Dr. McB explains the economy in Path of Exile

There isn't an economy in PoE. The economy occurs outside the game.

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Arrowneous wrote:

Sigh! Is the state of the art today in arpg's such that we must do a ton of math (new mana leech mechanics for example) or have taken a statistics course in college just to play this game? Why is all this over thinking required to play PoE anyway?

Have you ever even played Pokémon? Even in the first-gen iterations for the original Gameboy, (chugging along on an ancient, cheap Z80-knockoff CPU that hasn't been state-of-the-art since the 1970s) it was still complex enough to necessitate a LOT of math and calculations to find the ideal

Modern RPGs are no different here. Yes, players can opt to just ignore all the math... But understanding a game's function allows one to better play it.

Moreover, in the case of this thread, it's meant to address a DIFFERENT issue: economics. It's been well-observed for YEARS now (at least since the first MMO, Ultima Online, got popular some 16-17 years ago) that in any situation here, a "virtual" economy will appear and function in all the same rules as a REAL economy.

It makes no difference that what they're trading is just "pixels on a screen" rather than real-world agglomerations of atoms of gold, or that some things are otherwise different; introduce human activity, and that itself is what generates an economy.

And this all puts it into a VERY complex field. In essence, we're not studying the game ITSELF, but rather... Human behavior.

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Arrowneous wrote:

All GGG really needs to do is come up with a statistical graph for time/rewards for the 99% of PoE players (or the majority whatever that % is) and then tweak PoE as best possible to hit the center of that bell curve. I have no clue how to gather that kind of info.

Actually, this is a major reason why RPGs tend to be so math-heavy, at least the online, multiplayer ones.

In one word, "Balance."

Balancing a game to control for such a WIDE range of options, (>100 active skills, some >70 passive gems, a passive tree with ~1,300 nodes) gets very difficult: each extra option adds another "dimension," exponentially increasing the total possible range you have to balance for. In terms of choice and variability, Path of Exile MAY be the most complicated RPG ever made.

There's a thread that GGG put somewhere (sadly not in the Development Manifesto) that REALLY illustrates this: they discussed the evolution of how the game handled statistical scaling in the game; they started at just hand-editing values, then a more complicated formula in a spreadsheet, and eventually got to a MASSIVELY complex program that adjusts for far-reaching and remote effects of even the SLIGHTEST balancing change.

They've recognized that as the game grows more complex, their tools to try and balance it have to grow as well.

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Arrowneous wrote:

So no amount of statistical analysis of the PoE economy will ever change the plain cold hard fact that trade chat sucks for most players and that some kind of the much talked about (but to date mythical) Public Trade Stash system is needed to make trading a much less "pain in the arse" (even if your ass is cleaner than the innkeepers rooms. Who else remembers back to the elvin arses. ☺)

It's been a while since I touched BG.

But yeah, one major thing that would be aided (the speed of the "catch-up effect") would be helped by, simply put, allowing trades to be made easier and with less effort. In any economy, the speed and effort required to perform transactions has always been one of the major parameters that controls the overall function of it, and can yield other effects outside of just "the tic rate" that changes occur in.

Case-in-point: if GGG decided, say, to introduce an "exchange" for currency orbs, (akin to the stock market, or for some real-world gaming examples, the "Grand Exchange" in Runescape, or Steam's "Steam marketplace") the increased speed of transactions WOULD have a major effect in allowing orb prices to adjust and shift more smoothly... But it would ALSO put all scam-artists (and most flippers in general) out of business, as their vector to profit comes ENTIRELY from exploiting the difficulty of transactions.

Regarding Mirrors:

I made a thread in Feedback regarding mirrors after making thus thread. Although building upon the ideas in the OP, it has some editorializing in it, so I didn't feel it belonged here; ultimately I defend the existence of Mirrors in the post.

That said, in terms of facts and mechanics, I do not much disagree with Azdrubel's excellent post (which demonstrates he's roughly as good at explaining the economy as I am). We agree that mirrored (not mirrorable) items are the loophole to the otherwise impervious Thrift Shop Rule, and the crafting of mirrorable items, unlike all other crafting, develops affects of a for-profit business. I agree that these crafters depend heavily on the vacuum flow of currency to the right and thus on the farming efforts of hundreds if not thousands of players.

What I disagree on is that this relationship is exploitative.

Path of Exile characters do not require sustenance. Unlike IRL capitalism, your character doesn't need food, water, shelter, phone, utilities, or transportation. If maps are not sustainable they might need those (and you won't see me arguing for any more than 2 chaos average per high-map to maintain sustainment), but generally characters do not have upkeep whatsoever. As a result, PoE players never are forced to trade for what they need, but instead for what they desire. This ensures that all trades which are mutually agreed upon can assume to be either 1. mutually beneficial or 2. the fault of the "loser." Simply put, if you feel exploited, don't click the Confirm button and you'll be okay.

Instead, the entire construct described in the OP is one of willing participants under no duress. Admittedly, sometimes this choice does feel rather binary, reduced to "participate or not," but it is there, and once you get to The Hump and the margins of trading begin to narrow, it's not that great of a use of your time, anyway. (SFL advocates cherrypick points to say "trade is OP" instead of considering the entire curve.)

I feel the main thing which is going on is self-exploitation. In a capitalistic economy it makes sense for labor to organize, to coordinate their collective efforts to ensure they get the best deal possible with capital. It doesn't require any special mechanics or GGGovernment intervention, just community effort and negotiation skills. And, more importantly than anything else, the willingness to strike. If you feel the culture of trading has resulted in an unfair flow of currency towards capital, stop willingly contributing to that flow. If you think one mirror-service guy is unethical and another one is okay, boycott the unethical one. Not because it's the white knight thing to do, but because changing the norms of trading will, if successful, improve your stash in the long run.

Really, there is only one mechanic I feel should change: the name-and-shame rule on the forums. But in typical PoE style, you can always third-party to fix gaps. There are PoE fan forums out there where such discussion is allowed. And if those don't do it for you, make your own.

Regarding improved trade systems/UI:

As I explained in the OP, the trade system is most beneficial as a catch-up mechanic to brand new players entering an established economy, and loses much of its effectiveness once one catches up to the average player.

As such, PoE's reliance on third-party tools squanders much of the potential wonder of the economy. Having new players able to jump in and immediately become viable economic participants is a huge deal, because by the time they find poe.trade, etc a good deal of the awesome has already been missed.

So yes, it indeed would be nice if we had some tools which "don't require a college course." I'm for asynchronous trading.

I would be skeptical that a bell shaped curve applies to PoE, more like a fast decreasing curve with most players trying the game and giving up before even completing the first difficulty level, someone coined the pareto distribution, I would agree more to that than a bell shaped distribution. It is the same with real life, there are a lot more poor people than rich one with a barely existent middle class. I think it is flawed to assume PoE's economy is any different and that the "middle class" is the dominant one with the "poor" and the "rich" acting as tails...I have no idea how one could anyone assume this? any real GGG data ? I would really be surprised...you should do more reading about wealth distribution in economics than assume that a Mexican hat fits all problems :).

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ACGIFT wrote:

I would actually disagree with this on a major ground: while, yes, because total wealth progresses, as a general rule, with increasing time spent, (suggesting an exponentially-shrinking Paretto distribution) so does the probability of partaking in trade. A simple observation is that one with no wealth (to either buy or sell) does not partake in the economy. As a (tautological) note, those not trading... Are not part of the economic distribution.

Rather, I would suggest that the distribution is still follow a Gaussian "bell curve," albeit a "positively skewed" one. In many political, social, and economic measurements where :

- There is a defined zero-value, (e.g, it is impossible to have NEGATIVE wealth here, only POSITIVE)

- But no PRACTICAL defined maximum (94,371,840 mirrors may as well be "infinity" for most purposes)

The result very often will follow such a "positive skew" with a longer "tail" heading towards higher numbers. However, the result still largely follows the same shape, just skewed.

Hi ACGIFT,

you are right and I was not clear on that part. I meant, I agree with the way Scrotie formulated it in reply to the post that suggested a Paretto-like distribution, where he said basically the same as you pointed out.
I will reedit my post to correctly reflect this.
I blame my lack of english for it as I am not a native speaker... (damn, that excuse is too easy)

Apart from that, thanks, especially for the math. I am not confident enough to do that. I am frequently skipping my probability-based statitics course because it makes me fall asleep.

I cannot agree on your remark about mirrors though, I actually think they are too scarce. If your numbers of the probability of creating a 6t1 piece are in fact close to correct, it would be nearly impossible for players to ever possess a BiS item. I think one part why people glorify the later LoD era on the b.net so much is that it was actually possible to perfect your gear simply through farming and trading, because due to bots and hacks the market was flooded with high-end uniques and highrunes. You didn´t even need to bot yourself. If there were no mirrors in this game it would never be possible to create BiS items and most players would NEVER reach the point of actually perfecting their gear.

Now I have stated in another post that I think the majority of players is nearly unable to achieve perfect gear and I stand by that, but I think that problem is related to the scarcity of mirrors, because with a rising demand for mirrored copies (if mirrors were more common) the fees would likely go down and the overall goal of perfecting your characters gear would be more achievable, but this might be shortsighted and I am not adamant about it.


regards

edit/
@Scrotie:

I wanted to reedit my answer here roughly six minutes before the servers shut down. I tried really hard to reduce it to a reasonable length, but after several failed attempts I said "fuck that, I write the whole stuff in full length. Looks like Scrotie likes reading long cryptic economy stuff." So, Scroll down a little and there you have it, sry in advance...

It's been considerably more than six minutes. (At one point this made sense within context.)

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nait2k4 wrote:

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There is no need for such conspiracy theories because Occam's Razor tells us the bell curve is the most likely and best explanation.

Your post is a waste of time, ScrottileMcboggles. The people who need to read it won't, because they either don't forum, or they are a little on the dense side and the fact that there are paragraphs will scare them.

You understand this applies to virtually all online forums and social networks, yes?

On average, online communities consist of less than 10% of the total population of a gaming community.

great discussion.

so i fall in t3 category sad but true

Hi again guys,

Finally, after making a multitude of excuses (having to play The Awakening is no excuse! it is a simple fact of life, a law of nature and so on and so forth) it is here.
I adhere to the relationship between the VERY rich (the 0.1% so to say) and the majority (in relative terms! so we are speaking about at least 80% of the given population) being inherently exploitative.
Your answer though, as eloquently and intelligently as it was presented, gave me a fairly clear idea on WHY we actually disagree. Because in the way you presented it I cannot disagree. It is selfevident that if one felt exploited in a trade he/she would simply deny the transaction. Despite that, I still disagree.

It will come as no surprise that I am arguing from a neo-Marxist point of view and my argument for "exploitation" therefor roots in Marx´ theory of value. Now I am (thankfully) not going to reiterate that theory here because A) it would be much too long (Marx wrote a huge book on capital and considered it to be his "introduction") and B) it would be very difficult to completely apply Marx´ theory to a gaming economy - I am not quite sure someone has done that yet.

So I will try (edit: and fail epically!) to make it short:

The basis, the very foundation of PoEs economy is arranged in a way that makes exploitation inevitable when it comes to the creation and consumption of high-end currency. Exploitation is a systematic condition. It does not matter that from an agent-centered perspective everyone agrees on the trades and does not feel "exploited". They are nonetheless - without being aware of it, because it is systematic.

The root of this exploitation lies in a fact that you only briefly touched in your OP and I only mentioned in my previous post because I considered it to be obvious. It is the dualistic (some might say dialectical) nature of currency itself. Let me explain:

Although you are right when you say that PoE-characters require no real sustenance, one might argue that the required frequent upgrading of gear due to the increased pressure of reduced currency droprates due to lvl-disparity between characters and playable content IS a form of sustenance, but you don´t even need to go that far. I would argue that upgrading your character is a vital part of the game and I am quite sure that nearly every player on this very forum will agree with me. That means upgrading is not a question of choice, but a question of degree. Are you willing to trade for it? Are you willing to haggle and to barter? Are you willing to grind for gear? Or rather grind for currency? How do you want to upgrade? THAT is the question probably every player has to answer sooner or later, because NOT doing it means not playing the game. Upgrading is the games nature. Most players* do this by engaging in trade, because as your TSR** dictates: trading is the most beneficial way to upgrade IF the player has currency (see my former post: demand only counts as such if it is solvent demand). The TSR ALSO dictates, that the players get MORE for their currency if they give it away, than if they used it themselves. They clearly get what their currency is worth, otherwise currency would be worthless (omg, this gets out of hand) as a currency. Now this is the one side of currency, let´s call it the primary attribute = "to be medium of exchange". Completely logical I think.

Additionally we can use currency to GAMBLE (we like to call it crafting to rub our D... belly when we roll sth great; but in essence we gamble), let´s call it the secondary attribute = "to be means of production". To achieve a desirable outcome we have to gamble repeatedly. That already implies that in all likelihood we have to invest a sizeable amount of currency - only for ANY desirable result. For a specific result we have to invest a brobdingnagian amount - gigantic (nearly) beyond all counting. I repeat this from my earlier post just to make absolutely clear under which condition the secondary attribute of currency becomes predominantly interesting: under the one and only condition that you are rich. Very rich.***

This is THE ultimate point which I tried and appearantly failed to show in my former post. The appeal of the secondary attribute of currency increases exponentially with the amount of currency the person accumulating already has in possession. In essence the secondary attribute adds onto the value the currency already has due to its primary attribute. The TSR, YOUR Thrift Shop Rule, allows to identify a specific threshold for every type of currency at which it becomes expendable, in other words: at which the secondary attribute becomes dominant. This threshold increases proportional to the rarity and inversely proportional to the usability (= extent of secondary attribute) of the specific orb. Simple logic dictates that for this to work the majority of players must not cross that threshold ever, otherwise the TSR would be broken and no trade would take place.

This leads to a contradictory scenario, in which the extent of the primary attribute of certain orbs is not connected with the secondary attribute in any way. Instead, the primary attribute alone is the factor that determines the extent of the primary attribute. This is the case for Exalteds and Eternals (not Mirrors though, but for a different reason!).
Their threshold is so high, that the secondary attribute is in essence nonexistent. But that means it is not included in their trading value for the majority of players!

In terms of a simplified equation:

usually:

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A = R + B

where: A = extent of primary attribute, B = extent of secondary attribute, R = rarity

in case of Exalteds/Eternals:

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A = R

B becomes essentially the Marxist value, because although the majority of players will get their moneys worth out of a trade with Exalteds or Eternals, they give the secondary attribute on top for free and do not get paid for it.
As I pointed out in my earlier post the high-end crafters, the only ones who use Externals (nice name, isn´t it?), rely for their very existence on the majority of players to provide the amount of Ex/Et they need. They are the only ones who buy Ex/Et for their secondary attribute, but A) pay only the equivalent of their rarity and B) generate money by selling the products (= mirror rights) for a price equal to:

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Rarity + secondary attribute * amount of invested Ex/Et

They generate profit by exploiting the fact that the extent of the secondary attribute is never included in the market value of Ex/Et in the first place.

That is my reasoning for why in essence the very rich players exist in an exploitative relationship with the majority and why I cannot agree with you, Scrotie.


best regards



*I assume - but maybe I am wrong and the majority of players plays selffound. Does not matter though, because as stated in my other post, when talking about economy, SF-players don´t matter, sry guys.
**Bad-ass abbreviation for a bad-ass theorem! For further information check: McB, Scrotie 2015: Dr. McB explains the Economy in Path of Exile
***I am not talking about someone who "takes his chances" and throws a fuse at a 6sox chest but about someone who gambles with a certain goal. The former just plays a slotmachine, the latter actually gambles with a system.

By the same logic, I could say that once orbs reach their end user, they lose their value as a medium of exchange (and it is the deteriorating htility of orbs as mediums of exchange which prompts their use). But that would be flawed in the same way your idea is flawed - it is what we do with orbs that destroys one of these values. Trading an orb away prevents it from being a means of production for you; using an orb on an item destroys its value as a medium of exchange for you. This means the value of an orb for anyone, at the end of the day, is R or B, never a sum of both. The idiom of my language is: you can't have your cake and eat it too.

What's really going on here is relative values being reduced to binary choices by a min-maxing paradigm. The Thrift Shop Rule doesn't say orbs have no crafting value if you can trade for the item... just that it is less value than trading, every time, so there is a clear right and wrong answer as well as a strong tendency. A = max(R,B)