Curse

Reverend Dr · Dec 31, 2009, 02:36 AM // 02:36

The price of ectos is based on the trader price.

Unfortunately the trader price doesn't really express what would otherwise be the free market price of ectos would be as there is no 'free market' to trade (trade channel hardly reaches enough people, and offsite auctions the same).

Create an artificial increase in price of trader in a short period, especially when there is expectations of a price increase, and that increase will stay. It will only decrease if people start selling to trader and with speculation as is, it is far more prudent to hold onto ecto. It really is a terrible system. Notice how Zkeys, which have no system of sorts, stay at a much more even level.

HawkofStorms · Dec 31, 2009, 04:14 AM // 04:14

There was also a theory floating around on guru that I'm starting to like. A lot of hackers convert gold into ecto so it can be quickly traded and laundered after stealing an account. So the rise in ecto prices might also have something to do with the increased number of hacked accounts in recent weeks (as well as farming being reduced and speculators of course).

Martin Alvito · Dec 31, 2009, 05:39 AM // 05:39

Quote:

Originally Posted by Reverend Dr

Create an artificial increase in price of trader in a short period, especially when there is expectations of a price increase, and that increase will stay. It will only decrease if people start selling to trader and with speculation as is, it is far more prudent to hold onto ecto. It really is a terrible system. Notice how Zkeys, which have no system of sorts, stay at a much more even level.

Yes, the trader tends to make changes stick. It's a two-edged sword, though. The trader also sends very clear signals as to when the price of a commodity is rising or falling. This precipitates and prolongs both booms and panics. When the price is rising at the trader, sellers dry up; when the price falls at the trader the market floods with sellers, perpetuating the shift.

optymind · Dec 31, 2009, 06:08 PM // 18:08

If Item X sells for 100e and e=4k, then it is 400k.
If ectos go down to 2k, then sellers expect 200e.
If ectos then go up after Item X is selling for 200e to 8k, sellers expect 200e, and then it is worth 1600k.

Barrage · Dec 31, 2009, 06:14 PM // 18:14

My only concern is armbrace price, the ectos sky-rocketed and their prices barely moved.

Jinkies · Dec 31, 2009, 06:27 PM // 18:27

Like I said, the price of Ectos is going up due to inflation.

Nobody buys armbrace for Platinum so their prices arent afected in terms of platinum.

If it were just the case of everyone hoarding their things because of the SF nerf, then armbrace would increase in price as well since DoA runs are based off of SF tankers.

Reverend Dr · Dec 31, 2009, 08:11 PM // 20:11

Quote:

Originally Posted by Martin Alvito

The trader also sends very clear signals as to when the price of a commodity is rising or falling.

No it doesn't. That's why its such a terrible system. It is affected only by buying and selling of ectos from the trader, it is a system that is easily affected by both rampant speculation and deliberate manipulation.

The Mountain · Dec 31, 2009, 09:19 PM // 21:19

The ecto prices, by definition, are up because people have bought more ecto from the trader.

The average player, even in high-end PvE alliances, actually believes the SF nerf will drastically affect the influx of ectos (causing price increase). They plan for this by their hoarding and even buying of ecto (from trader) to maximize their profits when the nerf bat is swung.

However, those of us who've been around for awhile remember what ecto prices were like before any SCs, before even Ursan.....omg, they were 4.9-5.5k.

When the drama ends and the dust settles from the nerf, ecto prices will fall back down to this level because the SCers (if they don't create other forms of SCs) will go to farming ecto in more traditional manners, which in my experience ALWAYS resulted in more ecto for me.

Ensign · Jan 01, 2010, 09:36 AM // 09:36

It's important to distinguish inflation from exchange rate fluctuations.

You should only see significant long-run exchange rate changes between the major currencies when there are significant shifts in the composition of the economy; the game is old enough now that there are huge buffers of all the major currency items, which makes prices a lot harder to move in the long run.

A new equilibrium was hit when RR was removed with hero battles; a lot of what you're seeing now is (likely over) hedging for a supply shock on ecto with the next balance update. There's usually a lot of short-run noise in the exchange rates around the seasonal events, when holiday items become a big part of the economy for a few days.

Spiritz · Jan 01, 2010, 03:45 PM // 15:45

I would say ecto prices rise because of the changes to uw - uw was made a bit harder due to skeletons and finally the adding of dhumm.
SC`s were almost wiped out of existance and now take a lot longer ( god i recall days before the SC existance and we all coped then ) and i also noticed more ppl were farming fow than ever.
If theres less ectos comming out of uw then yes prices will rise - x number of SC`s with 8 players getting even 2 ectos each totals a lot per hr considering the amount of ppl doing it and now that amount has dropped bigtime.

Martin Alvito · Jan 01, 2010, 03:58 PM // 15:58

Quote:

Originally Posted by Reverend Dr

No it doesn't. That's why its such a terrible system. It is affected only by buying and selling of ectos from the trader, it is a system that is easily affected by both rampant speculation and deliberate manipulation.

People have tried to deliberately manipulate prices, and they have failed at it.

You're fighting all the money in Guild Wars when you try to move the price in either direction. Push the price high enough, and people will simply sell to the trader to avoid the time price of reselling ecto on the open market. Push it low enough, and people start buying for less than they would pay on the open market. The only time that doesn't hold true is when there's a broad shift in players' expectations.

The trader does two things. It makes it more difficult to knock the system out of equilibrium, and prolongs rare periods of disequilibrium through its signaling function. Players get clear "this time the price shift is for real" signals from the trader and react accordingly. You're correct that the trader aggravates speculative bubbles. You're wrong to suggest that it makes price manipulation possible.

QueenofDeath · Jan 01, 2010, 04:08 PM // 16:08

I don't think the problem is with ecto prices as it is with a cap on the amount of gold/plat you can store. I HAVE to buy SOMETHING so I can gain more gold as I have reached my cap on all my characters and storage for gold/plat. If I don't buy ectos I HAVE to buy something else.

But, in that I do HAVE to buy something else (outside of buying another character slot or another chapter which I ain't) I'd rather buy Zashien keys as they have interior value as well as exterior value. Namely I can use them anytime I want to try and get a rare or nice item. I know I can invest ectos in items, but, 1600e say for a Ded Zhed is pretty stupid when I could use them for 1600 chances of getting a bunch of rares out of the Zashien chest.

I also can farm Zashien keys a lot easier and in a lot more places than ectos. So, I get to go all over the place instead of being resigned to one or two areas to farm ectos. I literally maxed out on gold/plat by doing Zashien PVP and at least it wasn't redundant stupid PVE same ole mobs combat. Sad thing is others have found out about how easy Zashien key farming is now and it takes a lot longer to get into a PVP match that gives the most experience for them. Especially when Kurzicks were kicking balls in Fort Aspenwood.

)

The other issue is the game doesn't burp out enough NEW content that is RARE that might help get rid of a lot of the ecto in peoples hands. Pretty pictures just don't make me want to cough up my ecto. A +20^50 new insignia or weapon type would. (For PVE only of course). I'm sick to death of +15^50 cap on damage items. No amount of color or contour in a new weapon is going to make me buy it unless it has MORE POWER.

Personally I think INSIGNIA's ruined the game AND the economy. Getting a PERFECT weapon that LOOKED kewl with +15^50 used to be hard and uncommon and even rare. Now you can get them a dime a dozen. If Insignia's never made it into the game GREEN items would have been more valueable. They just totally went over the top when they added insignia's.

So it really doesn't matter about ectos anymore the economy is so screwed the population dwindles and decreases and that's a big difference from the real world as well since population continues to GROW and there's no quitting and playing a new life in the real world like you can in mmo's or mmorpg's.

Someone needs to make a online persistant world with decaying and even breakage of items and have no monthly fee. I'd go play that. DAOC has that, but, it cost $15 a month to play it and is too group oriented. Too damn many group oriented ones online as well.

Emperor Bush · Jan 01, 2010, 09:03 PM // 21:03

I love a good ole' discussion applying real world economics to guild wars. It's a topic I think about in my nerd head often.

When we were all assuming (naively, I might add), that SF was being nerfed in November, I liquidated EVERYTHING into ectos. Every valuable item I had in storage, every piece of gold I had on any character on both my accounts...hell...I cleared out my materials storage of almost everything, so that I could get as many ectos as possible. So now I'm sitting on over 300 ectos. (yes, I am aware of how poor I am in comparison to some, but I feel rich). My thinking was, for every 1K increase in ecto prices, I am now making $300K.

But then I started thinking about the elasticity of ectos. Why do people buy ectos? Only a very small percentage of buyers buy them to exchange for armor. Most people buy them to store money, and a smaller number of people (like myself) buy them on mere speculation.

This got me worried that if ecto prices jump, people will stop using them to store money, and that the price would quickly crash. I'm very seriously contemplating dumping my hoarded ectos soon, because damnit, I can't figure out what the value is. 13/100 is now upon us. Perhaps when they hit 12/100 I will pull the trigger.

"but one thing ure correct about is even tho ecto prices have increased...people still ask the same ammount of ecto's for items when ecto's were 4.5k"

I love this. People assume the price of an item is related to ectos, without any recognition of the change in ecto prices. Amazing how things like Heavy Equipment packs and Ambraces sell for the same amount of ectos, regardless of ecto prices.

My thought on inflation is 4 fold:

1. The economy still hasn't recovered from Red Resign Day.
2. Zaishen Quests put a ton of more money in the economy.
3. Runners for EOTN Dungeons are constantly improving, giving tons of money out to players who just stand there, collecting gold drops and collecting gold rewards for the quests.
4. Wintersday Event + Players being on vaction in real life cause alot of additional playing, questing, and farming, putting even more money into the economy.

dr love · Jan 01, 2010, 11:22 PM // 23:22

Quote:

Originally Posted by Emperor Bush

Why do people buy ectos?

because if you want to buy something, you'll be paying in ectos.

unless you enjoy a non favourable exchange rate on your zkeys, lockpicks or whatever else.

own age myname · Jan 01, 2010, 11:58 PM // 23:58

Quote:

Originally Posted by The Mountain

The ecto prices, by definition, are up because people have bought more ecto from the trader.

The average player, even in high-end PvE alliances, actually believes the SF nerf will drastically affect the influx of ectos (causing price increase). They plan for this by their hoarding and even buying of ecto (from trader) to maximize their profits when the nerf bat is swung.

However, those of us who've been around for awhile remember what ecto prices were like before any SCs, before even Ursan.....omg, they were 4.9-5.5k.

When the drama ends and the dust settles from the nerf, ecto prices will fall back down to this level because the SCers (if they don't create other forms of SCs) will go to farming ecto in more traditional manners, which in my experience ALWAYS resulted in more ecto for me.

This person speaks the truth. People are overreacting.

Reverend Dr · Jan 02, 2010, 05:06 AM // 05:06

Quote:

Originally Posted by Martin Alvito

Players get clear "this time the price shift is for real" signals from the trader and react accordingly. You're correct that the trader aggravates speculative bubbles. You're wrong to suggest that it makes price manipulation possible.

Counter example Zkeys. Even during the height of RR when tons of Zkeys were flooding the market the price never really dipped below 4K and now they are around 5K. There is no trader for Zkeys, yet somehow even when events that greatly influence the production of Zkeys changes, the Zkey prices do not change much. When there is talk of something that one day might affect ectos, things change overnight. Its the trader that determines the ecto shift, not the players, not the market. You would be a fool to suggest that the value that the trader arrives at is the same as what a player driven market would derive.

Ensign · Jan 02, 2010, 07:30 AM // 07:30

Quote:

Originally Posted by Reverend Dr

Counter example Zkeys. Even during the height of RR when tons of Zkeys were flooding the market the price never really dipped below 4K and now they are around 5K. There is no trader for Zkeys, yet somehow even when events that greatly influence the production of Zkeys changes, the Zkey prices do not change much.

There are a couple things going on here to keep in mind.

One is that a significant portion of the value of Zkeys is their currency role; I don't have a good feeling for how much that is, or even how you would even go about measuring it; but it's an essential fact that Zkeys are treated as a quasi-liquid store of value. Unlike non-currency items, which are liquidated if they aren't going to be used, people are generally perfectly happy to hold onto relatively large numbers of Zkeys. Hence you're really looking at an exchange rate fluctuation, not a change in commodity prices.

Second, unlike in the real world there isn't any good information on the quantity or velocity of any of the major currencies in GW. So when making exchanges people are really working on a very limited set of information; the supply and demand balance of the small fraction of currency up for exchange at a given time. Since we're talking about a currency here that people use to store value, there isn't a 1:1 correspondence with the increase in inventories and the amount on the exchange market; inventories and in-currency transactions increase a lot faster than exchanges.

Zkeys also behave a bit strangely in that the market for them is pretty throttled - meaning that demand becomes very inelastic far away from the established equilibrium price. I.E., if the equilibrium price is 5k, you can sell reasonably fast at 4.5k, but decreasing further to 4k doesn't give you a similarly sized increase in volume; you essentially saturate the market for people looking to make the exchange. Since the exchange volume is also very low typically, this makes prices move slowly.

In short - since we're talking about a currency spike with low information and a small exchange market, it's not surprising that exchange rates would drift slowly even in the presence of a significant quantity spike.

Quote:

Originally Posted by Reverend Dr

When there is talk of something that one day might affect ectos, things change overnight. Its the trader that determines the ecto shift, not the players, not the market. You would be a fool to suggest that the value that the trader arrives at is the same as what a player driven market would derive.

The value the trader arrives at is indicative of what the player market would derive - but the reasoning is a bit complicated. It's fast in contrast to the way the Zkey market is slow. Consider how the trader works. Its buy and sell prices are significantly below and above the established exchange rate, respectively. As such it's relatively insensitive to small changes in pricing expectations. The trader's main function is that it allows for very large volumes of currency to be exchanged when there's a shock in the expected exchange rate. Contrast this with Zkeys, where there is no such outlet for volume transactions.

Let's say that I expect Zkeys to appreciate significantly from a base price of 4k. I can probably suck up every Zkey that appears for sale at 4.5k as fast as they hit the market; a higher price isn't going to significantly affect how fast I can buy Zkeys - the only real threat is a huge enough shift that bidding wars break out, and even then it's usually rational to split the sales or take advantage of the friction in the system by jumping districts instead of starting said bidding war. So generally there's going to be a pretty tight funnel on just how many keys I can move that isn't super price sensitive.

The trader changes that, because for a significant enough price differential the volumes that can be exchanged can get huge. I'm not limited by how fast I can find people to sell me ecto at a marginally higher price; once my price expectations hit a threshold I can suck down huge quantities of ecto from the trader - and the trader also records this transaction so that everyone can see it. So what the trader's price is really a leading indicator. It shows significant price pressure on the top or bottom of the market, and people will see the trader's price shift as an indication that something real is happening. Zkeys, conversely, don't have any leading indicators like this, nor any potential for a huge spike in demand; everything has to move the old fashioned way.

In short, the trader gives the gold/ecto exchange rate a lot more information and much higher transaction rates on the margin than the gold/zkey market, which translates directly into how fast prices can adjust.

Martin Alvito · Jan 02, 2010, 08:44 AM // 08:44

Quote:

Originally Posted by Ensign

The value the trader arrives at is indicative of what the player market would derive - but the reasoning is a bit complicated. It's fast in contrast to the way the Zkey market is slow. Consider how the trader works. Its buy and sell prices are significantly below and above the established exchange rate, respectively. As such it's relatively insensitive to small changes in pricing expectations. The trader's main function is that it allows for very large volumes of currency to be exchanged when there's a shock in the expected exchange rate. Contrast this with Zkeys, where there is no such outlet for volume transactions.

Let's say that I expect Zkeys to appreciate significantly from a base price of 4k. I can probably suck up every Zkey that appears for sale at 4.5k as fast as they hit the market; a higher price isn't going to significantly affect how fast I can buy Zkeys - the only real threat is a huge enough shift that bidding wars break out, and even then it's usually rational to split the sales or take advantage of the friction in the system by jumping districts instead of starting said bidding war. So generally there's going to be a pretty tight funnel on just how many keys I can move that isn't super price sensitive.

The trader changes that, because for a significant enough price differential the volumes that can be exchanged can get huge. I'm not limited by how fast I can find people to sell me ecto at a marginally higher price; once my price expectations hit a threshold I can suck down huge quantities of ecto from the trader - and the trader also records this transaction so that everyone can see it. So what the trader's price is really a leading indicator. It shows significant price pressure on the top or bottom of the market, and people will see the trader's price shift as an indication that something real is happening. Zkeys, conversely, don't have any leading indicators like this, nor any potential for a huge spike in demand; everything has to move the old fashioned way.

In short, the trader gives the gold/ecto exchange rate a lot more information and much higher transaction rates on the margin than the gold/zkey market, which translates directly into how fast prices can adjust.

A very nice explanation; I've been trying to avoid this discussion.

The trader also produces resistance to price changes. Small perturbations are suppressed by players that experience high time prices and will buy/sell from the trader when a shift occurs. That generates stable expectations; players know to tune out small up/down perturbations in the trader price. Once that resistance is broken, demand changes as you describe.

In practice, it seems to take a broad-based change in player expectations to break through that resistance. If I had to guess, there are two causes on the upward side. First, the trader is probably hard coded to resist price increases after the inflationary fiasco in mid-2005. Second, price increases probably make it rational for botters to trader ecto and reinvest time saved in farming additional ecto.

The upshot is that the price of ecto is relatively stable over time, but is susceptible to large shocks.

QueenofDeath · Jan 05, 2010, 04:38 PM // 16:38

The question I have is how can we be 100% sure Anet doesn't mess with merchant/vendor ecto prices? Nobody can really and Anet could have periodically these merchants dump so many ectos (like the US has farmers bury some of their crops) thus increasing the value of ectos. I don't trust anyone when it comes to ingame economies. But, on the other hand players control the value of Z-Keys as there is no Z-key vendor. They hold a nice high stable value and easily sell like hotcakes and even if they don't sell they still have a trade-in value at the Z-Chest.

Next with GW2 coming most all of this will just become moot when 2/3rds of the population moves the GW2 anyway. What is left in GW won't matter and prices will soar and the casual will get discouraged and quit anyway. GW is spiraling down to its place with the rest of the tired old online mmo's/mmorpg's of the past like EQ, DAOC, UO, AC and the rest.

Martin Alvito · Jan 05, 2010, 05:01 PM // 17:01

How does taking a hand directly benefit ANet?

Are you really suggesting that certain ANet employees might manipulate prices for their own gain on the RMT market? EVE had an episode of that sort, and it was absolutely disastrous. Took them years to recover. I would imagine that there are safeguards, and the prospective profit would not be worth one's job.

Players control the prices of both ectos and zkeys. The outcomes differ because the mechanism that maps player behavior onto prices varies. Institutions matter; there's a huge research literature on the topic in both economics and political science.

You're seeing insanity in ecto prices because almost everyone believes that they will become harder to farm in the future. This is true, but the problem is almost certainly overstated. Unfortunately, it's impossible for educated players to take the other side of the bet and balance out the market. The storage caps on gold are inconvenient. Even if I think you all are dead wrong about the future ease of farming an ecto, there's a limit to the amount of ecto I can sell off.

The economy in GW has been goofy for some time now, but this has a lot more to do with the easy ecto regime than the game's age.