Trading For Dummies

Nokigon wrote: A good guide, marred only by the approval of a troll.

...and a brownnoser   

Thank You Squill!!  Great guide and exactly the info I was searching for.

<Squill> wrote:   The slow downward trend is related to newbies being able to build and sell cows when they enter the game; without much hassle, so supply is picking up. I doubt that this has anything to do with the production price; because unlike the our markets in RL; Illy's market is not profit driven to that extent; it's more the fact that it's there and you can trade on it; so why not?

The reason newbies build and sell cows is because it is the most profitable for the material expenditure and per unit (with a limit to how many units you can put in a caravan, that's important).  Compare: Horses.  Horses cost more resources to build, and yet sell for 1/2 the price (well, until the cow prices tanked).  You say that the downward trend of cows is because newbies can build livestock right away, however they can build horses right away, and we don't see the market flooded with them.

The market might not be 'profit driven' for veterans who have billions in the bank, but for new and new(ish) players who only have a couple of million, it is.

You list 'swords' as being more profitable than cows.  That wasn't true until very recently.

Edited by Koragg - 24 Oct 2011 at 09:45

Koragg wrote: The market might not be 'profit driven' for veterans who have billions in the bank, but for new and new(ish) players who only have a couple of million, it is.

A bigger issue is that gold gained from the market is generally only used again on the market.  In effect, it doesn't really circulate.  The prime utility of gold is to pay for troops (soldiers/diplos), and if anyone has a long-term strategy of running a deficit and using the market to generate payroll I'd be surprised.  To wit: the vets are buying, not selling, so they in general must be running a gold surplus.

I would be curious to know how much gold is in circulation in total from day to day.  It would be nice to know how much inflation/deflation the economy experiences.  I assume the devs keep a tight eye on this, as wild inflation or deflation can severely impact game mechanics.

Unless offsetting a gold deficit with trade is a widely used tactic, the total amount of gold in the game, as well as per capita, should be increasing.  Since deflationary pressures are not likely to be as strong in the game as in a real economy -- we are not likely to see a drop in supply, wages are non-negotiable, and conflict is the only real factor affecting demand -- I expect we'll see steady inflation.  This isn't a problem unless the inflation rate is volatile.

So currently, the market isn't driven at all.  If it's a given that players tend to run gold surpluses over the course of the game, nobody needs long-term the gold the market provides, and the goods have a much higher utility value.  Gold is technically only good for converting one resource into another, which can be done more efficiently (though less easily) through direct barter.  I'd guess that right now, the market is driven by curiosity, speculation, and a hoarding desire.

I can think of one simple change that could encourage a gold-deficit playstyle, and that would be scheduling of trade orders.  If I could queue a sell order for x number of books or swords or leather every y hours (as long as I have them), I could reliably maintain an overall positive cash flow.  I wonder if this is something the devs are considering for trade 2.0.

I'm not an economist, it would be interesting if any forum members were and could provide some insight.

<Squill> wrote: The vets "might" be running a gold surplus largely because of tax revenue they get from there cities. However; generally over a period of time many of them build troops in preparation for battle/war/tournaments. In which they go through a stage at the bigging whereby they have a lot of gold flowing until most of the gold revenue is consumed by units they have built and they go into deficit.

Right.  So the primary motivator for large players is to hoard gold in anticipation of converting it to resources and to temporarily pay for offensive armies (who supposedly will suffer losses, so any deficit will be short-term).  The primary motivator for smaller players to trade goods for gold is...?  An expectation of needing it when they are large?  Or simply to easily convert certain resources to others?  But we've established that the large players don't need to sell goods to accumulate the gold to buy the goods they will need (which would be self-defeating anyway, unless they're speculating/playing the market, or again converting from one resource to another though this would be inefficient).  Why are smaller players interested in earning gold via the market?  I suspect it may be more psychological than anything else (the satisfaction of seeing a number get really big).

Generally the tournaments are a way to relieve inflation; where troop and gold reserves are spent in huge amounts.

Ah, I forgot about the tournaments!  Yes, they are the pressure valve, good point.

I have a good friend who has some odd ideas about economics so I have given myself the briefest and shallowest of educations.  The economic simulations in games like Illy are really fascinating, though they lack some very crucial components of real-world systems.  Glad you enjoyed my thoughts.  I'm a subscriber to Keyensian economics and Illy's system does, to me, show a clear demand-side market.