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Quote from palathos

We can all be as certain as we like, that our particular perspective or view of economics is the correct way which the d3 cash AH will perform. Perhaps the details of the debate is not as important as how long the debate lasts. In the end, Blizzard must bend to the popular opinion if they want to make a successful game. So all of these predictions and applications of real world econ is a bit silly, since none of us are smart enough to predict how it will end up behaving in-game.

For some people it is as simple as, introducing a system which encourages using real money inside of a game is enough to dirty the sanctity of what it is to play a game to begin with. Are these people (myself included) wrong? No, so you can't tell them they are wrong by flexing your econ 101 muscles and telling them what idiots they are. On the flip side, the people who are in full support of the cash AH have every right to be. I just don't see how those people can be so confident in the success of a system which is still months from even having a chance to prove itself. Some of those in favor of the cash AH wisely recognize that the system is not guaranteed to work. However, many of these people go on to debate the subject as if there was no chance of failure/imbalance.

For some, the relative success of the cash AH is irrelevant. It is fairly hard to argue that we will be able to play the game using the gold AH exclusively and not gimp ourselves. I think we can all agree that we are more likely to see the best items, and more of them in the cash AH. This makes the people who prefer to "keep a game a game", feel pretty betrayed.

It is easy for some to blur the lines and abstract the concept of spending gold vs real cash, but for others, it is impossible for us to simply convert gold to real money to items without feeling as though the entire experience has been cheapened.

Bottom line, I say fight on for your own view no matter which side of the fence you are on. It is all we can do at this point, and it is the only way we can influence Blizzard to remove/keep/change the cash AH.

Quote from Don_guillotine

Quote from santaclaws490_4577737

Completely agree with your point here, but I just have to point out that markets don't always act rationally (in the large scale). I think what they are trying to do is give Gold in D3 more intrinsic value by pairing it with USD/EURO. I wonder what the effect of a fixed rate would have. Like many currencies in developing nations do in order to create stability.

The real world is much more complex than simple markets like D3 will have. Most of the reasons that cause turmoil in the real world don't exist (at least in the same degree) in Diablo 3.

Large scale irrationality has it's roots mainly in (not exclusive reasons, but major culprits):

• Imperfect information (that created the subprime mortgage crisis -- no-one was aware of the large scale ramifications of micro phenomena such as subprime mortgages).
• The so called "Black Swans" (as coined by Nassim Nicholas Taleb). That is, events that are inherently unpredictable, but have serious ramifications. This is things like 9/11 (no-one sane expected it to happen), the Internet (how it changed the world), etc. etc.
• Regulators creating havoc -- often with good intentions -- with bad laws or bad actions, that go wrong mostly because of wrongly predicted reactions.

Information in D3 will be near-perfect (you see all of the stats of the item, its price, and the price of other similar items, etc.) so that won't be an issue. Then it'll be all about making sure nothing crazy can happen and that Blizzard won't screw it up.

Quote from Don_guillotine

Everyone doesn't behave rationally, that's the major flaw in econ 101. However, that fact is irrelevant as long as the market acts rationally in the larger scale.

Now, nowhere near everyone needs to behave rationally. Hell, you (or anyone else, for that matter) don't need to exchange currencies. You can stick to trading in one (gold or money).

Other people will meddle with the two markets and make them work for you by abusing the arbitrage and making the prices interchangeable between the two. There are countless people (me included) that get this perverted satisfaction in the trading aspect of D2. The minority that will abuse this way to make easy profit will be enough.


Regarding your question about why there needs to be two currencies, several reasons:

• Not everyone wants to use real money, so there needs to be the gold AH.
• Besides that, people need gold (for repairs, artisans, etc.).
• By tying the in-game gold's value into real money's value they achieve market stability in a way that is unattainable by using in-game gold alone. This is because the only way a purely gold-based market can work in a game like D3 is when the amount of gold gained is really minimal compared to the amount of gold needed. And even then it'd be hard to keep gold increments reasonable.
• It's all been proof-tested by D2JSP, which created one of the most stable and functional markets for D2.

PS: the economy-to-be of Diablo 3 will be rather simple mathematically. All it takes is some people understanding statistics and some proof of concept taking place during the beta and the whole AH can (and probably will) work like a charm.

Quote from mus1k

Quote from Dolaiim

No it won't. You're assuming everyone behaves rationally, like counting machines. You're assuming everyone will exchange currencies immediately like some HFT software. Human beings are not pure theory executors, and the system in practice will be many orders of magnitude more complex than you and Phrozen are making it out to be.

Here's an important point: The models you're using are in reference to two real-world currencies. But that's not what we're discussing. We're talking about one fake currency and one actual currency. The models don't necessarily hold, and the emotion and moral dissonance that is obviously at work here destroys many of your notions.

While I honestly appreciate the exercise in econ 101, the world does not operate in a vacuum, nor does it adhere to steadfast rules like this, because there are no steadfast rules outside a vacuum. We can't say that a video game community is going to behave like wall street currency traders. The fact is we just don't know any of this for sure.

My bottom line is this. Why do I have to exchange between two currencies in the FIRST PLACE? It's an added layer of toil that keeps me from killing monsters and getting loot.

There are many answers to this, but I haven't heard any that are compelling.

If people are not behaving rationally (working off the economy laws) they lose money. When they lose money, I get money. Yay for me.

Fake currency? Played WoW ever? Fake currency and yet the most robust, active and WORKING economy I've ever seen in gaming. Hell, some real-life economies are not as stable as WoW economy based on a FAKE currency.

PS. All currencies (yes, I am tlaking about dollars, euros and all those other pieces of paper) except for pure gold are fake, just saying...

Quote from santaclaws490_4577737

There is a market price and to drive it up, reducing supply will work. It may not be so drastic as the example listed but regardless it is easily doable with a bit of money. If I am buying out the market at 10$ and I have to buy your one 900$ sword to keep the market price up it does not effect the avg. price so much if my volume is high, which I am guessing it would be. Even so if I wanted to retain market prices I would still be making a profit on your 900$ dollar sword. This increases YOUR gain for the sword, but it creates a very very messy economy.

Of course you wouldn't want to hold a manipulation for extended times but with MANY companies doing this, it can turn in to a very 'not so fun' environment. Market manipulation is abundant in the real world, in example it only takes an average 3 million USD to manipulate Sri Lankan markets, it is not just a problem with oil.

If you buy a sword for 1000$ it is worth 1000$.
If you don't think a sword is worth 1000$ - DO NOT BUY IT.

I mean, it's simple, it's how marketplace operates and still people cannot understand even basics of it. How do you live your life without knowing basics of supply/demand and free market?

Quote from Don_guillotine

Quote from santaclaws490_4577737

There certainly would be for inelastic markets. It happened in WoW. You can even pull of more common high demand items. Like Copper Bars in WoW (or wtv they were called).

And in RW markets there are far more external factors that are impossible to take in to account. In a more perfect market in D3, manipulation is far easier, because the outcome is far more foreseeable.

This discussion is going in circles again, so this is my last comment on the whole manipulation issue.


Manipulation is usually done using the flaws of the market, not its perfection. That's what, to use a famous example, George Soros did when he bet against British government's promise (a flaw in the market) that they wouldn't devalue the British Pound by short-selling Pounds Sterling for large sums.


While you are correct about WoW market and some items in it, those manipulations don't really last long. All it takes is some undercutting and the artificially high price won't last for more than something between fifteen minutes and an hour.

Of course, this is only true on high population servers. On low population servers manipulation like the way you described can be pulled off, since there are far less people using the AH and less supply.

This won't be a problem in D3. D3 will have one large region-locked AH (NA, EU, etc.), so there will be hundreds of people selling items there all the time.

Quote from Don_guillotine

Quote from santaclaws490_4577737

There is a market price and to drive it up, reducing supply will work. It may not be so drastic as the example listed but regardless it is easily doable with a bit of money. If I am buying out the market at 10$ and I have to buy your one 900$ sword to keep the market price up it does not effect the avg. so much if my volume is high, which I am guessing it would be. Even so if I wanted to retain market prices I would still be making a profit on your 900$ dollar sword.

Of course you wouldn't want to hold a manipulation for extended times but with MANY companies doing this, it can turn in to a very 'not so fun' environment. Market manipulation is abundant in the real world, in example it only takes an average 3 million USD to manipulate Sri Lankan markets, it is not just a problem with oil.

I don't think there is any profit to be had in manipulating the market the way you describe. In a functional market the price will be exactly at the level where supply and demand meet. If the price is increased, less people buy the item since they think the price is too high and although the price is higher, units sold is lower, resulting in less profit.

And since the company will have no way of controlling the supply (items are found all the time), they only stand to lose money since they have to buy off everyone undercutting them.


Real world is more complex with lots of imperfect qualities but D3 market is as close to a perfect market there is. It is far, far, less susceptible to manipulation.

Quote from Nestor_rerolled

@santaclaws

Much like an earlier poster who talked about WoW's "auction-pvp", there are some of us who will use the AH in D3 for the fun of it. I will play the game to kill mobs, hell yeah! but I will also get a TON of mileage out of that evil "Market Manipulation".

I 'know a guy' who bought a truck and two jetskiis by selling WoW gold. There it was illicit and against the EULA but.... Here in D3 it will be sanctioned and will support Blizzard.

ETA: You just edited your post so this is no longer in reply.

Quote from Don_guillotine

Quote from santaclaws490_4577737

I read PhrozenDragon's article and he did list a few of the major drawbacks but I find one very important one that he missed (I think) is Market Manipulation. What will start to happen, because all items can be bought locally from a single point (the AH) is that people with large amounts of money (companies in China seeking profit in eg.) will use their buying power to wipe a high demand item off the market by outbidding everyone regardless and then sell for ridiculous prices. They can do this with gold OR cash. This doesn't even have to happen to high end items. And eventually intentional over-farming (BOTS or people, labor is cheap in Asia, very cheap). I get that there will always be 3rd parties trying to make money from such a popular game, but the AH makes it more accesible, more abundant and easier for these 3rd party companies to RUIN gameplay for people seeking a great gaming experience. If you leave the market to d2-esque trading or some middle ground in stead of one giant market, it will reduce the manipulation of items being sold/bought and profiteering. Although if I were a blizzard shareholder I would certainly want this system in the game, it is a good profit model - thats why I doubt you will see too many free trades.

I personally think, if Diablo is truly going for the gaming experience, they can do better than the RMAH.

Fictional example:

Sword of Leet usually goes for $10. Malevolent company X buys all Swords of Leet on the market and lists them for $1000.

I find a Sword of Leet, list it for $900. Either company X buys it and relists for $1000 or someone else buys it. I get $900 either way.

Eventually company X can't hold the manipulation.


Market manipulation is not a problem when anyone can find any item with some luck. It's not like the OPEC, which can manipulate oil prices only because most of the countries with oil resources belong to the organization essentially creating a monopolistic supply of oil.