Economic Principles in the Context of “Path of Exile”

Before I begin, here are some things to keep in mind when engaging in mature, civil discourse. The more offense you take to this preface, the more likely it is that you should follow its premises.

1. WE ARE ALL HUMAN BEINGS
I know a lot of people consider the “Golden Rule” child’s play, but seriously consider what you would feel like if someone said the same thing to you. You could even take this a step further and put yourself in someone else’s position before you post, expressing preemptive empathy. This not only has the effect of cooling people’s jets, but also contributes more to the discussion.

2. OBJECTIVITY IS AN APPROACH, NOT A CHARACTERISTIC
No one is completely and totally unbiased, this is just the nature of human beings. So, before posting, consider your own bias and the biases of those to whom you’re responding to. For example, if you are a standard player, you will probably care more about the state of standard’s economy than the next guy.

3. AN ARGUMENT WITH NO EVIDENCE IS MEANINGLESS
The third consideration is that you use evidence to support your claims. Because of the nature of PoE and GGG’s (understandable) reluctance or inability to give thorough, relevant information, factual evidence is often not something we have access to. Instead, we must turn to similar real-world situations, metaphors, or personal experiences. If you use these tools, attempt to comprehend the inherent limitations of them; take everything you say with a grain of salt.

4. READ EVERYTHING!
Last but certainly not least, read everything in its entirety. It could be that something you respond to has already been addressed in the original post. By the same token, it could be that something you respond to has not been mentioned whatsoever. There is a significant difference between skimming and thoroughly reading. If something doesn’t make sense to you, read it again!

And now, to the issue at hand..!

What does it mean to have a healthy virtual economy? That’s a pretty big question, but I’ll trim it down to two basic end goals. A healthy virtual economy is:

1. Stable
Stability is simply a measurement of how much the market fluctuates. If chaos:exalt is 30:1 one day, how much will it change in the next day? How much will it change in the next week, the next month, the next year? Stability is difficult to achieve in a game where the meta or demand is constantly changing.

2. Equitable
The “fair” distribution of wealth is a touchy subject for many, for whatever silly reason. I think most people would agree that an equal distribution of wealth amongst all peoples is an impractical and ineffective theory, apart from the fact that it would be impossible in PoE. On the other side of the spectrum is today’s real-life economy: a very high concentration of wealth at the top, with much fewer people. What we should be aiming for here is a happy medium between these two extremes.

Now that we have some basic goals, let's go over some reasons why the PoE economy is not stable or equitable in its current state.

In the real world, there is a very distinct relationship between risk and reward. If you were to chart their relationship on a graph, it would ideally be risk=reward, or a linear equation. To measure risk is to measure the probability of success: the lower the chance you have of success, the more risky something is. Another part of the equation is the cost associated with the action taken, or what you’re risking. The last part is what happens if your risk does not pay off, or if you fail.

For example, Chris (TOTALLY RANDUM HAHA) is an avid computer programmer who decides he wants to create a game. Building the necessary team to do this and subsequently doing it successfully is a pretty risky proposition: in general, the chances for success were low. The reward involved was creating something he’d be proud of, as well as being able to sustain himself. The cost was a lot of self-spent money and the time and effort involved in creating it, sustaining it, and finding financial backers for such a game. If he failed, there wasn’t a lot to lose: at the worst he would have spent some time and money on something that he tried to make great.

If there had already been a game exactly like PoE on the market before Chris decided he wanted to make a game, there would have been less of a market for his game. The probability of success would have significantly decreased, and the risk would have been higher. If the other variables (reward, cost, failure) had stayed the same, he would have been less likely to try and make the game. Similarly, if the cost were larger, or the reality of failure worse, he also would have been less likely to make the game. If the potential reward had somehow been greater instead, he would have been more likely to do so.

Finally, this is where eternal orbs come into the mix. It’s my firm belief that eternal orbs have taken this equation and turned it upside down. For the sake of argument, let’s assume that Ethel has infinite of every currency orb. Ethel wants to make a perfect ES shield. After a lot of time spent eternal + regaling/exalting, Ethel has the exact shield that she wanted. This is obviously an extreme example, but the point is to illustrate that if cost is ignored, there is no risk involved when using eternals to craft. In this hypothetical context, Ethel knows, with 100% certainty, that she will succeed.

However, of course, cost is a variable that should be considered. When considering the very high cost of using eternals, I would modify my statement to say that there is no inherent risk involved in eternal + exalting. Rather, there is only outside risk from other variables, like the cost. Rather than knowing with 100% certainty that he WILL get his own ideal ES shield, he instead knows that he could, eventually, get it. As a consequence, inherent and theoretical risk is nonexistent, and de facto risk still has the potential to be very low (if you have lots of currency).

Remember what happened when we modified the risk associated with Chris’ decision to make PoE? When the risk increased, it decreased the chances that he would do it. Conversely, if we decrease the risk it will increase the chance that someone will do something. Eternals have eliminated the inherent risk associated with crafting in general, and so everyone’s desire to use eternals with enough certainty (or wealth) for success has skyrocketed! So much so that the entire economic system revolves around it:

When your new friend begins to play PoE, the first thing you advise him against is to use his currency on gear. Instead, they should save up to buy upgrades from other people: purchasing upgrades is almost ALWAYS cheaper than making your own. There are two reasons why this is so:

The first is that lower risk means a lower reward. If you go onto poe.xyz and search for upgrades, there is no risk of you losing much more currency than you expect to. You have the agency to choose whether or not to buy things. However, this is also (usually) at the cost of some reward: it is unlikely that you will find the exact item that you’re looking for, and even if you do it will be highly priced. This is an organic and great reason why it is safer to use poe.xyz.

The second, however, is the extremely high risk involved in crafting your own items and the disproportionately low rewards associated with them. Compounded with the fact that every rational player would like to eventually use eternals because of their nonexistent inherent risk, the risk of spending extra currency crafting your own less-than-perfect items is never worth taking. Despite the state of eternals, only a very small portion of the player population will ever get to use them with any modicum of certainty.

Eternals effectively make the distribution of wealth less equitable; the rate at which the rich profits is exponentially higher than the rate at which the poor profits. The understandably high cost of eternals forces poorer players to trade for upgrades rather than crafting their own.

Though I believe eternal orbs to the main issue with the economy, mirrors also pose an interesting problem. Mirrors essentially allow one player, the owner of a “mirrorable” item, to become a factory for that item. Once Ethel has created the ES shield she wanted, she can now supply this item to anyone who has the currency to buy it. This alone is troubling, since it seems as though the only factory for items should be, well, the game itself. Even when you craft, you’re essentially spending money to attempt to get a certain item to drop for you; the game engine/server has more control over the outcome of the item than you do (especially without eternals).

The main difference between Ethel’s ES shield factory and real factories is that there is no upkeep associated with the former. Real factories require an initial investment, but also require a lot of upkeep in terms of paying money, time, and effort. Once Ethel has finished her shield, she’s completely done. There is no chance that her shield will disappear and there is no cost (except negligible chromatics) associated with selling mirrored copies to others.

The transaction of capital implies that there is a give and take with the process. Each person involved in the transaction gives something away and receives something in return. This is absolutely not the case for mirroring items in PoE. One person gives currency and receives a really good item, the other person gives nothing and receives currency for it. In this context, it is not the risk that is eliminated, but the cost; if it had cost Chris absolutely nothing to attempt to make PoE, he would have been crazy not to. In effect, there is no reason why someone with a mirrorable item would not want to mirror it.

Mirrors also push the poor and the wealthy further from each other. Those without mirrorable items must spend time or currency to generate a net profit of currency. On the other hand, those with mirrorable items are able to stand idly by whilst raking in profits.

Before I bring up a list of suggestions, I’d like to highlight that 1.2 and 2.0 could very well solve a lot of these issues, but we really have no way of knowing with certainty. An in-game trading system would also give GGG a heightened ability to monitor the going-ons of the PoE economy. Supposedly six-linking items will be less risky in 1.2, which is certainly a step in the right direction. In any case, I’m sure GGG is aware of these issues.

Here are some things I would consider experimenting with, either on private, alpha, or live servers:

1. Please, for the love of god, get rid of eternal orbs. As stated earlier, they eliminate the inherent risk associated with crafting, and furthermore put the pleasure of efficiently crafting behind a massive paywall.

2. Reevaluate mirrors. Though the item is extremely rare and useful, there should still be enough risk or cost involved to make some players take a second glance at the prospect of mirroring mirrorable items. Some potential ideas could be:

-Making it possible for mirrors to reroll an item

-Having a limit on how many times an item can be mirrored

-Slowly decreasing the value of an item each time it gets mirrored

3. Decrease the risk of crafting in the absence of eternals. Some specific suggestions are:

-Creating a limit on what affixes an item can roll based on item level. For example, saying an item can roll affixes within x levels away from its item level, rather than any affix below its item level.

-Creating an affix limit might make crafting too easy, so I would suggest creating or modifying affixes so that they scale with something other than item level. In other words, creating affixes whose best tier is not always the highest tier. If this was implemented well, it would add a lot of much-needed choices and dynamism to the crafting system.

-Another way to decrease this risk is to create different bases for items that have gigantic affix pools, like spell daggers vs phys daggers, staves, and so forth.

4. Reevaluate the rate at which orbs (specifically alchemy/chaos/exalted) drop. In other words, experiment with increases of these rates. It’s unlikely that changes in these rates will directly affect people’s purchasing power, as markets usually bend to the shape of these changes. It will certainly be an initial sacrifice of the stability of currency exchange rates, but with the end goal of decreasing the risk of crafting. Apart from dealing with the absence of eternals, drop rates can and should be changed in order provide more stability after major game changes, such as the removal of labyrinth and maze from the map affix pool.

5. Lastly, consider hiring (or at least consulting with) an actual economist. An economist would be invaluable to predicting market changes and achieving/sustaining a healthy virtual economy.

All of these changes would directly decrease RMTing. The stabilization of the crafting system would decrease the market for flipping, and make it more difficult for RMTers to gain in-game wealth. The abolishment of eternals and reevaluation of mirrors will create a more equitable economy, and make people less likely to feel the need to buy from RMTers. I could go on, but I think you get the picture.