Dr. McB explains the economy in Path of Exile

This was a much easier read than when it was haphazardly being discussed in the Wraeclast.net chat room.

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NeroNoah wrote:

Given the time dependence for getting wealth and the fact that getting good gear allows you to have better tools to advance and profit from initial scarcity (in temporal leagues) I would say that the curve follows a Pareto distribution:



So the people with junk gear is more than it would be in a normal distribution, and the people in the middle are not necessarily a majority.

Also, it can be said that people prefer crafting materials over currency, so if orbs flow upwards, the system is not as fun as it could.

And the whole "economic masters controlling the economy" can be achieved via price fixing and monopolies (I remember one post of a member of a group of people describing that basically won a league that way, so the evidence exists).

Anyway, I agree about the whole "not going paranoic with rich people" thing anyway, but let's not be conformists.

this!

the relevant Wikipedia Article also states the following:

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Pareto originally used this distribution to describe the allocation of wealth among individuals since it seemed to show rather well the way that a larger portion of the wealth of any society is owned by a smaller percentage of the people in that society. He also used it to describe distribution of income.[8] This idea is sometimes expressed more simply as the Pareto principle or the "80-20 rule" which says that 20% of the population controls 80% of the wealth

Bell Curves look that much nicer, but they do not correspond with "Wraeclast reality".

though I agree with the "currency flow" model you described, Scrotie.

still, you know my opinion about it is Orbs should have been usable objects - which can be obtained by playing the game - to incrementally upgrade your characters' gear, rather than "currency" in the first place.
their extreme rarity, and notable cases where that rarity isn't proportional to the Orb's functionality - is what made them trade-able instead of use-able.

Re: Paretto

You guys do realize that wealth is left-to-right on my graph and population is down-to-up, right?

So let's say you grab the rightmost end of my bell curve and stretch it way out there. This doesn't really change anything. All the key points - gear flows right to left, currency left to right, the Thrift Shop rule, Tier 1 population much smaller than Tier 2, etc - all those points remain unchanged.

I also pointed out that trading allows the Tier 4 population to catch up. They basically are on a crash course for Tier 3 and make it there pretty darn quick. After a while there is much less Tier 4 than previously.

So if you want to really get technical about it, yes, the "after" picture of the economy does look reasonably close to a Paretto distribution. However, this is a result of common-sense economic forces I already explained. The "before" picture, the picture of wealth before trading gets involved, would still be a normal distribution, because it is dependent on individual time investment and skill.

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ScrotieMcB wrote:

the picture of wealth before trading gets involved, would still be a normal distribution, because it is dependent on individual time investment and skill.

I think the "before" picture is shapeless.
before trading gets involved, RNG makes sure "wealth" (or rather, abstract overall quality of items obtained at that point) is chaotic.

if risk/reward was put into the picture, there would perhaps be a correlation between how far a player's character (or set of characters) in the "tradeless league" is into content, and what his/her "wealth" is - resulting in a smooth graph shape.
but that's not necessarily the case in "full RNG mode".

again, I agree with your "currency flow" model. just not with how you view the distribution of "wealth" in Path Of Exile.

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johnKeys wrote:

I think the "before" picture is shapeless.
before trading gets involved, RNG makes sure "wealth" (or rather, abstract overall quality of items obtained at that point) is chaotic.

Why would you think that?

Correct me if I'm wrong, but what you're describing sounds exactly like a normal distribution to me.

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elitedesolator wrote:

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johnKeys wrote:

I think the "before" picture is shapeless.
before trading gets involved, RNG makes sure "wealth" (or rather, abstract overall quality of items obtained at that point) is chaotic.

Why would you think that?

Correct me if I'm wrong, but what you're describing sounds exactly like a normal distribution to me.

please read the technical explanation I just added.

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johnKeys wrote:

please read the technical explanation I just added.

Read it.

We're not talking about two players though. We're talking about thousands of players. Assuming all the players face the same odds, some will get next to nothing, some will get a lot of good stuff, and most will be in the middle.

EDIT: "The normal distribution occurs when a number of random variables, with independent distributions, are added together. No matter what the underlying probability distribution of the individual variables, their sum tends to the normal as their number increases."

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elitedesolator wrote:

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johnKeys wrote:

please read the technical explanation I just added.

Read it.

We're not talking about two players though. We're talking about thousands of players. Assuming all the players face the same odds, some will get next to nothing, some will get a lot of good stuff, and most will be in the middle.

EDIT: "The normal distribution occurs when a number of random variables, with independent distributions, are added together. No matter what the underlying probability distribution of the individual variables, their sum tends to the normal as their number increases."

to position (thousands of? millions of?) inputs on a graph, you need to be able to compare any two inputs.

well if I have a Shavronne and a Kaom, while you have a blue Rustic Sash with a T3 roll - I probably have more "wealth" than you.
but what if I have a white Coral Ring, and you have a white Pine Buckler?
both were the product of RNG, and RNG has a nice Bell Curve to it, but it doesn't make our "wealth" comparable.

if however I sold my Ring for a Chaos Orb, and you sold your Buckler for 2 Chaos Orbs - that makes our "wealth" comparable: 2:1.
and it also makes the "wealth" of the buyers comparable: minus 1/2 Chaos Orbs, plus Buckler/Ring.
meaning the "wealth" of all 4 of us can be positioned on a graph.

therefore Scrotie is correct in his "economic gear flow" model, but the graph "before trade" isn't a graph. it's just a collection of thousands of dots.

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ScrotieMcB wrote:

Myths such as economic masters controlling the economy, or exaggerating the effect of RMT in the game. There is no need for such conspiracy theories because Occam's Razor tells us the bell curve is the most likely and best explanation.

At what point do we say economy is controlled by masters geniuses?

1) I have spoken with a master crafter RMTer who told me i am going to make every mirror worthy item and get my investment back. So later, whenever he starts buying eternals (by hundreds) their price instantly increase over all the market.
2) Famous players such as the famous poe Self found player have always been saying that many top players were doing RMT through D2J**.
3) We have seen a bunch of top ladder players(tier 1 right?) being banned because they were caught, what about the ones who were not?
4) Oh and bots, bots! I have been talking with a super top ladder player and he admitted to me using a bot to help him do maps. Would not that mean he can use maps for other purposes? Like farming and gaining illegal currency? Any bot user is probbably involved in RMT..
5) Richest players in standards stay richest players.

What about those who only play the market? No leveling or whatsoever. Where are they

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johnKeys wrote:

to position (thousands of? millions of?) inputs on a graph, you need to be able to compare any two inputs.

I am starting to think you don't have a good understanding of statistics.

It doesn't matter if we can't physically plot this particular set of data on the graph.

The fact is that this game is pretty much the same as each player rolling thousands of dice (comparison to item drops). And that follows normal distribution.