Understanding prices in PoE (ECONOMICS)

So I've read many people complaining about the trade system and the economy in PoE. I really like the economy in PoE because it actually represents very well a free market, and actually what in the game is -erroneously- denominated currency its real money -in the game ofc- since the medium of exchange has intrinsic value itself -not like the currency we use in real life nowadays-. In this post I wanted to talk about prices.

One of the things that bothers me the most is people saying that sellers or buyers try to scam because they don't ask for the real value of the item. People tend to confuse value with price. Here is a definition of prices:

"People exchange only if each party values what they receive more than what they give away. The price is the exchange ratio between the exchanged goods.

A market price refers to the special conditions of a concrete act of exchange (of two individuals, that exchanged definite quantities of two definite goods at a definite place and at a definite date). In the end, it is determined by value judgements of the individuals involved.

A market price is not derived from the general price structure or from the structure of the prices of a special class of commodities or services. What is called the price structure is an abstract notion derived from the many individual concrete prices. The market does not generate prices of land or motorcars in general. Things are valued based on their power to remove uneasiness."

So for example, I would be happy to pay 20 chaos for a 5L chest that I really really need. But maybe another person doesn't need it so much so he is only willing to pay 10 chaos for that same chest. The price is subjective, it reflects how much you are you willing to give up -the utility of the money you are giving away- in relation to the item you want to receive. The 5L chest doesn´t have a "real value". In the market that chest is worth what people are willing to give up in exchange for it, and that price can vary in every individual exchange, it could be 5, 10 or 100 chaos.

sorry for the long post :D

Difference is, people can print money in these economies, by using RMT and/or botting services, which exist. Therefore, prices get inflated across the board and its hard for average joes not printing their money to afford it, and their only recourse is to get lucky with RNG and find said items worth multiple exalts/chaos to trade.

This is why prices inflate so fast, and why its always hard for players to afford said items unless they play a ton or get lucky.

As I said in another thread, once people get to the point where they need these items, its a hard reality check to realize they will never afford them unless they find one of comparable value because they cannot compete with those using other means, aka "printing" their money, with RMT/bots. This inevitably makes others charge the same for theirs.

The main reason D2 was ever as popular as it was is because this gear gate was circumvented by millions of personal bots and dupes that made ALL the items accessible to everyone. Its a funny little tidbit people dont like to think about, that the only reason they enjoyed d2 was because they could actually afford rune words, because they were duped, and could afford high end items, because they were botted and duped, and therefore people enjoyed the game. They never really had to compete except at the beginning of lod and in classic when getting something like a Windforce would cost 1,000 bucks on Ebay. Eventually, even in ladders windforces would drop down to nothing in prices thanks to all the bots and dupes, and people loved the game.

The only thing you need to know about economies in this game is 2 things; you either powergamer it up and play a ton and get lucky and find these high end items, or you buy ala d2 style. Your average player will never own anything of note unless RNG gods deem him lucky.

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Destructodave wrote:

Difference is, people can print money in these economies, by using RMT and/or botting services, which exist. Therefore, prices get inflated across the board and its hard for average joes not printing their money to afford it, and their only recourse is to get lucky with RNG and find said items worth multiple exalts/chaos to trade.

This is funny because the same thing happens in real life. But inflation of prices is good! All the modern 'economists' tell us. No doubt surrounded by the swarms of young students eagerly waiting to defend their grandmasters.

Inb4 central bank of Wraeclast.

"

QueenTakesKnight wrote:

"

Destructodave wrote:

Difference is, people can print money in these economies, by using RMT and/or botting services, which exist. Therefore, prices get inflated across the board and its hard for average joes not printing their money to afford it, and their only recourse is to get lucky with RNG and find said items worth multiple exalts/chaos to trade.

This is funny because the same thing happens in real life. But inflation of prices is good! All the modern 'economists' tell us. No doubt surrounded by the swarms of young students eagerly waiting to defend their grandmasters.

Inb4 central bank of Wraeclast.

Yes! Inflation is GREat! That is why the world is doing so well!


:DDD

I love a thread about economics. A small level of inflation is good; not hyperinflation.

Luckily, PoE isn't experiencing hyperinflation so no need to worry about that.

But you're correct - price is definitely subjective…

But it's also negotiable. This is what I dislike about the trading system: when you give an offer for something, you're obviously going to try and give the lowest possible price that you think you can thus maximising your utility. Most of the time, sellers do not see this as a chance to haggle but as a take it or leave it offer. I'd like more people to realise that haggling is something we are supposed to do in PoE.

Thoughts?

"

Mivvi wrote:

I love a thread about economics. A small level of inflation is good; not hyperinflation.

Luckily, PoE isn't experiencing hyperinflation so no need to worry about that.

But you're correct - price is definitely subjective…

But it's also negotiable. This is what I dislike about the trading system: when you give an offer for something, you're obviously going to try and give the lowest possible price that you think you can thus maximising your utility. Most of the time, sellers do not see this as a chance to barter but as a take it or leave it offer. I'd like more people to realise that bartering is something we are supposed to do in PoE.

Thoughts?

Kaoms - 30 exalt.


patch.


Kaom's - 120 exalt

NO hyperinflation hey?

I could continue with the skyrocketing value of more items..while simultaneously having the price of exalted orbs go down.

"

Mivvi wrote:

Most of the time, sellers do not see this as a chance to barter but as a take it or leave it offer. I'd like more people to realise that bartering is something we are supposed to do in PoE.

Thoughts?

You keep using that word, I do not think it means what you think it means.

You mean haggle.

Haggling is the process of negotiating for prices.
Bartering is the process of trading goods purely and only for private use, not for use in future trades.

"

sempuken wrote:

Kaoms - 30 exalt.


patch.


Kaom's - 120 exalt

NO hyperinflation hey?

I could continue with the skyrocketing value of more items..while simultaneously having the price of exalted orbs go down.

That's not really hyperinflation… That's supply becoming more inelastic I'd argue.

Edited my previous post about bartering/haggling. I believe it was the correct use of barter but for clarity's sake I changed it. Cheers mate.

"

sempuken wrote:

"

Mivvi wrote:

I love a thread about economics. A small level of inflation is good; not hyperinflation.

Luckily, PoE isn't experiencing hyperinflation so no need to worry about that.

But you're correct - price is definitely subjective…

But it's also negotiable. This is what I dislike about the trading system: when you give an offer for something, you're obviously going to try and give the lowest possible price that you think you can thus maximising your utility. Most of the time, sellers do not see this as a chance to barter but as a take it or leave it offer. I'd like more people to realise that bartering is something we are supposed to do in PoE.

Thoughts?

Kaoms - 30 exalt.


patch.


Kaom's - 120 exalt

NO hyperinflation hey?

I could continue with the skyrocketing value of more items..while simultaneously having the price of exalted orbs go down.

That's not hyperinflation. Say, if it were that post-patch everything worth 1 chaos is now worth an exalt due to a horrendous amount of exalts having dropped, along with a load of mirrors, divines, chaos etc, then it would be hyperinflation. The price of Kaom's is supply and demand.

"

Mivvi wrote:

I love a thread about economics. A small level of inflation is good; not hyperinflation.

Luckily, PoE isn't experiencing hyperinflation so no need to worry about that.

But you're correct - price is definitely subjective…

But it's also negotiable. This is what I dislike about the trading system: when you give an offer for something, you're obviously going to try and give the lowest possible price that you think you can thus maximising your utility. Most of the time, sellers do not see this as a chance to haggle but as a take it or leave it offer. I'd like more people to realise that haggling is something we are supposed to do in PoE.

Thoughts?

There's no reason to ever haggle with someone though, since there are literally thousands of other people trying to buy/sell the same thing and it's easier to keep fishing for a "good" deal. "Good" in this case meaning I get the better end of the deal and the other guy is none the wiser.