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Replacing/augmenting B2B market with Vickrey auctions

David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 0 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012	Posted on Apr 12, 2012 To be clear: I am raising this more as a point for discussion and not a "You should totally implement my cool idea!!!". I think it might be a good change, but it would be a fairly significant one both in terms of effect and effort of implementing. As mentioned yesterday (http://www.ratjoy.com/forum/topic/on-the-ease-of-crashing-m arkets/), the public listing system is very prone to market crashes. Vickrey auctions (http://en.wikipedia.org/wiki/Vickrey_auction) are a form of secret bid auction which encourages bidders to bid the true value of a lot to them. They're not perfect, but they're easy to understand and relatively fair. I propose a B2B market system based on them, in which rather than putting a large amount of material on the market at a fixed price sellers put a lot onto the market and buyers bid on it. One possible way it could work (not the only way by any means): --DESCRIPTION BEGINS-- Seller specifies an auction length, a reserve price and selects a quantity of goods. They also specify how many times they want the auction to repeat (so if I have 50000 Q15 strawberries I could offer them in 5 lots of 10). The number of repeats and the reserve price are kept secret. They pay a listing fee based on these numbers (maybe 1% of reserve price?). The goods for the entire run of auctions disappears from the warehouse at that point. Players may cancel future repeats of an auction (their listing fee is refunded for those repeats if they do) but once an auction has begun it may not be cancelled. Buyers place bids on the lot. This money is taken out of their account at this point. At the end of the auction, if no one has met the reserve price the auction rolls over and starts again (maybe some limited number of times?). If N people have met the reserve price then the person who bid the highest wins (in the event of a tie the auction is split) and pays the amount of the second highest bid (if this is under the reserve price they pay the reserve price). Any money not spent on the auction is returned to the bidders. If the auction is set to repeat then it starts again and everyone who bid in the previous one and did not win gets re-entered. --DESCRIPTION ENDS-- Notes: * There are other types of auctions which might be more suitable. For example a Vickrey Clarke Groves auction (http://en.wikipedia.org/wiki/Vickrey%E2%80%93Clarke%E2%80%9 3Groves_auction) purports to be the correct equivalent for when there are N items being auctions. But it's more complicated and I don't really understand it that well. :-) * In order to have decent price discovery/tracking it would probably be worth having some sort of public listing of completed auctions. This would retain some of the price crashing properties of the existing system but I think it would be more robust to manipulation.
David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 0 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012	Posted on Apr 12, 2012 This would possibly even work better if combined with the idea I posted in another thread (http://www.ratjoy.com/forum/topic/selling-of-research-techn ology/) of being able to sell the use of your buildings. That works very naturally as an auction.
Roald Adriaansen RJ: Wuvil CO: Wuvil Post Rating: 0 + / - Total Posts: 146 Karma: 281 Joined: Feb 4, 2012	Posted on Apr 12, 2012 I don't like auction systems, they're to inconvenient. With a buy order addition (which is coming) you will have a system much easier and faster. Most stuff on B2B is still overpriced, calling it a crash is not really justified. Additionally you want crashes and spikes in an economic game, being able to make all your money from B2B buying and selling adds another dimension to the game. Also, if I want something I want it now, not whenever who is selling it finally logs on/timer ends. I don't mind it as an aidditon, but I do not want it as a replacement. With buy orders the B2B market will be very similar to how EvE's market works which is very successful.
David MacIver RJ: DRMacIver CO: David R. MacIver Post Rating: 0 + / - Total Posts: 47 Karma: 56 Joined: Apr 5, 2012	Posted on Apr 12, 2012 (Last edited on Apr 12, 2012) What would you say is inconvenient about the system I outlined? In particular, are you sure you're not confusing this with an English auction in which you iteratively submit bids when someone outbids you? This is a secret bid-once system. The amount of maintenance required by the buyer and seller is only fractionally larger than the existing system.
Nwabudike Morgan RJ: CEO Nwabudike Morgan CO: CEO Nwabudike Morgan Post Rating: 0 + / - Total Posts: 108 Karma: 344 Joined: Apr 4, 2012	Posted on Apr 12, 2012 Purchases are currently instantaneous, whereas auctions take time to complete. Instant purchases are more convenient.
Zack WenJian RJ: Zack CO: Zack Post Rating: 0 + / - Total Posts: 114 Karma: 503 Joined: Mar 31, 2012	Posted on Apr 12, 2012 the market did not crash.. According to microeconomics, Strawberry, a perfectly competitive market works this way. If you find your marginal cost and your selling price is same. you should sell your factory and proceed to other industry. it will come to a point where demand=price=marginal cost, you must exit the industry.
David Stark RJ: Zarkonnen CO: David Stark Post Rating: 0 + / - Total Posts: 53 Karma: 23 Joined: Apr 4, 2012	Posted on Apr 12, 2012 The question is whether such perfectly competitive markets make for a fun game...
Josh Millard RJ: Tex Corman CO: J. Quaff Arabica Post Rating: 0 + / - Total Posts: 167 Karma: 231 Joined: Apr 3, 2012	Posted on Apr 12, 2012 Purchases are currently instantaneous, whereas auctions take time to complete. Instant purchases are more convenient. This'd be my primary criticism of the proposal as well. As an idea it is interesting; as a system in the game it'd be inherently more frustrating to deal with than a straight B2B buy. I want to hit the button and know that I've secured inventory, not hit the button and wonder if I have that inventory after all.
Zack WenJian RJ: Zack CO: Zack Post Rating: 3 + / - Total Posts: 114 Karma: 503 Joined: Mar 31, 2012	Posted on Apr 12, 2012 The question is whether such perfectly competitive markets make for a fun game... bro, you can change industry.. different industry has different market. because fruits are such low cost, increasing quality effect very little to the price Try crashing a automobile or aircraft industry, it's gonna be impossible. For monopolistic competitive market, quality matters a lot. just changes of Q5 can increase the cost of airplane by many percent. It's almost impossible to crash it. take a look at the market demand of other industry right now, processed food like cakes, sandwiches, truffles, the demand met is as low as 20%. why not switch to these industry?
Billy Vierra RJ: Saffrian CO: Billy Vierra Post Rating: 0 + / - Total Posts: 84 Karma: 100 Joined: Apr 10, 2012	Posted on Apr 12, 2012 I personally also disagree with the auction system. Could you imagine in the real world if you needed to buy water and had to auction on it for 3 days? What I think we need to do is set a minimum amount on B2B sales, at the very least for new people. Call it a govt regulation or something. The minimum would be based on the actual value with a quality modifier * X %. Where X can be modified per item. This will keep new people coming in and flooding the market. Right now if you look, almost across the board (it seems) that the store value is lower than the B2B value and this does cause an issue.
Roald Adriaansen RJ: Wuvil CO: Wuvil Post Rating: 0 + / - Total Posts: 146 Karma: 281 Joined: Feb 4, 2012	Posted on Apr 12, 2012 The minimum is export price and it is modified by quality.
Matthew Suozzo RJ: Buckaroo Bonzai Post Rating: 0 + / - Total Posts: 40 Karma: 51 Joined: Apr 5, 2012	Posted on Apr 12, 2012 (Last edited on Apr 12, 2012) I think many of the posters misunderstand Vickrey auctions' function when applied on scales of the EoS economy. The large numbers of items being sold doesn't mean there would be minute- or even hour-long auctions going on. The point of second-price auctions is, to the contrary of what many of the posters assume, to maintain or speed up the transaction process but have the purchase prices be closer to the actual valuation of the item. Think of it as setting a level at which you would buy an item (as was discussed in another thread) and have a seller make the deal with you. In this scenario, one could implement a Vickrey-type system by selling small bundles of a large lot at very quick intervals and, if the reserve was met by a group of buyers and the winner has the requisite cash to pay for the lot, a sale takes place. As you can see, this system would function more continuously than the B2B system currently in place but less constant than selling an item in a store.
Billy Vierra RJ: Saffrian CO: Billy Vierra Post Rating: 0 + / - Total Posts: 84 Karma: 100 Joined: Apr 10, 2012	Posted on Apr 12, 2012 The game is based on economy and tries to mimic real life and still let it be fun. Now imagine if you went out to buy some flour to make some bread and was told you could not just purchase it, you would have to bid in an auction. You no longer can plan on buying resources as you need them, you have to plan days in advance to make sure you will have them or risk having to wait a few days before you can purchase the needed flour.
Matthew Suozzo RJ: Buckaroo Bonzai Post Rating: 1 + / - Total Posts: 40 Karma: 51 Joined: Apr 5, 2012	Posted on Apr 12, 2012 You're still not understanding the suggestion. First of all, you are not the consumer in this scenario, you are the manufacturer. Believe it or not, manufacturers must constantly be weary of how they are going to acquire the necessary components of their products. If a supplier makes something with flour, they better be able to get flour when they need it. This solution still satisfies this AND alleviates the stress of overpaying for a product given that you plan far enough in advance. If there are larger parcels that run at auction, let's say, every 2 seconds, the buyer can still acquire a large number of goods through "bidding" on these auctions. The distinction here is that if you want more all at once, you pay a premium of having to bid the greatest amount. On the flip side, as a seller, you can choose to run auctions with larger parcels and quicker transaction rates but expect to get a lesser return on your items than a slow and steady approach. Be that as it may, in a Vickrey system, EVEN THE HASTIEST OF SELLERS RECEIVE A MORE FAIR PRICE. Again, this doesn't change the dynamics of the commodity flux but it stabilizes the markets of these commodities (you see less of a "rush to the bottom" or Nash equilibrium). It may be more complex and it could hurt the game but if it's good enough for Google (http://www.gsb.stanford.edu/news/research/econ_ostrovsky_in ternetauction.shtml, http://en.wikibooks.org/w/index.php?title=Strategy_for_Infor mation_Markets/Google_advertising&stable=0#Vickrey_Auction_S ystem), it's good enough for me.
Francis Gerard RJ: Francis Gerard CO: Francis Gerard Post Rating: -1 + / - Total Posts: 2 Karma: 10 Joined: Apr 3, 2012	Posted on Apr 12, 2012 So, you want to implement an obscure, rarely used auction system, one that is basically not a method capitalists used to trade among themselves in a game which is by intent an appearance an attempt simulate being a capitalist. Right. Out of blatantly morbid curiosity, Dear G-d, why?,
Matthew Suozzo RJ: Buckaroo Bonzai Post Rating: 0 + / - Total Posts: 40 Karma: 51 Joined: Apr 5, 2012	Posted on Apr 12, 2012 I would hazard a guess that in the time it took you to write that post, 70,000 second-bid auctions were held. Maybe not a realistic system for this game but I was just trying to explain what the benefits of it would be. What's the matter with a little friendly discourse? Oh, and don't get so curious. You might hurt yourself.

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