Tobold's Blog
Monday, May 04, 2009
 
Economic kamikaze

I didn't spend much time in WoW this weekend after cancelling my account, but the little time I did spend was used flooding the auction house with underpriced goods. There is a well-documented trend of deflation for items like Titansteel Bars or Ebonweave, and I found I had 47 of the former, and 16 of the latter. If I kept them and came back in half a year or a year, I'd probably find them being worth just half of what they are worth now. So selling them now is the better idea, even if I have to undercut going prices by 10% to 20% to make them move at a fast speed.

The funny thing is that of course selling so much stuff changes the going rate of items on the AH. It's the economic equivalent of the guy in the movie with the finger on the red button shouting "If I'm going, I'll take you all down with me!". :) Economic kamikaze.

I found it interesting how Gevlon has the opposite problem: He is moving to a different server where he bought himself into a guild, but can take only 20k gold in cash, which leaves him with the problem of having to buy goods for 194k gold. Obviously if you buy a lot of goods, you risk changing AH prices too, although some people are creatures of habit and post their items always for the same price, even if they all sold out.

Makes you wonder to what extent AH prices are determined by people leaving servers, doing either fire sales like mine, or buying up things to move like Gevlon. Might explain some strange local fluctuations in prices.
Comments:
Mass buying might even get you into problems. Destabilizing the economy can get you a ban from the game.

But if you see someone is just dumping his goods on the AH you can do two things:
-> Wait until it's all sold
-> Buy it all and sell it for the regular price and make some profit. Dangerous if the supply is much higher then the demand
--> A smart businessman makes profit.

What if it's the other way around and someone is mass buying?
-> Just buy those who post at regular prices and relist them again for a higher price.
-> Dump your stock if you have any
--> A smart businessman makes profit.
 
Any "fire sales" are usually scooped up by a reseller and listed at market value, so fire sales are unlikely to have much of an effect. I started reselling items shortly after WoW's launch and made an easy living off the AH until the majority caught on with add-ons like Auctioneer. I caught players dumping goods all the time and within minutes could have the items reposted at normal market value.
 
People who actually leave don't sell their stuff, as game gold is just as worthless to a non-gamer as game stuff.

You are taking a temporary leave. People who take planned temporary leave and capable of thinking in forward are quite rare.
 
What will inevitably happen is that someone will see you've undercut the market, purchase your items and resell them and make a nice profit. So, that your undercutting will not change the market in the over all sense, it will just make someone richer.
 
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