economics is an interesting subject. One of my most entertaining memories of college revolves around my macroeconomics professor and I getting into a very heated debate about layoffs and their effect on the economy.
Economics is an interesting subject. One of my most entertaining memories of college revolves around my macroeconomics professor and I getting into a very heated debate about layoffs and their effect on the economy.
# posted by : 12/4/07 15:52
: 12/4/07 15:52
Hi Tobold,
I thought resource nodes spawn dynamically -- that is, the more players in a given area, the faster the spawn rate? When I tried farming for ores at odd hours (early morning for example), I found very few of them around. Whereas I find just as many during very populated times.
Also, Nick Yee is doing a user survey on economic behavior of MMO players; you might be interested in taking the survey or reading the results later:
http://www.nickyee.com/mmorpg/
I thought resource nodes spawn dynamically -- that is, the more players in a given area, the faster the spawn rate? When I tried farming for ores at odd hours (early morning for example), I found very few of them around. Whereas I find just as many during very populated times.
Also, Nick Yee is doing a user survey on economic behavior of MMO players; you might be interested in taking the survey or reading the results later:
http://www.nickyee.com/mmorpg/
I recently saw the price on Mageweave cloth spiral out of equilibrium. What used to go for 2g per stack suddenly jumped to 5.5g per 20 stack.
I have been making money like there is no tomorrow ever since the shortage began. Glad I kept those mid range mats on my bank char :)
I have been making money like there is no tomorrow ever since the shortage began. Glad I kept those mid range mats on my bank char :)
# posted by : 12/4/07 16:28
: 12/4/07 16:28
I thought resource nodes spawn dynamically -- that is, the more players in a given area, the faster the spawn rate? When I tried farming for ores at odd hours (early morning for example), I found very few of them around. Whereas I find just as many during very populated times.
To my knowledge there is no dynamic spawning of resource nodes, except that there is a cap beyond which no more new resources spawn. I sometimes managed to gather herbs at odd times in odd places, where I really was the only person in the zone, and found tons of herbs. If you are looking for currently popular herbs or ores in Outland, you might just be confusing "players online" with "players busy gathering". In the morning, while there might be less players online in total, a larger percentage of players is busy gathering herbs, in preparation of the raids later in the day. While in the evening with lots of players online, many of them are in a raid dungeon, and the herb gathering places are actually less crowded than you'd think.
To my knowledge there is no dynamic spawning of resource nodes, except that there is a cap beyond which no more new resources spawn. I sometimes managed to gather herbs at odd times in odd places, where I really was the only person in the zone, and found tons of herbs. If you are looking for currently popular herbs or ores in Outland, you might just be confusing "players online" with "players busy gathering". In the morning, while there might be less players online in total, a larger percentage of players is busy gathering herbs, in preparation of the raids later in the day. While in the evening with lots of players online, many of them are in a raid dungeon, and the herb gathering places are actually less crowded than you'd think.
Really bad farming of primals, where they do it all the time, can RAISE prices if they end up cornering the market. Farmers don't just farm a good portion of those items, they will aslo buy out any other auction for those items when their price is undercut at the AH. Why else would they do this but to control the average listing price of an item? And once they control the price of the item, they are not going to sell it for anything less than the demand will pay for.
# posted by : 12/4/07 17:30
: 12/4/07 17:30
Hi tobold, intresting reading.
But as I understand the general equilibrium model you wouldn't need that to explain wow economics as it tries to cover crossrelations between goods and items of an economy. I think it would be needed if you for example could choose which herbs to use for the prodcution of an elexir or portion. Then price-change in one herb would influence the other.
In wow we mostly have just one fix input for the same production. Also interest, and F/X-rates are not existing. Therfore I think the supply and demand model more convenient to anlyse the wow economy.
But as I understand the general equilibrium model you wouldn't need that to explain wow economics as it tries to cover crossrelations between goods and items of an economy. I think it would be needed if you for example could choose which herbs to use for the prodcution of an elexir or portion. Then price-change in one herb would influence the other.
In wow we mostly have just one fix input for the same production. Also interest, and F/X-rates are not existing. Therfore I think the supply and demand model more convenient to anlyse the wow economy.
# posted by : 12/4/07 17:45
: 12/4/07 17:45
Interesting article. After I hit 70 and bought my slow gryph with the quest money from 60-70, I needed about 4k+ gold for the fast gryph.
I went and farmed primal fire in shadowmoon rather than the elemental plateau, since the elementals in shadowmoon are lower level, less camped, and a larger number spawned at any one moment.
It took me about a week and a half of farming to get the money. During that time, I would get about 110 gold an hour from the primal fire, green drops, and gray drops. I'm a mage, so I kill a little faster than other classes, but it seems like a fast way overall.
One thing I noticed is that prices would fluctuate hourly on my server, but not necessarily based on how many primals were currently being sold. I undercut like a lot of people, but when prices got 4g lower than I wanted to sell, I would buy out the cheaper ones and relist them for my price, which was still undercutting the majority of primals. Even though I wasn't really making a profit from buying and relisting, it allowed me to keep the price where I wanted it, without exactly cornering the market. I guess my point is, the AH can still be manipulated to your benefit if you have the daring to spend your own money to make money.
Also, I have noticed that the simpler items, like low level cloth and herbs have shot up in price. Not only are less people collecting them, but people who just want to level up a profession often buy the low level stuff just to level, and aren't picking the stuff up on their own.
I think the economy of most servers is pretty dynamic and that most of the time in balance.
Nice post though, I come here every day. Thanks for your time.
I went and farmed primal fire in shadowmoon rather than the elemental plateau, since the elementals in shadowmoon are lower level, less camped, and a larger number spawned at any one moment.
It took me about a week and a half of farming to get the money. During that time, I would get about 110 gold an hour from the primal fire, green drops, and gray drops. I'm a mage, so I kill a little faster than other classes, but it seems like a fast way overall.
One thing I noticed is that prices would fluctuate hourly on my server, but not necessarily based on how many primals were currently being sold. I undercut like a lot of people, but when prices got 4g lower than I wanted to sell, I would buy out the cheaper ones and relist them for my price, which was still undercutting the majority of primals. Even though I wasn't really making a profit from buying and relisting, it allowed me to keep the price where I wanted it, without exactly cornering the market. I guess my point is, the AH can still be manipulated to your benefit if you have the daring to spend your own money to make money.
Also, I have noticed that the simpler items, like low level cloth and herbs have shot up in price. Not only are less people collecting them, but people who just want to level up a profession often buy the low level stuff just to level, and aren't picking the stuff up on their own.
I think the economy of most servers is pretty dynamic and that most of the time in balance.
Nice post though, I come here every day. Thanks for your time.
There is another point to be made regarding Equilibrium, or balance as players like to call it. Equilirium is neither a positive or negative economic state. It simply is what it is. Meaning, the price equilibrium for Wool may well be at 1.5g a stack. A player who is level 15 and needs a stack of wool to level some tailoring skills may bemoan that the price is too high, and that the market economy for Wool is out of whack. He has attached a normative value to what the market has actually dictated to be EQ. Being unable to afford an item does not mean that the maket for that item is out of balance. Equilibrium has absolutely nothing to do with a person's ability to afford that item. It's a misconception that many players carry.
Also, general server economy EQ is not a quality I'm looking for. If the entire economy is at EQ, my profitable opportunities are negated.
What I think players should look for is a vibrant economy, where the AH has a large quantity and a wide variety of items being sold, whereby prices are lower, and the buying power of 1 gold is stronger.
On a side note, what I'm so far loving about jewelcrafting as a profession is that I depend on a steady supply of ores to be on the AH. On my server, I buy all Adamantite Ore that is under 25g a stack, and generally always yield one blue gem from that stack, which I can sell for 40g+ uncut, or cut it if I have a design that is in demand for that gem. My point is, even though I am a miner, I'm always needing more ore than I can harvest myself (time being the contstraint on my personal supply curve). Hence I rely on other players to fill in the gap to meet my demand. Prospecting has added a great tie-in market to miners.
Also, general server economy EQ is not a quality I'm looking for. If the entire economy is at EQ, my profitable opportunities are negated.
What I think players should look for is a vibrant economy, where the AH has a large quantity and a wide variety of items being sold, whereby prices are lower, and the buying power of 1 gold is stronger.
On a side note, what I'm so far loving about jewelcrafting as a profession is that I depend on a steady supply of ores to be on the AH. On my server, I buy all Adamantite Ore that is under 25g a stack, and generally always yield one blue gem from that stack, which I can sell for 40g+ uncut, or cut it if I have a design that is in demand for that gem. My point is, even though I am a miner, I'm always needing more ore than I can harvest myself (time being the contstraint on my personal supply curve). Hence I rely on other players to fill in the gap to meet my demand. Prospecting has added a great tie-in market to miners.
A couple of random thoughts popped up while reading yet another interesting post:
Farmers, through their activities, tend to make the whole server economy more fluid and responsive. Because they are in more-or-less constant action bringing those rare materials into the economy, there can *be* a market for them. Otherwise, it's just too dependent on the actions of a few individuals who can set prices all over the place.
The other thing that struck me was that although I agree with everything here, the topic doesn't address the fact that gold farmers inject more wealth into the economy per hour played, and so the more of them you have, the more they will cause inflation because they do not take their profits and turn around and invest them, say, in the crafted or looted items of others. Instead they farm the gold to sell to other players. Who now have large amounts of money to buy-out the mats they need or items they want. Granted, it's probably very hard to measure this across a server economy I'd suspect, but it does happen.
Haven't you written about this before? I could have sworn I read some Tobold commentary on farmer-induced inflation in the past.
All I know is, the stuff I want costs too much!
Farmers, through their activities, tend to make the whole server economy more fluid and responsive. Because they are in more-or-less constant action bringing those rare materials into the economy, there can *be* a market for them. Otherwise, it's just too dependent on the actions of a few individuals who can set prices all over the place.
The other thing that struck me was that although I agree with everything here, the topic doesn't address the fact that gold farmers inject more wealth into the economy per hour played, and so the more of them you have, the more they will cause inflation because they do not take their profits and turn around and invest them, say, in the crafted or looted items of others. Instead they farm the gold to sell to other players. Who now have large amounts of money to buy-out the mats they need or items they want. Granted, it's probably very hard to measure this across a server economy I'd suspect, but it does happen.
Haven't you written about this before? I could have sworn I read some Tobold commentary on farmer-induced inflation in the past.
All I know is, the stuff I want costs too much!
# posted by : 12/4/07 20:21
: 12/4/07 20:21
Tobold:
To my knowledge there is no dynamic spawning of resource nodes, except that there is a cap beyond which no more new resources spawn.
To my knowledge the spawning may be static or dynamic. :-) It seems more dynamic in my experience, but that directly contradicts your experience. I wonder if there is a way to tell for sure?
Chris:
I have prospected hundreds of stacks of adamantite and record a rate of about 1 rare gem per 7 stakcs. Are you sure you are getting 1 in 4?
Brocker and Tobold:
Whether the price of primals goes up or down depends on what happens to the gold that is bought by the end users. If end users only spend gold on epic flying mount training, then overall the price of primals will drop because of increased supply and no change in demand. But if the farmers are all farming primal fire and selling gold to users who buy primal air, then the price of primal air will skyrocket.
To my knowledge there is no dynamic spawning of resource nodes, except that there is a cap beyond which no more new resources spawn.
To my knowledge the spawning may be static or dynamic. :-) It seems more dynamic in my experience, but that directly contradicts your experience. I wonder if there is a way to tell for sure?
Chris:
I have prospected hundreds of stacks of adamantite and record a rate of about 1 rare gem per 7 stakcs. Are you sure you are getting 1 in 4?
Brocker and Tobold:
Whether the price of primals goes up or down depends on what happens to the gold that is bought by the end users. If end users only spend gold on epic flying mount training, then overall the price of primals will drop because of increased supply and no change in demand. But if the farmers are all farming primal fire and selling gold to users who buy primal air, then the price of primal air will skyrocket.
Oops, wrong terminology in my last comment about prospecting: I get 1 rare gem in 7 prospects which consumes 5 ore. Which means 1 rare gem per 35 ore, or close to 2 stacks of 20.
Changed:
On average, I seem to get a blue per stack of 20. On some stacks I've gotten 2, on some none, but by and large it's close to 1 in 4.
Now that I've said that, I'll go on a long dry spell of nothing but powder.
On average, I seem to get a blue per stack of 20. On some stacks I've gotten 2, on some none, but by and large it's close to 1 in 4.
Now that I've said that, I'll go on a long dry spell of nothing but powder.
# posted by : 13/4/07 00:42
: 13/4/07 00:42
Really bad farming of primals, where they do it all the time, can RAISE prices if they end up cornering the market. Farmers don't just farm a good portion of those items, they will aslo buy out any other auction for those items when their price is undercut at the AH. Why else would they do this but to control the average listing price of an item? And once they control the price of the item, they are not going to sell it for anything less than the demand will pay for.
This is where my real issue with RMTs are. While it doesn't seem to be such a huge issue with WoW, I think Blizzard took great steps to spread out mobs or other sources of certain materials, thus making it hard to claim a monopoly over much of anything.
This, unfortunately, isn't quite so true in earlier designed games. Up to shortly before WoW came out, RMTs were a growing but still minor problem. The safeties that are in place now were not then, and so many games made design decisions that made sense from a design perspective, but allowed for an easy monopoly on products for those who are farming them full time, in a group (which was a common tactic by employed RMTs in FFXI). And it's not just theoretical that they might use the monopoly to increase prices. I remember in FFXI on my server a monopoly was gotten on the mob that dropped the Archers Ring (low level ring which could be crafted into a good +acc ring) and over a few weeks one group of RMTs got a hold of almost every Acher's Ring on the AH and drove the price of it up to double, and almost triple it's inital value. And since this was the only source of the item, and at the time it was considered by most to be one of the best melee DDer ring in the game, you needed it.
As I said, many modern games are being created with systems and safeties in place which minimize the effects of RMTs and stop them from doing things like this, but for those of us who still enjoy older games, they are just as much of a plague as they ever were.
And since no RMT group limits itself to just one game, phenominal success in one game means they can continue to support other game which may not be making as much money, but still bringing in enough to justify a presence there.
This is where my real issue with RMTs are. While it doesn't seem to be such a huge issue with WoW, I think Blizzard took great steps to spread out mobs or other sources of certain materials, thus making it hard to claim a monopoly over much of anything.
This, unfortunately, isn't quite so true in earlier designed games. Up to shortly before WoW came out, RMTs were a growing but still minor problem. The safeties that are in place now were not then, and so many games made design decisions that made sense from a design perspective, but allowed for an easy monopoly on products for those who are farming them full time, in a group (which was a common tactic by employed RMTs in FFXI). And it's not just theoretical that they might use the monopoly to increase prices. I remember in FFXI on my server a monopoly was gotten on the mob that dropped the Archers Ring (low level ring which could be crafted into a good +acc ring) and over a few weeks one group of RMTs got a hold of almost every Acher's Ring on the AH and drove the price of it up to double, and almost triple it's inital value. And since this was the only source of the item, and at the time it was considered by most to be one of the best melee DDer ring in the game, you needed it.
As I said, many modern games are being created with systems and safeties in place which minimize the effects of RMTs and stop them from doing things like this, but for those of us who still enjoy older games, they are just as much of a plague as they ever were.
And since no RMT group limits itself to just one game, phenominal success in one game means they can continue to support other game which may not be making as much money, but still bringing in enough to justify a presence there.
I made most of my gold for my mount my scalping cheap items from the AH (items that people sold jsut to get rid of) and resold them for slightly above market.
I didnt really toss many things ontu the AH unless I thought it would start a bidding war (ie high demand items) generally i would toss a few advertisments into trade/spam and go back to playing the game. Some of my better $-making buys were simply selling tailoring mats, for some reason the places I go and the server needing large ammounts of those mats It wasnt too hard to sell em and restock em without much effort.
I didnt really toss many things ontu the AH unless I thought it would start a bidding war (ie high demand items) generally i would toss a few advertisments into trade/spam and go back to playing the game. Some of my better $-making buys were simply selling tailoring mats, for some reason the places I go and the server needing large ammounts of those mats It wasnt too hard to sell em and restock em without much effort.
The way most gold farmers make money is by farming up rare items and materials, as in the rarest, or otherwise cornering the market in drops. If they are undercut by other players, they typically buy the lower-priced items and resell them at a higher price. That activity seems to have less of a return (you invest more per sale that way), but it also forces up the general price of goods on the auction house so they get MORE profit for the goods they farmed.
Regardless of demand, if the supply is at a fixed rate, due to the actions of a monopoly of any sort, it harms the economy. This is why the large monopolies of the US were largely segmented by the government, and why Blizzard is working its butt off trying to keep out gold farmers.
Regardless of demand, if the supply is at a fixed rate, due to the actions of a monopoly of any sort, it harms the economy. This is why the large monopolies of the US were largely segmented by the government, and why Blizzard is working its butt off trying to keep out gold farmers.
I realize that, probably, no one will ever read this due to the fact that this is a several-day-old post, and the discussion surrounding it has cooled down.
Do I care? Take a guess.
Two things I had to say:
First point is this little quote:
This of course helps new players, because they can sell the wool they gather for much more than it was worth when everybody was low level.
I'm no expert on the subject of economy, but I can't see how this helps players. The way I see it (but I could be wrong), prices have a certain domino-esque effect. If wool prices go up, other prices will follow. Those high-level people getting their mucho grande gold/hour in TBC will probably think along these lines:
"I make 100 gold an hour. Now, in order to level my new profession (or whatever other reason I might have) I need lots and lots of low-level trade skill reagents. Now, because of all those people like me who decided it would be more efficient to farm gold instead of those items, I need to spend 90% of my gold, instead of the normal 50%. [I know, it's a bit extreme, but bear with me.] That means that after three hours of fighting mobs in TBC, I now have 300 gold. Now, after buying my items, instead of 150, I now have 30 gold left. Guess I'll just have to ask some more gold for that epic world drop I found.
Blam! Inflation. And inflation hits people just starting out the hardest. People who don't know market prices, who don't know about the use of the auction house, who just consider Wool Cloth vendor trash. Those people all come to the Auction House one point or the other, and at that point, they've already fallen out of the vicious cycle of inflation, and will either have to farm gold for many hours in order to get back in 'the circle' or do without the player economy.
So there. Those people that don't farm Wool Cloth don't help beginners. Heck, they're doing the exact opposite.
Secondly, that 'general economic equilibrium theory' doesn't apply to a virtual economy. Why? Various reasons.
First of all: you make one really crazy assumption: that people know basic economics, and have the amazingly rare ability to apply everyday logic to a computer game.
Heck, I've seen it happen various times in various guilds I've been in: chat logs filled with messages like "Damn! Item x is getting expensive! I'll just have to farm more money, then.". Hear that? It's the sound of your general economic equilibrium theory flying out the window. This player, and all those other morons like him, deliberately fuck up 'our' entire economy. They don't go for the cheapest way out. They go for the most fun, because hey, why else would you be playing a game. In a way, they have a point. A point, stabbing the explosive balloon that is the WoW economy.
Secondly, any real life economy usually has a small army of smart, calculated and experienced economics, keeping intact the precarious balance of that economy. The only army we have is composed of gold farmers. Money is being generated at incredible rates (something which doesn't happen in 'real' economies), and in the endgame sphere, the only existing money sink is an epic mount. All other money that enters that 'place' just keeps circulating around, with repair costs only slowing its growth. Because high-level people eventually have lots and lots of practically unused money, people who supply that which those high-levels demand will eventually realize that there's a small fortune just waiting for them and up their prices. In real life, those people would sell nothing, and be forced to either lower their prices or risk selling nothing at all. In WoW, those people will actually just buy all other offered instances of the demanded item x in order to justify their high prices. What's worse is that once other suppliers find out about the 'new' prices, they follow suit. Again, the people who aren't in the highest economical circles get left out, practically giving their money no market value whatsoever because they can't buy anything with it, forcing them to farm the item x, despite the fact that they have a reasonable amount of money - whose purpose on the market it was to link one type of work to another type of result [say you're a cattle farmer, with the money you gain from that job you can buy bread, linking the work (cattle farming) to a whole different result (bread)]. This result is effectively destroyed by the practically limitless rise of both money and prices because that rise forces people to do work A for result A and work B for result B, instead of work A for result B.
In effect, the concept of money becomes reserved to upper spheres, while the 'normal' players are left with their 'meaningless' money. At best, two 'separate' economies are formed, but I doubt it'll happen.
So yeah, you were saying that gold farmers weren't ruining the economy?
Another small difference is concurrence over the same type of item. In real life, the chance that two randomly picked cars are alike is practically zero. In WoW, if you take two Primal Mights, there’s no freaking way there’ll be a difference.
My point: People should stop applying ‘normal’ economics to MMORPG economies. The economy of the country you live in can’t possibly be compared to Azeroths economy. They are different in their very fundaments – their supplies and demands.
P.S.: As I stated before, I am no expert on the subject of economics. On the contrary, I know practically nothing of economy. Please, don’t take me too seriously. I’m probably wrong, this is just my view on the matter. If you notice any flaws in my train of thought, please, tell me. Share your views with me, but don’t go running around like a damn baboon shouting obscenities. You’ll just annoy people, eh?
P.P.S.:Yeah, I know. I typed out all that knowing chances are no one will read it. I'm crazy.
Do I care? Take a guess.
Two things I had to say:
First point is this little quote:
This of course helps new players, because they can sell the wool they gather for much more than it was worth when everybody was low level.
I'm no expert on the subject of economy, but I can't see how this helps players. The way I see it (but I could be wrong), prices have a certain domino-esque effect. If wool prices go up, other prices will follow. Those high-level people getting their mucho grande gold/hour in TBC will probably think along these lines:
"I make 100 gold an hour. Now, in order to level my new profession (or whatever other reason I might have) I need lots and lots of low-level trade skill reagents. Now, because of all those people like me who decided it would be more efficient to farm gold instead of those items, I need to spend 90% of my gold, instead of the normal 50%. [I know, it's a bit extreme, but bear with me.] That means that after three hours of fighting mobs in TBC, I now have 300 gold. Now, after buying my items, instead of 150, I now have 30 gold left. Guess I'll just have to ask some more gold for that epic world drop I found.
Blam! Inflation. And inflation hits people just starting out the hardest. People who don't know market prices, who don't know about the use of the auction house, who just consider Wool Cloth vendor trash. Those people all come to the Auction House one point or the other, and at that point, they've already fallen out of the vicious cycle of inflation, and will either have to farm gold for many hours in order to get back in 'the circle' or do without the player economy.
So there. Those people that don't farm Wool Cloth don't help beginners. Heck, they're doing the exact opposite.
Secondly, that 'general economic equilibrium theory' doesn't apply to a virtual economy. Why? Various reasons.
First of all: you make one really crazy assumption: that people know basic economics, and have the amazingly rare ability to apply everyday logic to a computer game.
Heck, I've seen it happen various times in various guilds I've been in: chat logs filled with messages like "Damn! Item x is getting expensive! I'll just have to farm more money, then.". Hear that? It's the sound of your general economic equilibrium theory flying out the window. This player, and all those other morons like him, deliberately fuck up 'our' entire economy. They don't go for the cheapest way out. They go for the most fun, because hey, why else would you be playing a game. In a way, they have a point. A point, stabbing the explosive balloon that is the WoW economy.
Secondly, any real life economy usually has a small army of smart, calculated and experienced economics, keeping intact the precarious balance of that economy. The only army we have is composed of gold farmers. Money is being generated at incredible rates (something which doesn't happen in 'real' economies), and in the endgame sphere, the only existing money sink is an epic mount. All other money that enters that 'place' just keeps circulating around, with repair costs only slowing its growth. Because high-level people eventually have lots and lots of practically unused money, people who supply that which those high-levels demand will eventually realize that there's a small fortune just waiting for them and up their prices. In real life, those people would sell nothing, and be forced to either lower their prices or risk selling nothing at all. In WoW, those people will actually just buy all other offered instances of the demanded item x in order to justify their high prices. What's worse is that once other suppliers find out about the 'new' prices, they follow suit. Again, the people who aren't in the highest economical circles get left out, practically giving their money no market value whatsoever because they can't buy anything with it, forcing them to farm the item x, despite the fact that they have a reasonable amount of money - whose purpose on the market it was to link one type of work to another type of result [say you're a cattle farmer, with the money you gain from that job you can buy bread, linking the work (cattle farming) to a whole different result (bread)]. This result is effectively destroyed by the practically limitless rise of both money and prices because that rise forces people to do work A for result A and work B for result B, instead of work A for result B.
In effect, the concept of money becomes reserved to upper spheres, while the 'normal' players are left with their 'meaningless' money. At best, two 'separate' economies are formed, but I doubt it'll happen.
So yeah, you were saying that gold farmers weren't ruining the economy?
Another small difference is concurrence over the same type of item. In real life, the chance that two randomly picked cars are alike is practically zero. In WoW, if you take two Primal Mights, there’s no freaking way there’ll be a difference.
My point: People should stop applying ‘normal’ economics to MMORPG economies. The economy of the country you live in can’t possibly be compared to Azeroths economy. They are different in their very fundaments – their supplies and demands.
P.S.: As I stated before, I am no expert on the subject of economics. On the contrary, I know practically nothing of economy. Please, don’t take me too seriously. I’m probably wrong, this is just my view on the matter. If you notice any flaws in my train of thought, please, tell me. Share your views with me, but don’t go running around like a damn baboon shouting obscenities. You’ll just annoy people, eh?
P.P.S.:Yeah, I know. I typed out all that knowing chances are no one will read it. I'm crazy.
What an interesting article! Thanks for sharing your thoughts. I got a kick out of reading this as a businessman who has played WoW extensively.
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