23 replies to this topic

[Ourumov]

Skip to TL:DR below if necessary.

Well I have, like everyone else an idea on how to curb inflation. This is my first post here. I'll be posting on the official forums too but posts there tend to be buried immediately by QQ threads and I'm hoping to get some actual conversation going.

I'm sure I'm not the only one to have had this idea, but I haven't seen it specifically stated and I'll be itemizing rational.

So inflation. It's a problem right? I have a suspect that there's a majority of people that spend close to 80% of their time in the Auction House, sniping that sweet deal to flip for cash or gold. There's also a tremendous amount of AH botting that takes place. I think this is worse than people botting for gold or paragon levels ingame because the only reason to make gold is to buy upgrades. Due to the people flipping and inflating prices on the Auction House, the value of gold is sky high. Not the monetary value, that's dropping. But what can be bought with the gold is decreasing every day, and this is due to the AH flipping.

Case in point: I went to search for some Vile Wards with %Life, Vitality and > 200 dex today. Of the 14, only 3 allowed bids (min bid and buyout were not the same). Two of those three had minimum bids of 100m. The buy only sets ranged from 110m to 1.5b, with the set at 110m having only 4hrs left. In other words, they weren't going to sell. The only viable pair to actually bid on had a 19m bid with 7hrs left.

Now, I'm pretty sure that the pair with bids at 19m would end up selling for 50-80m range. I'd like to assume that's going to be by someone who will use them, but the sad reality is that they will probably go right back up on the AH for 150m from whoever bought them (I have another idea which would disallow someone from reselling something on the AH for (24-48hrs), but it's not the point I'm trying to make here). My point is that the market is only willing to pay 50-80m for them, and the majority of items with these stats will just sit in the hands of AH tycoons who are trying to get way more than fair market value out of them .

TL;DR (read only below)

The solution is simple. Do not allow "buy only" auctions. Do this by setting a cap on minimum bid. Make minimum bid cap of 10x or even 100x of vendor value. Here's the bullets.

• It enables fair market value of items being sold.
  
• A floor of 40-400k would allow anyone to bid, and greatly prevent flipping items on the auction house.
  
• You can set buy out to whatever you want. That way you can still get "quick cash" if you needed it.
  
• No cap on minimum bid means Auction House is the game, not slaying demons. How can one compete with someone who spends all their time putting in game items out of reach for all but the super rich? Or worse, a bot that does it.
  
• Gold botting is devauled, gold itself is devauled.  What good is having billions of gold if great items are within reach?
  
• Godly items are unaffected. This is super important. An end game item will still be noticed and sell for the value the market sets for it. This is included in the definition of fair.
  
• Some suggest that nobody will sell on the AH anymore then. The majority of people will still sell on AH because fair market value is fair. You can still sell your godly items via trade forums to avoid fees, but the liquidity of the AH will never be beat by trade forums.
  
• In typing this post I realized I haven't considered the impact or how to address commodity which do not allow of any bids at all. I fear they could become the new thing to flip, although the fact they fall regularly and can have no real sink might mitigate potential explosion of value from market makers.
  
• I'm looking for good additional points, or perhaps counter points to add. I will update post as suggested.

In closing. AH flipping impacts the game far more than gold botting. Gold botting only affects the game because it enables AH flipping. We need to devalue gold.

The AH is NOT an auction house! It's a market with not enough open interest or liquidity to sustain itself. I'll post this on the official forums but I fear I've typed all this up only for it to get buried. I know everyone has ideas, but I'm really interested in discussing this with people who care about the game.

THanks for reading.

[Ourumov]

If you like this idea please visit it on the official forums for a bump. /topic/7198960210 (apologies to mods for circumventing URL posting restrictions as I'm a frequent visitor, first time poster here and cannot post links).

[Hellfrog]

TL;DR as long as the original text O.o

[Ourumov]

Yeah but it's bullets and skips the case example... I hope you can survive at least the tl;dr part.

There's some interest so far on the official forums but it seems to center around the regurgitated "gold sink" and "trade once" ideas. I'm trying to emphasize "fair market value" for items which is quite a different approach.

[maka]

I had a discussion about the AH with some random dude on the General chat channel, and the bottom line is this: as long as there is a critical mass of people that think the same way that that dude thought ("if there's at least one person willing to pay a certain amount for a certain item, then that's its market value"), the economy will go on being the way it is.

A relative few greedy people in the midst of 'honest' people will always rig the game in their favour; case in point - today's world.

[Bagstone]

Didn't read all of it, but the reason why D3 suffers inflation is simply because there is no gold sink. Period. The AH is a closed system, the 15% going out don't matter much. The real cause is to be found ingame.

Repair costs are way too low compared to what even white mobs drop, the vendor items suck as usual (why not like in D1 where you could actually buy King's Staff of Haste off Griswold for 100k?), and crafting is DEAD. Fix either of that (or all these problems) and inflation is gone.

[Ourumov]

Bagstone, on 20 November 2012 - 05:40 PM, said:

Didn't read all of it, but the reason why D3 suffers inflation is simply because there is no gold sink. Period. The AH is a closed system, the 15% going out don't matter much. The real cause is to be found ingame.

Repair costs are way too low compared to what even white mobs drop, the vendor items suck as usual (why not like in D1 where you could actually buy King's Staff of Haste off Griswold for 100k?), and crafting is DEAD. Fix either of that (or all these problems) and inflation is gone.

Wow the discussion here is so much better than official forums. Thanks for the alternate community.

So my counterpoint to teh gold sink is that this approach prevents doesn't prevent gold inflation. It prevents item inflation, thus devaluing gold. Off to lunch but will be back to chat more.

[Bagstone]

Ok, after actually going back and reading your whole post more thoroughly (and not just briefly skimming it), I get your point.

I still believe you're looking at it without the big picture. Even if a thousand people do AH flipping, what does that mean? All of these people have 10 slots max. They will either pick prices to high and have their slots occupied for 36 hours. Revenue? Zero. Or they will eventually lower their prices so that the items sell. Thus, the market regulates itself. Your post is more or less saying that the majority of items on the AH is overpriced. I think this is only partially true. Below average items are basically worthless, you can buy them for vendor prices. There are some average items where it begins to scale; those Vile Wards which are not even close to best in slot, but better than good rare shoulders. They are of limited availability, but not many people will pay more than 20, 30m for shoulders, so the price is what it should be. And then there are best in slot items. These have absolute perfect rolls and are very rare. Some people accumulated a lot of gold over the past months and are sitting on multiple billions, without the intention of getting real money for it. They are completely fine with paying 1-2 billion for their best in slot.

When you describe your Vile Ward scenario, you mentioned there were lots of 100m Vile Wards that wouldn't sell. Are you sure about that? I saw Vile Wards that were indeed sold. You can check if an auction has no bids when you click on the "bid" button. If you can place a bid for the current amount, there is no active bid; if the value in the text box is +5% of the current bid, then someone already placed a bid. I wouldn't be surprised if these 19m Vile Wards would go up to 100m later on. Besides, if the AH flippers buy these items for 50-80m to put them back online for 120m, what prevents you from bidding 50-80m as well? And if they actually do this a couple of times and don't get the 120m back, they will actually LOSE money. So your theory doesn't really hold up, unless you can closely monitor a couple of items for a few days and proof this with pictures.

Oh, one reason for inflation is obviously real money brought into the game. I forgot to mention that. However, there are also new items coming into the game that should compensate for that. If there would be a gold sink, like crafting, gambling, useful vendors, getting a new haircut... just ANYTHING, we wouldn't see BiS Echoing Furies offered for 10 billion on diabloprogress. It's just insane.

[Bagstone]

I just went on the AH and I think 120m for decent Vile Wards seems to be fine. There are auctions running for another 10 hours already at 80m and people have placed a bid on it - doesn't seem like 120m are overpriced. EU AH though - prices are much higher than in the US.

I'm looking for a Mempo for quite a while now, and realized something. Mempos are getting cheaper and cheaper; you can get a decent Mempo with 150+ int and some vit for a few million (far less than 10). However, a really good Mempo has crit. My main is wizard, so I'll focus on int:

-I went to search for all Mempos with int and crit. There are 51 Mempos, 3 of them with less than 170 int. Of the remaining 48, 7 have no buyout - taking these out because they follow a different market style (start low and hope for a high price). What I end up with is the following:
-Mempo of Twilight with socket, 8-9% IAS, 170-199 int, 70-80 allres, 10-12 life% and 3-6 crit. As you can see, the only hugely varying factor is crit chance. Let's sort by crit, look at the average price and exclude overpriced items by AH flippers, as you would call them:

3.0 CC: 9 Mempos for 120-150 buyout.
3.5 CC: 4 for 140-175
4.0 CC: 7 for 165-230 (one excluded that were at 1 billion)
4.5 CC: 5 for 225-350 (two excluded that were at 1.5 billion)
5.0 CC: 4 for 400-525 (two excluded that were at 1.5/2.0 billion)
5.5 CC: 3 for 580-880
6.0 CC: 4 for 690-1200

Here's a graph:



What does this show?

I chose Mempos because if you constrain 1 stat (int), you have essentially only one variable; there's less randomization in other stats and they're essentially all useful. As you can see, prices don't scale linearly; there's a tipping point where they get insane. A friend of mine bought a 4.5 crit Mempo for 500m a while ago; as you can see, he lost money. However, if you bought a near perfect Mempo (5.5 or 6.0 crit) they will probably never go down in price (unless Blizzard solves inflation and/or releases a better helm).

In fact, here you can see a Mempo without buyout and what the current bid is:
Near-perfect Mempo and current bid.

This thing would already have been bought by buyout if it was at 1.5b!

The market regulates itself. But there's too much money on the market - that's why there's inflation. And the gap is widening: perfect items will get more expensive. However, in my small survey of 50 Mempos there were 5 "overpriced" Mempos, 5x higher than similar ones, and there were enough "reasonably priced" ones. In conclusion, I don't think AH flippers cause a problem for the economy or cause the inflation, and I also don't think your idea would solve anything.

One solution I didn't see in your proposal though: auction fees.

[maka]

Bagstone, on 20 November 2012 - 09:39 PM, said:

The market regulates itself.

Damn...I know I've read this before. But where........

[Bagstone]

maka, on 21 November 2012 - 12:34 AM, said:

Bagstone, on 20 November 2012 - 09:39 PM, said:

The market regulates itself.

Damn...I know I've read this before. But where........

Thankfully, this is a computer game and not the real world. The options here are very limited; you don't have crazy things like on the stock market where you can bid on things going downhill and benefit from companies going bankrupt. You also don't have a debt system that creates "bubbles". All money that's been traded in D3 is backed up by gold in the system, real money on the RMAH, and items that are associated with a specific value.

Anyways, my sentence is still misleading. What I wanted to say is that prices will adjust themselves - even though the price might be high and in the billions, as you can see in my example. There are just super rich people who pay multiple billions for a perfect item. But there's no one spending 5 billion on an item that is worth 5 gold (like what's happening at the stock market right now with Apple and Facebook and shit, creating a new bubble and no one cares because it's not even their money).

[Ourumov]

Bagstone.. you just blew my mind man. I can't believe you took the time to write all that down and graph it. Amazing.

In the thread on official forums (which quickly turned to shit), someone suggested AH fees and I really liked that idea. Ebay has those for a reason. I'm not sure if it will bring about the same fair market value as minimum starting bid cap but if it were a factor of minimum bid it would definitely make people think twice about BIN only auctions.

AH filppers do cause a problem for the economy. They directly made me lose out on items three times It's far more common and it doesn't even take 1000 AH flippers to do it. It just takes 10 guys with 20 accounts. Don't forget about RMAH slots and arbitrage

I read your post twice before responding. I feel like I owe you a better response than what I can formulate after one read though but the Vile Ward auction I was watching sold for 88m went right back up on the market for 150m BIN only. They were flipped. Maybe that person will f them self, maybe not. For the super rich, losing 80m to net a 30m gain (if they BIN for 150m - fees) is a risk worth taking. The golden parachute is  selling them for 105m at a wash before the weekend is over.

The mempo with bids for 1.4b, well that's why I reject the concept of lowing the maximum BIN/bid on the AH which many have recommended. That mempo is worth 2b. It is a top world item.

As far as the rest of the mempos, you'd need more info on if those mempos with +4.5cc will sell in that range and what they were purchased for. A test I can't afford to run would be to put up a mempo with 4.5cc at 100k starting bid and see what it bid up to. There's less than 20 of them on the market. It's not that hard to corner that market and buy anything under 300m to place right back up at 400m. As long as you dump inventory before prices slip before 350m you're in the green. If they silp below that they might lose a little but it's hard to imagine a net loss.

It's simple market maker inventory management, you just need to have market maker capital to pull it off. For all we know some quant at Goldman Sachs who's a Diablo fan invested 5k in gold and is running this through basic algorithms. It would be a much more predictable market than actual futures/commodities because of the limited amount of inventory. Ok.. that's speculation and unfounded. But it's all too possible.

[Ourumov]

Bagstone, on 21 November 2012 - 08:04 AM, said:

maka, on 21 November 2012 - 12:34 AM, said:

Bagstone, on 20 November 2012 - 09:39 PM, said:

The market regulates itself.

Damn...I know I've read this before. But where........

Thankfully, this is a computer game and not the real world. The options here are very limited; you don't have crazy things like on the stock market where you can bid on things going downhill and benefit from companies going bankrupt. You also don't have a debt system that creates "bubbles". All money that's been traded in D3 is backed up by gold in the system, real money on the RMAH, and items that are associated with a specific value.

Anyways, my sentence is still misleading. What I wanted to say is that prices will adjust themselves - even though the price might be high and in the billions, as you can see in my example. There are just super rich people who pay multiple billions for a perfect item. But there's no one spending 5 billion on an item that is worth 5 gold (like what's happening at the stock market right now with Apple and Facebook and shit, creating a new bubble and no one cares because it's not even their money).

There are bubbles, just not with the same level of disparity. I think there was a pretty significant bubble 1.4 legendaries when they first came out, specifically SoJs, until people realized they're not as gravy as they wish they were and there was also a huge bubble with the gem duping that took place. But you're dead on about the differences.

Do you have a finance degree or do this irl?

[xrmb]

As someone who hasn't found any items to sell in the AH (because I need them myself and they aren't that great anyway) I have the feeling I'm stuck now in the game as a permanent loser (that's what the paragon 30+ people tell me .

- I make 300k-500k gold a night
- all the items I find are 99% useless
- all the items I craft are 100% useless

For a week now I'm trying to get some decent shoulders (just +100 pri stat, some life, +50 res all, +5 pick up radius), really far from a top item. Well, finally I get in the range that I have 2mio gold... to buy one item... one of 10 items... for one of ten chars... its going to be a long time before I'm done playing.

[ArcaneX]

xrmb, how much MF do u have?

I usually play 1-2 hours a day, and i often find alot of sellable items. Just recently i found a neck i sold for 50 mil.

But i think alot of people run without MF, and then its clear u only find crap, and utter crap....

Max your MF and remove it in your gear as your paragon level increases

[Bagstone]

Ourumov, on 21 November 2012 - 04:36 PM, said:

There are bubbles, just not with the same level of disparity. I think there was a pretty significant bubble 1.4 legendaries when they first came out, specifically SoJs, until people realized they're not as gravy as they wish they were and there was also a huge bubble with the gem duping that took place. But you're dead on about the differences.

Do you have a finance degree or do this irl?

Oh, you're absolutely right. And the brimstone bubble right now is another interesting thing, it's exactly like the Facebook IPO. People buying the hell out of a resource when there's nothing but hope that it might eventually become useful, but without any solid foundation for the value they're investing in. There's a small chance of getting revenue, but a lot of people will burn themselves.

No, I don't have a finance degree, so if you find any flaws point them out. I am interested in all of this and read some papers (not just newspapers but actual scientific publications), and I follow and try to understand the madness at the stock market (I absolutely don't get why every single investment group has Apple, Facebook etc. on "buy"). Also, the post about the Mempos took me just a few minutes - as I said, I was closely following this market for many weeks already and did a very quick summary. It would be really interesting to do this with an item that's available in large quantities, and closely follow auctions for a longer period. But frankly, I'm not that crazy ;-)

xrmb, on 21 November 2012 - 06:03 PM, said:

As someone who hasn't found any items to sell in the AH (because I need them myself and they aren't that great anyway) I have the feeling I'm stuck now in the game as a permanent loser (that's what the paragon 30+ people tell me .

- I make 300k-500k gold a night
- all the items I find are 99% useless
- all the items I craft are 100% useless

For a week now I'm trying to get some decent shoulders (just +100 pri stat, some life, +50 res all, +5 pick up radius), really far from a top item. Well, finally I get in the range that I have 2mio gold... to buy one item... one of 10 items... for one of ten chars... its going to be a long time before I'm done playing.

What's your paragon level? I didn't find anything useful since I hit 35 or so. Then a Manticore for 20m, a Vile Ward for 20m, and a Nat ring for 150m... it is true what people say, eventually you'll find stuff. But you need to get past paragon 30-40 in order to see regular legendary drops (of which 99% will still be salvage crap).
Anyways, I might have shoulders lying around that would fit you. What's your realm and battle tag? There are people in all regions who wouldn't mind helping fellow forum users out. The stuff you're looking for is stuff that many people here just vendor.

[Bagstone]

ArcaneX, on 21 November 2012 - 06:20 PM, said:

Max your MF and remove it in your gear as your paragon level increases

Completely disagree (but that's okay, everyone can have their own opinion). Go crazy on DPS and farm the hell out of act 3 mp0 until you hit paragon 30, 40. THEN you'll have a solid magic find that is not taking up stat points that you should rather invest in ehp/dps. Once you're at a high paragon level, progress is so slow that you can get a few MF to fill the gap to the 300 cap. Equipping 200 MF on a fresh 60 char when you're short on money is, in my opinion (!), a huge mistake. You'll never get to the sweet spot of high paragon levels in reasonable time.

[KouKayne]

i run with 240mf and i still find crap, can't farm well over that value in mp2, how much mf do you use?

[maka]

ArcaneX, on 21 November 2012 - 06:20 PM, said:

xrmb, how much MF do u have?

I usually play 1-2 hours a day, and i often find alot of sellable items. Just recently i found a neck i sold for 50 mil.

But i think alot of people run without MF, and then its clear u only find crap, and utter crap....

Max your MF and remove it in your gear as your paragon level increases

Yeah, and where do you get MF gear?

Oh, right, you need to buy it.

[ArcaneX]

maka, on 21 November 2012 - 06:45 PM, said:

ArcaneX, on 21 November 2012 - 06:20 PM, said:

xrmb, how much MF do u have?

I usually play 1-2 hours a day, and i often find alot of sellable items. Just recently i found a neck i sold for 50 mil.

But i think alot of people run without MF, and then its clear u only find crap, and utter crap....

Max your MF and remove it in your gear as your paragon level increases

Yeah, and where do you get MF gear?

Oh, right, you need to buy it.

Solid gear with MF that enables u to farm mp0-1 is very cheap, and easily attained if u know what stats to go after and the synergy between them.