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Discussion: Does the market in Illy "work"?

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Category: Miscellaneous
Forum Name: The Caravanserai
Forum Description: A place to just chat about whatever takes your fancy, whether it's about Illyriad or not.
URL: http://forum.illyriad.co.uk/forum_posts.asp?TID=10624
Printed Date: 21 Nov 2019 at 19:51
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Topic: Discussion: Does the market in Illy "work"?
Posted By: Marquesta
Subject: Discussion: Does the market in Illy "work"?
Date Posted: 22 Apr 2019 at 19:04
This is a genuinely confusing topic for me. I think in straight lines, and trading is anything but a straight line. An alliance member brought this up in AC, and I have a really hard time understanding why he says the markets in Illy don't work. To my mind, if it's the only market we have, besides trading directly between players (which isn't really a market), it works because it's the only system there is. It works according to the laws of Illy.
This is what he said;
"Anything valued at more than a million in centrum is worth one unit. And then you trade something else for it."
When I asked him to explain, he said;
"There are a lot of anatomies where there has been no trade or where offers are larger than a million. You don't use gold for those, and instead trade one of one kind for one of another kind."

Thoughts? 


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~~Marquesta
Whether tis nobler in the mind to suffer the slings and arrows of outrageous fortune, or to take arms against a sea of troubles, and by opposing, end them...



Replies:
Posted By: DeathDealer89
Date Posted: 23 Apr 2019 at 03:54
Market is working fine.  Scarcity is extremely high leading to high prices and demand simply isn't there for those high prices therefor almost no trade takes place for those items.


Posted By: Eros
Date Posted: 23 Apr 2019 at 09:26
Depends what you mean by 'work', but things get bought and sold so it functions as a market



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It's late on Ash Wednesday. An Asian teenager in a slammed-out Acura offers you a plate of chicken vindaloo


Posted By: rajput
Date Posted: 05 May 2019 at 00:05
How is it different from... selling off item(s) worth 1m gold and then using that 1m gold to buy the item you need? 

As far as market mechanics are concerned they are sound... except for the supply & demand analytics, the metrics it provide are not very useful...

Item exchanges are to be managed between player to player... that to me is completely logical... 
I think there is no harm in using the Illyriad forum for this activity... List the items you want and what you are willing to exchange for it... 


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Warning! Author of this post has weird sense of humor...


Posted By: smilee
Date Posted: 06 May 2019 at 06:13
Your friend talks about volume/liquidity, which for many items is very low. Ex.: You can trade millions of units of food at any one time, buy and sell. However, for some furs or minerals you can trade only one or two no matter the price.

Second, as he or she implies, prices are nonlinear. That means that 10x the quantity is not 10x the price, but rather more than that. How much depends on, again, market liquidity. Think of it as a premium for the ability to trade large volumes at once, instead of splitting your order for 100 million food into 100 trades to 1m each and waiting for a while in between for the price to normalize. 

Third, the player means (*I think*) that you don't pay 1m gold for something expensive and rare, you only sell something worth as much and then trade that gold for that item. Which can be technically true, but he or she misses that that is the exact same thing. You are still short the 1m gold you have netted from selling your item. So that is really just a psychological accounting trick, your friend values 1m gold more than the other item he swapped for the thing they bought. The effect is that his centrum cash pile is unchanged (makes it seem like he or she did not pay 1m gold) and the item sold for 1m isn't mentally accounted for - but they're still gone. Of course you use gold to trade in centrum, there is no other way even if you rationalize it somehow with swapping items.


Posted By: Doophusson
Date Posted: 11 Jun 2019 at 00:03
The market clearly does not work in Illyriad, or there is a lack of people working to make it work.

Consider horses.

You can currently buy horses for 56 gold each.
Or you can make your own with 20 wood, 5 iron, 60 food and 7 gold.
You can sell wood for 0.9 gold, iron for 0.9 gold and food for 1.95 gold.

So if you buy horses you can sell the resources to make horses for 139.5 gold, plus the 7 gold, for a profit of 90.5 gold per horse. That's an insane profit. It means selling horses is destroying more than 60% of the value of the resources used to create the horse.

I have stopped producing horses.


Posted By: spektor
Date Posted: 11 Jun 2019 at 02:48
Doophusson I disagree with your analysis. I would say the market price of basic res is more of a price for the effort of listing and trading, than for the actual res. I'd say basic res is essentially free, making the cost of producing a horse for yourself ~7 gold, much less than the market price.

I think Eros' reply is spot on. It all depends on what you're talking about when you say a market is "working".

Originally posted by Eros Eros wrote:

"Depends what you mean by 'work', but things get bought and sold so it functions as a market"





Posted By: Doophusson
Date Posted: 11 Jun 2019 at 08:33
Spektor, I would agree with you to an extent for the wood and iron, but for the food isn't that something people tend to run out of when making their cities as large as possible?


Posted By: Dungshoveleux
Date Posted: 11 Jun 2019 at 22:47
Basic resources, and manufactured resources always have prices in excess of their individual values. Therefore, it is better to trade items for gold rather than combine them. My theory about this is that when valuing the finished article, people always assume you got some ingredients "for free" i.e. not bought for cash. Also, I believe that when troops are killed,only a percentage of equipment is recoverable, unless the troops are defending in a town (their own town). Dropped stuff eventually disappears. People don't bother with special equipment because it goes missing so easily. The large quantities vs single items argument can work both ways. I have bought large amounts at both discount and at a premium. The game currently favours harvesters and crafters, but the temporary nature of special equipment is a real disincentive. No-one will deploy a special item or unit if it might go missing/get destroyed.  


Posted By: spektor
Date Posted: 12 Jun 2019 at 03:48
Originally posted by Doophusson Doophusson wrote:

Spektor, I would agree with you to an extent for the wood and iron, but for the food isn't that something people tend to run out of when making their cities as large as possible?


Perhaps. That statement does not describe everybody though. Just to continue this specific thought experiement, let's reduce your stated price by the same amount as we reduced the others (to account for market friction). So then a 56 gold horse is made up of about 67 gold worth of stuff. That's a bit closer at least.

However is your argument that food is highly demanded? Thus its price would go up. If it is in more demand than horses, then its price would be higher for an "equivalent" amount. Yes? Sounds like a market working to me.

Let's take a shot at a real life analogy. Someone takes a bunch of diamonds, and molds them into a basic framing hammer, how much would you pay for the hammer compared to the diamonds, and how many people would buy it? Maybe that's a bad analogy, but I think it at least highlights one important point.

What conditions do you (or anyone) expect a market should exhibit to be called "working"?


Posted By: Trader Tiro!
Date Posted: 12 Jun 2019 at 15:08
The Market Works...u just have to figure it out. Tongue
Instead of writing gibberish about it not working, perhaps u should try reading or watching the instruction videos...they are somewot useful Wacko


Posted By: Doophusson
Date Posted: 14 Jun 2019 at 09:13
If the market was efficient, with rational actors, then people would take the opportunity offered by the low price of horses to make a profit selling their food in preference to producing horses. That would be a working market.

I think one reason this isn't happening is that players are placing a value on creating their own horses - ie they're behaving irrationally.

Another reason is that the visibility of Centrum to every player, despite their distance from it, concentrates trade in that location, but that makes trade less efficient because of the distances involved.


Posted By: Garth
Date Posted: 14 Jun 2019 at 17:41
Originally posted by Doophusson Doophusson wrote:

If the market was efficient, with rational actors, then people would take the opportunity offered by the low price of horses to make a profit selling their food in preference to producing horses. That would be a working market.

I think one reason this isn't happening is that players are placing a value on creating their own horses - ie they're behaving irrationally.

Another reason is that the visibility of Centrum to every player, despite their distance from it, concentrates trade in that location, but that makes trade less efficient because of the distances involved.

Many people DO sell food instead of producing horses. And many other people just can't be bothered, or don't care enough, or haven't done the math and don't realize that horses (and a couple of other resources) are selling for less than the value of their components.

Do keep in mind that the Horse paddock is a building plot that cannot be replaced by anything else. So if you're not using it to produce horses, it's essentially wasted.

As for the visibility of Centrum, that coupled with the size of the map/number of active players really makes it hard to establish other trade centers. If there were thousands and thousands of active accounts across that large map, there would be far more trade activity in far reaches.


Posted By: DeathDealer89
Date Posted: 15 Jun 2019 at 00:23
I agree that horses are effectively free to produce, most warehouses are maxed out food included although less often.  You also completely skipping the cost of shipment, shipping 3000 horses takes 1 van while shipping 255k basics takes 85 vans more than 1 trip.  I can trade 85x the number of horses than I can the amount of resources.   Don't forget that there are also 11 other adv res that can be made and sold.  

The cost of basics is the shipment, the actual resources are free.  A rational actor takes all costs into consideration and doesn't ignore the largest one.  


Posted By: Dungshoveleux
Date Posted: 15 Jun 2019 at 22:11
The main reason the market doesn't "work" is that you cannot turn horses directly back into basic resources! Horses are for free. I had around 5m of them at the last time of looking.


Posted By: rajput
Date Posted: 15 Jun 2019 at 23:48
Most manufactured goods cannot be turned back into raw / base resources... I dont know how that is any relevant.

All basic goods (along with Horses) in Illyriad market are now at Over-Supply stage. There are number of factors to it;
a) Simply, 'Supply' is greater than 'Demand/Consumption'.
b) Considering every player have equal ability to produce basic goods at same res cost (whether they choose to do so or not), makes it complicated to dictate or control the prices in open/free market.
c) There is abundance of base resources which are required for manufacturing of basic goods.
d) Similarly, Illyriad is small community, it is quite easy to reach abundance of basic goods. 
e) Willingness of traders to trade at lower prices (or in another words, lack of patience).
f) Relatively peaceful and prosperous times.

For basic goods prices to gain, a number of above mentioned factors need to change. Moreover, in good Alliances it is quite easy to get basic resources and goods many times at Zero cost. 🤷 

Regarding profitability of basic resources vs basic manufacture goods; That is very logical because basic resources have higher consumption than basic goods and lower supply than basic goods. Basic resources are needed to build up cities as well as basic goods. Shipping issue, as mentioned by DeathDealer89, also contributes to lack of supply in market.

Another thing, If you take a deeper look at the point (B) I mentioned above, one implication you can drive from it is that in a perfectly insulated environment you will never be able to drive profit from manufactured basic goods... Why?... Because everyone can easily gain the ability to manufacture goods for themselves, moreover they can as easily enter the market and compete with you for whatever demand there is.

Having said all that, I dont think there is anything wrong with market mechanics or anything... What we are experiencing, has allot deeper roots/causes... 


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Warning! Author of this post has weird sense of humor...


Posted By: Tensmoor
Date Posted: 16 Jun 2019 at 02:28
There is a very simple explanation - any item is only worth what somebody will currently pay for it.

If I put horses up at 1 million per nobody would buy them - that is more than they are willing to pay for them. If I put them up at 1 per then they will be gone in a flash - that is less than folks are willing to pay for them.

That doesn't mean the market is broken. It means I put them up at the wrong prices if I wanted to get the maximum gold quickly.


Posted By: Dungshoveleux
Date Posted: 16 Jun 2019 at 23:59
Originally posted by rajput rajput wrote:

Most manufactured goods cannot be turned back into raw / base resources... I dont know how that is any relevant.
It is relevant because if you could convert things back into their constituent parts, then people would make money by doing it because the parts are worth more than the whole item. Purely in gold terms, it isn't worth manufacturing anything. Its cheaper to buy!


Posted By: Doophusson
Date Posted: 17 Jun 2019 at 12:11
Okay. So a large cost for goods in the Illyriad market is shipping cost, which is somewhat hidden because you can't rent caravans from other players.

This is exaggerated because of the Centrum effect.

I also take the point about resources not being scarce.

I think there are changes that could be made that would make trading more perilous, reduce the security with which resources could be stored long term and create more encouragement for limited warfare (that wouldn't drive people out of the game, but would increase the demand for goods).


Posted By: rajput
Date Posted: 17 Jun 2019 at 16:25
Originally posted by Dungshoveleux Dungshoveleux wrote:

It is relevant because if you could convert things back into their constituent parts, then people would make money by doing it because the parts are worth more than the whole item.
Every production or manufacturing process will incur losses including material loss. Similarly, every recycling process will also incur losses. Therefore, even if it is allowed to convert or recycle products, you will never get back the original quantity of materials you put in to a product after recycling it.

Also you have to be a little logical about certain things, you cannot recycle horses and livestock. You may process them into food but you cannot get the wood or iron or gold back from them. There are similar issues with recycling swords, spears etc... You will not be able to recover all materials.

Originally posted by Dungshoveleux Dungshoveleux wrote:


Purely in gold terms, it isn't worth manufacturing anything. Its cheaper to buy!
Yes very true. Players have the option of seizing production and using the supplies available in the market. Totally up to them.


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Warning! Author of this post has weird sense of humor...



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