Why does GGG hate auction houses?

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Fluffy_Puppies wrote:

Thanks for posting that Scrotie quote btw. I must have missed it. It gives me something to think about. I was only thinking from the supply side and how the supply curve would shift right with more sellers, but didn't consider that the demand curve would also shift right.

I don't think that the demand for the best of the best gear will shift that much though. Anyone with the currency to buy a legacy unique or mirror gear rare are already participating in the market. Excluding 1 or 2 lucky folk who happened to have found a mirror.

The new entrants to the market will be low or middle wealth players and so they shouldn't have much of any effect on the top tier market.

Scrotie, if you read this please give me your thoughts on this.

While I agree demand doesn't shift a lot on the highest tiers by implementing easier trade, the demand shifts virtually zero; it's not like people with mirror-service items don't have them on the market already. Easier trade makes these more visible to more people, while supply remains essentially static. The mirror service fee goes up.

It's a mistake to assume new entrants would be mostly low or middle wealth. More like low/middle tradeskill and/or low/middle tolerance for the tedium of the old trade system (which does have a correlation with wealth now, but not necessarily under a new easier trade system). A lot of these players, especially those who farm hard, would have quite a bit of trade clout.

However, it's important to remember that currency can be converted into items directly in this game. Because of this, there is a cap on maximum prices for gear (this cap was noticeably absent in the D3 trainwreck). So even though there isn't good data on the exact values, people have some vague estimation of how likely a Chance orb is to make, say, Shavronne's Wrappings (and how likely a Fusing is to make it a 6L, etc), so if a seller ever priced it too high, players would figure they could craft it instead, and would try that instead of trading. Because of this, sellers won't price it that high (for very long); it won't sell, so they'll lower prices.

Therefore, when I say prices for some items will go up, what I mean is: the margin between current prices and typical cost-to-craft will close a little bit. It's not an unbounded thing, and in some cases (such as the unique which is the most value-efficient craft for Orb of Chance) the increase in price will be so trivial no one would notice.

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deathflower wrote:

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Sickness wrote:

*If I have a reasonable chance to find an upgrade for myself, then the thousands of other players also have a reasonable chance to find the same item and since people don't want exactly the same items said item will have a supply that exceeds demand making the price drop drastically.

Mind farming a 500 dps bow for me? It seem like I don't have a reasonable chance to find an upgrade for myself.

?

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ScrotieMcB wrote:

While I agree demand doesn't shift a lot on the highest tiers by implementing easier trade, the demand shifts virtually zero; it's not like people with mirror-service items don't have them on the market already. Easier trade makes these more visible to more people, while supply remains essentially static. The mirror service fee goes up.

I thought mirrored items are more like substitutes. They aren't the original items although they function like them. You are buying a copy of the item. Mirror make owning copy of top tier items affordable. You don't own any original and the original are probably not for sale. We don't have a market for highest tiers items but rather we have a market for their copies...

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deathflower wrote:

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Fluffy_Puppies wrote:

That isn't fully true, it is only half of the story. What you are talking about is efficient market hypothesis. Basically in an inefficient market a small number of people possessing superior information can make extra normal profits by using their informanal advantage to make good trades. Sure a normal player in PoE can happen upon a good deal and profit from that happenstance. But what that normal player isn't seeing is all the times this small group of extra deticated traders have swooped in on the good deal and then flip the item for at or above market value.

These are the players that are running scripts on poe.trade and automating PMs on these very forums to have the seller of the underpriced item come to them.

The more efficient a market is, the less infromational advantage is possible. A key component of an efficient market is transparency.

Basically an AH would change prices to more closely reflect their actual fair market value (supply and demand equilibirum). The more efficient a market the more closely prices match fair market value and update in price to reflect nee information.

In the real world organizations trading in the stock markets spend millions if not billions of dollars to develop algorithms that give their creators a mere fraction of a second advantage over their competitor's algorithms.

Maybe I should explain things in another way. Top tier items value are determined by participants Purchasing Power. Goods in such category are prohibitively hard to trade without a huge capital, a barrier to entry. The participants are the potential buyers and limited numbers of rich traders.

Such items would be difficult to flip or not profitable because of the fierce competition. There is little reason to believe if all participants offered their highest bid they are willing to pay, the highest bidder could resell that item right back to other participants at a higher value who would only pay at a lower value.

I would think Goods in this category is so rare it would be quite different from goods with a supply like the stock market. I would consider them more like a limited edition items. A single participant could vastly affect the selling value of the item. The prices doesn't need to be rational or make sense either.

A limited edition cosmetic item could be selling at maximum gold carrying capacity and maximum AH transaction value above selling value of every weapon and armor existing in the game if there are people who are willing to pay for it. Just to illustrate a point.

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Sickness wrote:

*If I have a reasonable chance to find an upgrade for myself, then the thousands of other players also have a reasonable chance to find the same item and since people don't want exactly the same items said item will have a supply that exceeds demand making the price drop drastically.

Mind farming a 500 dps bow for me? It seem like I don't have a reasonable chance to find an upgrade for myself.

The items being flipped at a high frequency are in the single and double digit ex range though. Nothing extremely rare or hard to find. These are the items you were originally saying could be found at a big discount from time to time wasn't it?

I don't believe anyone with a mirrored item is confused about the current value of their items. But there are plenty of beginners that stumble on a rare or unique worth a few ex who don't know it. These are the people offering a bargain and the people who programs that run through the poe.trade index are the ones grabbing up the majority of them.

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Fluffy_Puppies wrote:

The items being flipped at a high frequency are in the single and double digit ex range though. Nothing extremely rare or hard to find. These are the items you were originally saying could be found at a big discount from time to time wasn't it?

I don't believe anyone with a mirrored item is confused about the current value of their items. But there are plenty of beginners that stumble on a rare or unique worth a few ex who don't know it. These are the people offering a bargain and the people who programs that run through the poe.trade index are the ones grabbing up the majority of them.

Maybe I don't consider these single or double digit exalts range items or mirrored items as top tier items in term of value, probably only the original item of the mirrored would have such value.

These items are not for sale, we don't really have any sale figures to go by. These items could potentially go for a few hundred mirrors of kalandra, but we don't really know.

There is really is no discount if there is no sale when they are not for sale right..... Similarly even if there are more people who want them and their value increase double, triple, quadruple, if they are not for sale , they are still not for sale after the price increase...

In other word, those items are better termed as priceless... You catch my drift?

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deathflower wrote:

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Fluffy_Puppies wrote:

The items being flipped at a high frequency are in the single and double digit ex range though. Nothing extremely rare or hard to find. These are the items you were originally saying could be found at a big discount from time to time wasn't it?

I don't believe anyone with a mirrored item is confused about the current value of their items. But there are plenty of beginners that stumble on a rare or unique worth a few ex who don't know it. These are the people offering a bargain and the people who programs that run through the poe.trade index are the ones grabbing up the majority of them.

Maybe I don't consider these single or double digit exalts range items or mirrored items as top tier items in term of value, probably only the original item of the mirrored would have such value.

These items are not for sale, we don't really have any sale figures to go by. These items could potentially go for a few hundred mirrors of kalandra, but we don't really know.

There is really is no discount if there is no sale when they are not for sale right..... Similarly even if there are more people who want them and their value increase double, triple, quadruple, if they are not for sale , they are still not for sale after the price increase...

In other word, those items are better termed as priceless... You catch my drift?

I don't even understand what you are arguing at this point then. I originally responded to you about inefficent markets allowing there to be bargain deals. I then pointed out that the majority of bargain deals are picked up by a select few either using private indexers or programs that look at indexes.

I don't even know how this moved to orignal 6x tier 1 mod items. It isn't even relevant is it?

Regardless, I don't care about the theoretical value of such an item. It has no bearing on the merits or lack of merits of an in game AH.

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Fluffy_Puppies wrote:

I don't even understand what you are arguing at this point then. I originally responded to you about inefficent markets allowing there to be bargain deals. I then pointed out that the majority of bargain deals are picked up by a select few either using private indexers or programs that look at indexes.

I don't even know how this moved to orignal 6x tier 1 mod items. It isn't even relevant is it?

Regardless, I don't care about the theoretical value of such an item. It has no bearing on the merits or lack of merits of an in game AH.

Was I being confusing? I wasn't disagreeing with you. I was pointing out the items you mention are lower on the value hierarchy.

I think the key factor here is participation or lack of it. It is same reason why people can flip in the first place, people can't be buying and selling all items all the time. They bought an item when the highest potential buyer wasn't there and sell it to him in another time frame. People are gonna flip with or without a AH, there is just probably more competition making it harder. The way I see it though, I can't be there 24/7 trying to pick up bargain either way. Your average players probably got a bargain though luck( or if you rather call it being at the right place at the right time). In a way, increase competition probably decrease the chance of that occurring.

We basically already have AH, but it requires online players moving their hands. And that's the distinction.

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deathflower wrote:

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Fluffy_Puppies wrote:

I don't even understand what you are arguing at this point then. I originally responded to you about inefficent markets allowing there to be bargain deals. I then pointed out that the majority of bargain deals are picked up by a select few either using private indexers or programs that look at indexes.

I don't even know how this moved to orignal 6x tier 1 mod items. It isn't even relevant is it?

Regardless, I don't care about the theoretical value of such an item. It has no bearing on the merits or lack of merits of an in game AH.

Was I being confusing? I wasn't disagreeing with you. I was pointing out the items you mention are lower on the value hierarchy.

I think the key factor here is participation or lack of it. It is same reason why people can flip in the first place, people can't be buying and selling all items all the time. They bought an item when the highest potential buyer wasn't there and sell it to him in another time frame. People are gonna flip with or without a AH, there is just probably more competition making it harder. The way I see it though, I can't be there 24/7 trying to pick up bargain either way. Your average players probably got a bargain though luck( or if you rather call it being at the right place at the right time). In a way, increase competition probably decrease the chance of that occurring.

Ah I got you.

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Fluffy_Puppies wrote:

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deathflower wrote:

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Fluffy_Puppies wrote:

I don't even understand what you are arguing at this point then. I originally responded to you about inefficent markets allowing there to be bargain deals. I then pointed out that the majority of bargain deals are picked up by a select few either using private indexers or programs that look at indexes.

I don't even know how this moved to orignal 6x tier 1 mod items. It isn't even relevant is it?

Regardless, I don't care about the theoretical value of such an item. It has no bearing on the merits or lack of merits of an in game AH.

Was I being confusing? I wasn't disagreeing with you. I was pointing out the items you mention are lower on the value hierarchy.

I think the key factor here is participation or lack of it. It is same reason why people can flip in the first place, people can't be buying and selling all items all the time. They bought an item when the highest potential buyer wasn't there and sell it to him in another time frame. People are gonna flip with or without a AH, there is just probably more competition making it harder. The way I see it though, I can't be there 24/7 trying to pick up bargain either way. Your average players probably got a bargain though luck( or if you rather call it being at the right place at the right time). In a way, increase competition probably decrease the chance of that occurring.

Ah I got you.

Yeah, this is why I hate the argument "easier trade turns game into a flipper's paradise." That would be a lot like saying "if they made the US tax code a lot easier, that would really help out tax preparation services like H&R Block, Jackson Hewitt, etc." I mean, it would reduce their workload, but it would also greatly reduce demand for their service in the first place -- they might not even have a business left if things became too easy. In the same way, I don't feel it's right to say a super-easy trade system is great for flippers, because they cannot act as a middleman, connecting original farmer with end user, as easily if that power is put more directly into the hands of the people.

What a super-easy trade system would do is: people basically "flip" their self-farmed items themselves, and there isn't much room for dedicated flipping outside of maybe bots, because the margins are too low for it to be worthwhile for it to be worth a human's time.

However, somewhat ironically, I also disagree with the underlying premise behind the "easy trade is a boon for flippers" argument, which is the implication that flippers are bad. I think they're good. So as an inverse of an inverse type of thing, I'm also against super-easy trade. Heh.