Ok. Economics folks.

[Blog Monster]

Just buy and re sell everything at the appropriate price, am doing so and conquering the broker. Out smart the under-cutter, duh! But don't take things too far and go bankrupt.

Also make a spiritmaster, best grinding class ever.

[khariste]

Originally Posted by Blog Monster

Just buy and re sell everything at the appropriate price, am doing so and conquering the broker. Out smart the under-cutter, duh! But don't take things too far and go bankrupt.

Also make a spiritmaster, best grinding class ever.

...Wrong...thread?

[Siendel]

Originally Posted by khariste

Accounting is not based on economics. Accounting existed long before economics came into being.

Perhaps before economic theories were codified into printed text, but there was a basic understanding of fundamental economic principles long before the concept of accounting came around. Sort of by definition, whoever created the concept of coinage and the creation of basic accounting, was a student of economics.

[Deception]

The theme of this piece can best be summarized as:

D. Yes, people are selling their crafted items below the separate material costs, however they derive satisfaction in the process.


khariste, you should be writing SAT essay questions. No, seriously.

[khariste]

Haha lol.

I'm happy with my current job. I just tutor undergrad economics and accounting on the side for fun.

[Primos]

Although the OP is a decent explanation of some basic economic concepts it hinges on the concept of the Homo Rationalis(not to be confused with Homo Economicus) way too much as a perfect model for explaining the behavior of Homo Sapiens. Of course Homo Rationalis offers a decent, although limited, model of some parts of the behavior of people in general (as opposed to the behavior of individuals). Rational actors are a fairly good model of genes in general in evolutionary dynamics for instance, but they're much less suitable for describing and / or predicting the general behavior of Homo Sapiens. A lot of economists seem to fail to realize that despite the fact that fancy, mathematical instruments such as game theory don't change the fact that it's in essence a social science dealing with the complex interactions of set of very complex actors. The study of the rational,game theoretical, utility maximizing aspects of human behavior need to be integrated with lessons from psychology and sociology about human behavior. "People will always maximize their utility" is a model assumption in economy, far from an accurate description of human nature. Robert Aumann's Collected papers has some interesting stuff about game theory as a descriptive science.
The model of a rational, goal oriented actor works best when there is a harsh penalty on not maximizing your utility.

So how does this affect Aion?
People are irrational, deal with it.

[Catalina]

My qualifications:

B.A. in Economics
1/2 way done with M.A. in Economics
Job title: Economist
Job: Work for U.S. Goverment doing Economics


Conclusion: Listen to the OP. 100% spot on stuff. Good post.

[Uller]

The point about opportunity costs is fairly accurate. Good to see some knowledgeable discussion on the issue vs. rantings from those who just got done with study hall for the day.

However, give me a successful small business man over an economist 8 days a week... even ones who feel it necessary to post their resume on a video game forum board.

As one of your fellow economist, John Kenneth Galbraith, once said, "The only function of economic forecasting is to make astrology look respectable. "

[Storm317]

If it drops and I farm it and then sell it for 100. It 100 profit for me. I'm just not taking advantage of the lowest cost and under cutting them. Now if I craft it. That is the difference.


Accounts Payable Specialist,

I pay the bills...

[Mercedes]

am i the only one with the feeling that someone in this thread has a small nyerk?

[Lothloryn]

Originally Posted by Storm317

If it drops and I farm it and then sell it for 100. It 100 profit for me. I'm just not taking advantage of the lowest cost and under cutting them. Now if I craft it. That is the difference.


Accounts Payable Specialist,

I pay the bills...

This post is what it's really about. The cost of an item in Aion is intrinsically linked to the cost of its materials. Unfortunately, the majority of the materials required for crafting are gathered and dropped items. This leaves an unstable baseline to draw up an economic forecast on a global scale. What one person crafts one day at at a profit might easily be well below profitability the next day. Conversely, and as is frequently the case, what one person sells at a small profit one day, might be undercut at a huge profit by someone else the next day.

As an example let's say that John makes a piece of armor at a cost of 40,000 Kinah and sells it for 50,000 Kinah. He expects to make a profit of 10,000 Kinah and thinks that's reasonable so he puts it up on the consignment merchant. A couple days pass and Mary decides to make that same piece of armor. The markets saturated a bit with the cost of the materials so she manages to make the same piece of armor as John did for 30,000 Kinah. Putting it up for the same price markup (25%) she puts it up for 37,500 Kinah. There is absolutely no way John can meet this price as it's below the value of the materials for him. Even if Mary decided to use the same price as John and they both sold, John would only make a 25% profit on his investment whereas Mary would make a 60% profit!

The economy in Aion is an open system dictated by the individuals and time frame.

[ChuMann]

Originally Posted by Catalina

My qualifications:

B.A. in Economics
1/2 way done with M.A. in Economics
Job title: Economist
Job: Work for U.S. Goverment doing Economics


Conclusion: Listen to the OP. 100% spot on stuff. Good post.

Qualifications aside, I don't think this level of economics has any relevance in MMOs for the reasons I posted earlier in this post:

Originally Posted by ChuMann

There are too many variables involved in economic profit in RL to count. In an MMO setting, many of these variables are lessened or completely negated, such as:
1) Customer Service
2) Convenience
3) Ability to earn Purchasing Income
4) Exaggerated Inflation
and there are countless others.

...goods are too similar, too easily reproduced, too easily traded, and too conveniently purchased to have an argument for the effects of economic profit in Aion.

Regardless of what you may or may not think, economics, in practice, is all theory. Income, expenses, overhead is real. Accounting is real. At the end of the day, prices are dictated and revenues are established using basic accounting principles, not advanced economic principles.

My qualifications:
Masters of Accounting, CPA
Job Title: Controller
Job: Work for State Government in a Health Facility managing Accounts Payable/Fixed Assets/Grant Reporting

Obviously though, I am completely biased. As are most people within their degree of specialty.

[Machiavellii]

I really enjoyed reading this.
For a moment I forgot the discussion was based on Aion.
Interesting read from so many economists views.

Since when is economics so monetary based? To my knowledge it is a social science based on the optimal choices one makes (company, individual etc.) under conditions of scarcity. A very broad and interesting science may I add.

Secondly, one posted about economics is only available in only two ways; micro and macro. What about the economics of human behaviour? A topic I personally find extremely interesting.

I hope some this intrigues more debate and discussion, I enjoy reading this. To make it simple, through reading these posts the marginal benefit is far greater than the marginal cost.

Great Post, OP.

**
Edit:
Sorry I just remembered, in respect to maximizing utility, monetary units aside, I'm sure I'm not the only one who gains pleasure from creating the next weapon or armor in the hierarchy of designs. My $0.02

[Primos]

Another point is that people tend to look at the profit per unit. To a lot of players playing MMORPGS it's the profit / time unit that actually matters, especially when dealing with consumables and resources that are easy to obtain. If you can gather 300 materials and sell them for 1k each while you can craft those into potions for example with 200 added costs, yet still sell the finished products for 1k, the profit per unit will be 1k for the raw materials, yet 800 for the finished products. Now let's say the materials sell at a rate of 100 per day, while the potions sell at a rate of 300 per day. At these rates, the profit per day for raw materials is 100k, while the profit per day for potions is 240k.