How the Economy Actually Works

I've posted this before in replies to threads, but it keeps coming up so I'm giving it a thread of its own.

Let us stop at the top of the economy food chain. These folks are the no-lifers with the amazing stashes and the best gear on the server. But here's the thing about having the best gear on the server: you can't trade for an upgrade. It's literally impossible. So instead you must farm one (which would involve chaining very high-level maps) or you make it yourself. Both of these things require large amounts of currency. So when a one of these players does trade something away, what they want are Exalts, and they intend to use them in large quantities, because given their position they are essentially in self-found mode.

Let's say one of these players finds something to sell. The maximum logical price is a little less than the average cost to make it oneself with orbs; if it was the same, players would just make it themselves. The lowest logical price is a little more than the vendor would give, which is virtually nothing. In order to save time trying to find an interested buyer, items end up about halfway between these two extremes, at much less than the average crafting cost. Simply put, prices are set according to minimum hassle finding a buyer and getting more than vendor would offer, and otherwise simply getting as much as one can.

Immediately below the best-gear folks you have the people with almost the best gear on the server. There are two ways for them to upgrade: either those with the best gear will find an upgrade then try to sell their old gear, or they can farm/orb it themselves. This becomes a test of patience, as the best-gear population which feeds them upgrades themselves seldom find upgrades, and thus rarely hand-me-down their old gear... thus upgrades are rarely available, but cheaper than "crafting" when they are. So these players hybridize trading with the practice of making gear themselves.

Once you get a few tiers down, there is a steady feed of upgrades available to buyers. Because of this constant availability, hybridization disappears and trading for upgrades becomes the de facto best practice. Even if the person you're trading with doesn't consume Exalts, the person he's trading with (or the person he's trading with, and so on) does, so it's still the players at the very top setting the demand.

Now that we understand the situation, let's debunk two common myths:

Myth: Increasing droprate will make players craft more.
Truth: Only if they're stupid with their "money."

The price of hand-me-downs available on the market is not set by droprate, it's set by the seller, and will always be significantly less than the cost to make it from scratch, since the seller doesn't want to waste time finding a buyer nor risk vendoring it. If an upgrade for your character is available on the market, the only reason to make it yourself is that you enjoy paying more.

Myth: No one actually uses currency, except for maps.
Truth: No one you know, maybe. But some are using a ton of them.

Remember that those at the top of the economic food chain can't trade for upgrades, so the main thing their currency is good for is making the upgrades themselves and/or perpetuating very high-level maps. The reason certain orbs are in such high demand is that those are the orbs those players need to forge their upgrades.

You're right. I just want to buy a good 6 link but people are only linking trash, I will have to make one from scratch again.

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ScrotieMcB wrote:

I've posted this before in replies to threads, but it keeps coming up so I'm giving it a thread of its own.

Let us stop at the top of the economy food chain. These folks are the no-lifers with the amazing stashes and the best gear on the server. But here's the thing about having the best gear on the server: you can't trade for an upgrade. It's literally impossible. So instead you must farm one (which would involve chaining very high-level maps) or you make it yourself. Both of these things require large amounts of currency. So when a one of these players does trade something away, what they want are Exalts, and they intend to use them in large quantities, because given their position they are essentially in self-found mode.

Let's say one of these players finds something to sell. The maximum logical price is a little less than the average cost to make it oneself with orbs; if it was the same, players would just make it themselves. The lowest logical price is a little more than the vendor would give, which is virtually nothing. In order to save time trying to find an interested buyer, items end up about halfway between these two extremes, at much less than the average crafting cost. Simply put, prices are set according to minimum hassle finding a buyer and getting more than vendor would offer, and that's pretty much it.

Immediately below the best-gear folks you have the people with almost the best gear on the server. There are two ways for them to upgrade: either those with the best gear will find an upgrade then try to sell their old gear, or they can farm/orb it themselves. This becomes a test of patience, as the best-gear population which feeds them upgrades themselves seldom find upgrades, and thus rarely hand-me-down their old gear... thus upgrades are rarely available, but cheaper than "crafting" when they are. So these players hybridize trading with the practice of making gear themselves.

Once you get a few tiers down, there is a steady feed of upgrades available to buyers. Because of this constant availability, hybridization disappears and trading for upgrades becomes the de facto best practice.

Now that we understand the situation, let's debunk two common myths:

Myth: Increasing droprate will make players craft more.
Truth: Only if they're stupid with their "money."

The price of hand-me-downs available on the market is not set by droprate, it's set by the seller, and will always be significantly less than the cost to make it from scratch, since the seller doesn't want to waste time finding a buyer nor risk vendoring it. If an upgrade for your character is available on the market, the only reason to make it yourself is that you enjoy paying more.

Myth: No one actually uses currency, except for maps.
Truth: No one you know, maybe. But some are using a ton of them.

Remember that those at the top of the economic food chain can't trade for upgrades, so the main thing their currency is good for is making the upgrades themselves and/or perpetuating very high-level maps. The reason certain orbs are in such high demand is that those are the orbs those players need to forge their upgrades.

I can see what you're saying, but I'm having a hard time figuring out what your point is. Does this prove or disprove something? Does this show us something new? I don't get this thread.

The two myths are very widely believed, and I'm sick of seeing them.

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ScrotieMcB wrote:

The two myths are very widely believed, and I'm sick of seeing them.

Weird, I've never seen anyone try to argue either of those points on forums or in chat. Can you direct me to an example?

As a side-note, the economy is awful in this game and it always will be unless GGG makes two changes they will never make, which is why we should have a no-trade league option.

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emtwo wrote:

"

ScrotieMcB wrote:

The two myths are very widely believed, and I'm sick of seeing them.

Weird, I've never seen anyone try to argue either of those points on forums or in chat. Can you direct me to an example?

As a side-note, the economy is awful in this game and it always will be unless GGG makes two changes they will never make, which is why we should have a no-trade league option.

What two changes are those?

"

emtwo wrote:

"

ScrotieMcB wrote:

The two myths are very widely believed, and I'm sick of seeing them.

Weird, I've never seen anyone try to argue either of those points on forums or in chat. Can you direct me to an example?

http://www.pathofexile.com/forum/view-thread/457270/page/6
http://www.pathofexile.com/forum/view-thread/456411/page/2 (novalight)
http://www.pathofexile.com/forum/view-thread/458441

Probably could find more; lazy.

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TX_AG_08 wrote:

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emtwo wrote:

"

ScrotieMcB wrote:

The two myths are very widely believed, and I'm sick of seeing them.

Weird, I've never seen anyone try to argue either of those points on forums or in chat. Can you direct me to an example?

As a side-note, the economy is awful in this game and it always will be unless GGG makes two changes they will never make, which is why we should have a no-trade league option.

What two changes are those?

The problems of the PoE economy are actually very similar to the problems of the US economy. Without getting into too much detail, essentially those that are ahead of the economic curve increase their lead exponentially while those behind the curve fall further and further back through no lack of effort or playtime. Fixing this would require A) allowing equal access to resources (making all orb types purchasable from vendors) so that the top economic tier cannot simply control the "means of production," and B) limiting the concentration of wealth into few hands (best achieved through some form of taxation) so that those at the top can't abuse the market advantage and cause hyper-inflation.

Of course, neither of these changes will ever be made for the same reasons that keep us from accomplishing them in real life. The richest amongst us tend to have the most interest in currency and make the most noise, and the rest of us are too dense to grasp that what is in everyone else's best interest is in our own best interest as well.

Bring on the socialism name-calling!

@emtwo

There already is a form of taxation for the highest-level players; it's called high-level maps. Given how hard it is to chain them, it's borderline ridiculous for you to advocate taxing them further.

If there is a vendor recipe for a bottom player, there is a vendor recipe for a top player. For some reason you're imagining only low-level players exploiting this formula as a means to catch up, when the real result would likely be the top players exploiting the same formula even harder to further solidify their lead.

Even if we accept your communist socialist goals, your solutions are either already in effect or would utterly fail to accomplish their objective.