Pulling troops off the market

[Firetooth]

Why are people so stupid as to undercut the marketed prices of food? People can't select who they buy from, everybody could easily price their food at $19. Instead, we will predictably end up with food down to $13, maybe $12 if people don't clue up.

I think this needs reiterating.

Do people even math? 15>14, and 16>15. You get more money if you sell your food higher. If food prices are fixed at 17/18, everybody involved makes more money. Why would you undercut?

[Shadow]

For interest's sake, here are the price cutoffs at which making food or buying your own amounts to the same thing, assuming a 100% economic build and perfect land access. Eg, if you are paying more than this for food you are better off making your own, and if you are selling food for less than this you are better off cashing directly:

rat: $13.46
painted one: $14.27
stoat: $16.92
fox: $15.76
wildcat: $15.71
lizard: $14.32
wolf: $10.83
marten: $19.77
magpie: $19.77
ferret: $10.23
weasel: $15.00

Even more interestingly, the average of these numbers, $15.09, is almost exactly the average price paid for food so far this round. It constantly amazes me that small groups of people are able to (completely accidentally) find the optimum balance just by interacting on a market.

Of course, there are situation where you would want to sell below or buy above those prices which are not necessarily a mistake, eg currently I sell food for less to players who agree not to attack me, and if you are desperate for food to sustain a breaking army, overpaying could be a good strategy in the long run.

Because it's not worth it for a lot of races to buy food that high.

[Firetooth]

For the cashers, it is not more effective, and as they are the ones with all the money...

[nateac]

Undercutting allows a faster sell off of the product.
Also basic economics tells us that demand goes down when prices go up so more people will switch to making their own food if prices go too far up

[Shadow]

Food is pretty much designed to be worth $15, so it's not really surprising where it is mostly staying

[taekwondokid42]

Do people even math? 15>14, and 16>15. You get more money if you sell your food higher. If food prices are fixed at 17/18, everybody involved makes more money. Why would you undercut?

Because when 12 people are selling at $17, I get 1/12 of the sales. But if 12 people are selling at $17 and I am selling at $16, I get 100% of all the sales. That means more money for me, because when 12 people are selling at $17 I am producing more food than I am selling. It's worthwhile for me to drop the prices to $16 or $15 because at those prices I am selling everything that I am producing and turning a much greater overall profit.

So by undercutting the market, I benefit myself greatly. But then I also benefit the whole economy, because another one of the guys gets frustrated that I'm pretty much soaking up all the money. So he drops his price, and now we are sharing. If we work together, we pick whatever price means we are selling all of our food.

So the whole market comes down to $15. Except that at $15, the Marten couldn't be bothered to sell food. It's not profitable for him. So the supply of food goes down.

That's the whole idea behind markets. Drive the price to a level where consumers are buying at the same rate as producers are selling. When the price goes down, producers have less incentive to produce. When the price goes up, consumers have less incentive to buy.

As it happens, the real world price gouges that people often complain about are expensive, rare, and hard to pull off. Not that it doesn't happen, but usually it's not in your best interest. Usually someone will undercut, or society will find some other way to circumvent the conspiracy. For example, at $19/food I'm just going to keep twenty thousand foragers around instead of five thousand. At $11/food, I'm not going to have any foragers at all.

For example, a US bank (I think JP Morgan) bought something like 80% of the worlds copper, with the intention of driving up the price and making a profit. This is a big risk on their end, and it relies on the idea that there's no cheaper alternative to copper. JP Morgan is hoarding all the copper because they know that we can't just build more foragers and make our own copper.

But by driving the price of copper up, they are taking a big risk. With copper at high prices, there's greater incentive for scientists to find a more suitable material. If they do find something that is abundant and cheap, most of the copper will become worthless, because the demand will disappear.

With copper at high prices, there's a greater incentive for people to mine copper. Copper-rich soil that may not have been worthwhile before might be worthwhile now. So the supply of copper will go up. As people continue to produce more and more copper, JP Morgan will need to keep buying it all up at the artificial price, and this will drain their coffers. And the longer they do this dance, the greater the chance that someone is going to find an alternative to copper.

If the people can't however find a good alternative to copper, then what JP Morgan has really done is slow down our consumption of it. If there's not enough in the world for us to keep going sustainably, JP Morgan is doing us a service by hoarding copper because one day we might actually run out. JP Morgan will make tons of money in this scenario, but it's probably good that the price of copper went way up, because no good alternative was available and the price was bound to raise anyway.

Markets are pretty remarkable things.

[Shadow]

The fact that the market is actually finally behaving like a theoretical market is strong encouragement that we're on the right track for making it actually work properly :)

[taekwondokid42]

One thing that I think is an issue with the current setup is that money is circulating through the system way too quickly. This is probably largely due to the fact that it's not safe to keep large volumes of any resource around: cash gets sacked, food gets sacked, troops get reverse-deserted.

So for the time being there's no reliable way to collect more than a couple of runs worth of resources, except to protect them through the market.