Why the entire NO economy is fatally flawed (long)

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Beamup
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Why the entire NO economy is fatally flawed (long)

Postby Beamup » Thu Dec 11, 2008 12:30 pm

Initially I'm going to focus on the market, then explain why direct trade is no solution. I'll also be using luxury materials as the example when I need numbers, but the same principles apply to other products even more severely because everyone can produce them.

By this point, it should have become clear to everyone that the NO economy is subject to boom/bust cycles hugely greater than anything ever seen in the real world. To understand why that is, consider what happens in the real world when economic conditions change - suppose that the demand for a particular good drops. When that happens, the price drops. The producers with the highest marginal cost of production (also the least profitable) go out of business, reducing the supply. This proceeds until a new equilibrium is reached with a smaller supply.

In NO, this crucial process cannot happen. Why not? Because all producers have exactly the same cost. Sure, specialization points theoretically change that, but in practice their effect is too small to be helpful - when the minimum price changes possible are in the range of 25%, a 2% difference in costs is irrelevant since everyone tips over the edge at the same time.

Due to this effect, production of good X is either profitable for every producer - so they make it at breakneck speed. Or, it's unprofitable for every producer - so nobody makes it at all.

Add to that the fact that transaction costs are so high (even at 5 bread per, the market fee consumes 20% of the profit, and at 3, which is the only price anything sells at currently, it's 50%) and that the economy is set up to be severely deflationary (there are huge bread sinks, but no sources other than baking) and everything completely falls apart. It's a hugely unstable system.

In theory, direct trade can help this. In practice, direct trade is not feasible unless you're in a position to spend several hours a day on it. So reliance on direct trade as a solution means that casual players - who are supposedly the primary audience here - cannot progress.

The solution I can see is a vastly expanded and revamped specialization system. It would need these characteristics in order to work:
- The effect must be many times greater than the 2% per point.
- The effect must be large even for low-level cities, and scale up less quickly for high-level.
- It must allow for increasing the efficiency of good production (not just rate) so that there is a reason for specialization in goods, and to promote trade in goods as opposed to everyone just buying materials and making the goods themselves.
- It must be balanced so that specialization in things other than wheat and luxuries makes sense. We have to have cities specializing in bricks; in baskets; in bread production (that last being overwhelmingly critical due to the otherwise deflationary economy).
- The market fee must be either abolished, or reduced to no more than 1% - or at least players should be able to invest in reducing it (e.g. higher level markets have lower fees - (10 - level)% or something). It serves no particularly meaningful purpose anyway. Preventing people from using the market as a warehouse should be done by fixing the warehouse, not breaking the market.

Unfortunately, I don't see that happening. Which means that the only conclusion I can reach is that NO is doomed to being the exclusive preserve of a small number of early adopters who can devote the necessary hours to direct trade.
Last edited by Beamup on Thu Dec 11, 2008 12:34 pm, edited 1 time in total.

CppThis
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Postby CppThis » Thu Dec 11, 2008 12:49 pm

I agree with you that the spec system is laughable and needs a major rework. Part of the problem is also how the upgrades work--everyone basically needs the same good at the same time, so when its not 'your turn' to be resource of the day nobody buys it. Ideally this is where traders would step in and stockpile a lot to profit in the future, but the bread tax, while not a bad idea in and of itself, is high enough that this wont happen since the good is getting taxed twice and that adds up fast.

Beamup
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Postby Beamup » Thu Dec 11, 2008 1:40 pm

A point that I realized could stand to be made more clearly:

Given the deflationary economy, prices will inevitably fall to around 3. This isn't some temporary thing - only when prices are that low will people be incentivized to bake enough bread to stop the deflation. And at that level, the market fee is 50% of the profit!

Deguar
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Postby Deguar » Thu Dec 11, 2008 2:14 pm

People only bake bread if they realise they are losing out by pricing their goods at 3. Judging by the amount of 3 per goods I've seen go up recently they don't realise it.

There is nothing substantially wrong with prices hovering at 3-6, as long as the bread sinks which were put in are removed . No more bread tax on markets, no more bread to make ships, certainly severely trim the amount of bread needed for third and fourth cities, soldiers no longer have to be fed.

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King Faticus
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Postby King Faticus » Thu Dec 11, 2008 2:25 pm

removing the market tax will introduce more exploits and encourage people to use it as a warehouse for extra goods especially since the warehouse 'bug' is being worked on :)

now what you CAN do is have the market repay the full upload fee once you SELL the goods but not for removing the goods.


that way you aren't really taxed and you still cannot spam the market or use it as a warehouse :D

Beamup
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Postby Beamup » Thu Dec 11, 2008 2:26 pm

"Deguar" wrote:People only bake bread if they realise they are losing out by pricing their goods at 3. Judging by the amount of 3 per goods I've seen go up recently they don't realise it.

They're only losing out if other people won't post at the lower price. Which they will. So pricing at 3 is completely rational.

lynnk
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Postby lynnk » Thu Dec 11, 2008 2:47 pm

Which means that the only conclusion I can reach is that NO is doomed to being the exclusive preserve of a small number of early adopters who can devote the necessary hours to direct trade.


This is a complete fallacy - this idea that people who do direct trade take all day to do their transactions - players don't sit waiting for their boats to come home you know ;)

Players who use the market will obviously take much longer to obtain the requirements for a high level palace or another city - players who do direct trade tend to do huge quantities at once...

I personally would not have the time to use just the market for the items I need - I would not be able to play the game either for a lot of reasons including starting on oil and so not ever having much demand for my goods on the market and just not havng the time or patience to be able to sit staring at the market screen all day long....

I can understand how the players who were used to making very high volumes of sales in the past are now not knowing what to do because the gameplay has changed so much now that a lot of people are getting more cities and so have no need to buy so much but have a need to sell so much more...

The only answer to the problem of the market having too many sellers and not enough buyers that I can see is for more direct trade 1:1 swapping ;)

Leperous
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Postby Leperous » Thu Dec 11, 2008 2:53 pm

Market prices are low because supply currently vastly exceeds the demand.

You're basically saying that, to operate at 3 bread per, we need higher percentages of specialisations to make any kind of profit.

But all I can see that doing is forcing more goods onto the market, keeping prices low. Removing the tax rate would push prices down to 2 per!

The solution here is to increase demand somehow (higher upgrade costs?) or to lower supply.

the economy is set up to be severely deflationary (there are huge bread sinks, but no sources other than baking)

Fewer sources than sinks means it's inflationary, no?
*EDIT* Ah no, I see now. With less bread people are buying less on the market and resorting more to direct trading.

Beamup
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Postby Beamup » Thu Dec 11, 2008 3:30 pm

"lynnk" wrote:This is a complete fallacy - this idea that people who do direct trade take all day to do their transactions - players don't sit waiting for their boats to come home you know ;)

The vast majority of reports suggest that direct traders are generally consuming vast amounts of time negotiating and tracking trades. I also find that I personally CANNOT manage any significant quantity of direct trade because I don't have the time to send hundreds of scrolls.

Players who use the market will obviously take much longer to obtain the requirements for a high level palace or another city - players who do direct trade tend to do huge quantities at once...

I personally would not have the time to use just the market for the items I need - I would not be able to play the game either for a lot of reasons including starting on oil and so not ever having much demand for my goods on the market and just not havng the time or patience to be able to sit staring at the market screen all day long....

That does not follow in the least. Thousands of units can easily be bought in under a minute on the market (given bread to pay for them). There is zero need to monitor it, or even glance at it more than once a day.

The only answer to the problem of the market having too many sellers and not enough buyers that I can see is for more direct trade 1:1 swapping ;)

This is completely misguided. Direct trade is affected just as badly by imbalances in supply and demand.

Leperous wrote:Market prices are low because supply currently vastly exceeds the demand.

You're basically saying that, to operate at 3 bread per, we need higher percentages of specialisations to make any kind of profit.

No. What I'm saying is that supply will inevitably grow until prices drop to 3, unless there are people who can profitably sell at 4 but not 3 (to simplify things a lot). It's the variation in profitability that allows the economy to adjust to varying demand.

The solution here is to increase demand somehow (higher upgrade costs?) or to lower supply.

That just pushes it off a bit into the future. As long as people can invest to produce more, they will so long as that is profitable.

Sandra Linkletter
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Postby Sandra Linkletter » Thu Dec 11, 2008 3:56 pm

"Beamup" wrote:The vast majority of reports suggest that direct traders are generally consuming vast amounts of time negotiating and tracking trades. I also find that I personally CANNOT manage any significant quantity of direct trade because I don't have the time to send hundreds of scrolls.

...

That does not follow in the least. Thousands of units can easily be bought in under a minute on the market (given bread to pay for them). There is zero need to monitor it, or even glance at it more than once a day.

...



There is a interesting difference in perceptions here between us on how the two methods of material acquisition work. This is probably due to our different outlooks on purchasing.

I hardly ever use scrolls in direct trade. When I decide that I want something on a one-off purchase, I go to the trade wall. I can usually strike a deal in a short time, depending on how fussy I am about distance. The deal is made and consumated within minutes. No further attention is required. My routine daily trades are noted in my ally list, which is relatively short, but in fact I can usually fulfill my regular trades by clicking on the incoming shipment and sending my return goods from the city screen that pops up. Again, this takes only a few moments.

In order for me to make good use of the markets, however, I have to check every material in all three markets, looking for bargains. I have to check all through the day, over and over again, in the hopes of catching that one offer of something that I need, at a price that I can't resist. That's very time intensive for the benefit returned. Sure, in moments I could buy all the raw materials my warehouse can hold, for 12 per, but why would I do that?

lynnk
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Postby lynnk » Thu Dec 11, 2008 3:58 pm

"Beamup" wrote: # 1 The vast majority of reports suggest that direct traders are generally consuming vast amounts of time negotiating and tracking trades. I also find that I personally CANNOT manage any significant quantity of direct trade because I don't have the time to send hundreds of scrolls.


# 2 That does not follow in the least. Thousands of units can easily be bought in under a minute on the market (given bread to pay for them). There is zero need to monitor it, or even glance at it more than once a day.


#3This is completely misguided. Direct trade is affected just as badly by imbalances in supply and demand.


No. What I'm saying is that supply will inevitably grow until prices drop to 3, unless there are people who can profitably sell at 4 but not 3 (to simplify things a lot). It's the variation in profitability that allows the economy to adjust to varying demand.


That just pushes it off a bit into the future. As long as people can invest to produce more, they will so long as that is profitable.


Firstly let me say I am very sorry that I contributed to your thread...

I thought it would help you to understand another person's point of view - another way the game can be played....

I see I was too kind :(

With regard to your point #1 - I have told you how I play - I have told you that I do not spend all day making direct trades with anybody - how would that work :confused: - I send a scroll - they answer - we send goods - how can that take all day :confused: - why don't you tell me what you imagine I do all day instead of calling me a liar :rolleyes:

your point I have numbered '2' is flawed because you have not said how long it takes you to obtain the thousands of bread required to purchase thousands of items - you just say 'whoosh - I buy thousands in an instant' as if bread just appears from nowhere :rolleyes:

#3 - I have told you my experience of playing Nile Online - and you again call me a liar :rolleyes: :p

Maybe when you have read and understood what I have said - you may gain the ability to ask me some relevant questions - I am always happy to help polite decent people - the others can manage without me :p

Agamemnus
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Postby Agamemnus » Thu Dec 11, 2008 4:09 pm

"Beamup" wrote:By this point, it should have become clear to everyone that the NO economy is subject to boom/bust cycles hugely greater than anything ever seen in the real world.


That is simply not true. There are no boom/bust cycles. There were very slight boom/bust cycles at the beginning of the game when everyone wanted one thing, but not anymore -- a large market range and a large level variance among cities largely removed that.

This might not be desirable at the very start of the game. The way to f"ix" this (if it needs fixing) is to populate people first on cedar/gold/emeralds/oil/henna, then on leather, then on kohl, and then on bronze... and to keep the current policy of new players appearing both on the edges and in relatively empty nomes.

Add to that the fact that transaction costs are so high (even at 5 bread per, the market fee consumes 20% of the profit, and at 3, which is the only price anything sells at currently, it's 50%) and that the economy is set up to be severely deflationary (there are huge bread sinks, but no sources other than baking) and everything completely falls apart. It's a hugely unstable system.

The market fee is always 10%, not 20% or 50%.

In theory, direct trade can help this. In practice, direct trade is not feasible unless you're in a position to spend several hours a day on it. So reliance on direct trade as a solution means that casual players - who are supposedly the primary audience here - cannot progress.

You don't need to spend a long time on direct trade if you have daily trades set up.


The solution I can see is a vastly expanded and revamped specialization system. It would need these characteristics in order to work:
- The effect must be many times greater than the 2% per point.
- The effect must be large even for low-level cities, and scale up less quickly for high-level.
- It must allow for increasing the efficiency of good production (not just rate) so that there is a reason for specialization in goods, and to promote trade in goods as opposed to everyone just buying materials and making the goods themselves.
- It must be balanced so that specialization in things other than wheat and luxuries makes sense. We have to have cities specializing in bricks; in baskets; in bread production (that last being overwhelmingly critical due to the otherwise deflationary economy).
- The market fee must be either abolished, or reduced to no more than 1% - or at least players should be able to invest in reducing it (e.g. higher level markets have lower fees - (10 - level)% or something). It serves no particularly meaningful purpose anyway. Preventing people from using the market as a warehouse should be done by fixing the warehouse, not breaking the market.


* Spec points greater than 2% would indeed make gameplay more interesting and allow more specialization.
* I would like to see your rationalization of why the effect should go up less for high level cities. Higher city levels already cost vastly more per laborer to upgrade than lower city levels.
* It currently makes sense for things other than wheat or luxury RAW materials -- clay, wheat, reeds, or your lux resource currently. But, I strongly agree that it should be production efficiency rather than a production rate.
* I still think the fee should be lower than 10%, so I agree with you there.

I would add another component -- being able to pick whether you want reeds, wheat, or clay in your reeds/wheat/clay plot. It's rather hard to have 4 brickworks running with one clay pit..

physikal
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Postby physikal » Thu Dec 11, 2008 4:30 pm

Sorry for going off topic here, but I have to say, this is a great thread! I think its very important! The way the economy has been going has really been effecting my enjoyment of this game. Especially when it has no PvP. Being just a "building/trading" game, its important that the structure of the economy is designed well. Just my 2 cents.

-Phys

Beamup
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Postby Beamup » Thu Dec 11, 2008 4:37 pm

"Sandra Linkletter" wrote:In order for me to make good use of the markets, however, I have to check every material in all three markets, looking for bargains. I have to check all through the day, over and over again, in the hopes of catching that one offer of something that I need, at a price that I can't resist. That's very time intensive for the benefit returned. Sure, in moments I could buy all the raw materials my warehouse can hold, for 12 per, but why would I do that?

Why would you do that? Prices are pretty stable overall; I never see any interesting differences between my markets, or between time of day, since the range upgrade.

As to time invested in direct trade:
- I never intended to call anyone a liar; my intent was solely to point out that there have been many threads where people have complained about how much time it takes, and few people contradicting them. My own experience also accords with that. So, what I intended to say was that if it takes you little time (after adjusting for my next point) then you seem to be in the distinct minority. If my lack of clarity caused offense, I apologize.
- Once you have regular trades set up, yes, that's quick. But how long did it take to *get* them set up? My experience says many hours and hundreds of scrolls, since most people are either uninterested or have saturated their capacity.

Agamemnus wrote:That is simply not true. There are no boom/bust cycles. There were very slight boom/bust cycles at the beginning of the game when everyone wanted one thing, but not anymore -- a large market range and a large level variance among cities largely removed that.

This might not be desirable at the very start of the game. The way to f"ix" this (if it needs fixing) is to populate people first on cedar/gold/emeralds/oil/henna, then on leather, then on kohl, and then on bronze... and to keep the current policy of new players appearing both on the edges and in relatively empty nomes.

I should have been more clear. I'm referring to the huge swing between the way things started (little supply, high prices) and the current state (massive supply, exceedingly low prices). "Cycle" is, I suppose, inappropriate since there is nothing in the current system that would ever move things off of the current state.

The market fee is always 10%, not 20% or 50%.

*Of the profit.* If I sell at 3, then my profit relative to the opportunity cost is only 0.6; the market fee of 0.3 is 50% of that.

* I would like to see your rationalization of why the effect should go up less for high level cities. Higher city levels already cost vastly more per laborer to upgrade than lower city levels.

My thinking is that something like 10-20% starting off would be desirable; if that ramped up at the same rate as currently I fear it would quickly become overwhelming.

Agamemnus
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Postby Agamemnus » Thu Dec 11, 2008 5:12 pm

- Once you have regular trades set up, yes, that's quick. But how long did it take to *get* them set up? My experience says many hours and hundreds of scrolls, since most people are either uninterested or have saturated their capacity.

Hmm, that's true, but that's part of the game! You can spend a whole chunk of time negotiating deals though that will stay for a while, as opposed to what you were saying, which is spending that chunk of time every single day.


I should have been more clear. I'm referring to the huge swing between the way things started (little supply, high prices) and the current state (massive supply, exceedingly low prices). "Cycle" is, I suppose, inappropriate since there is nothing in the current system that would ever move things off of the current state.

That's true, but I see it as an exercise in planning ahead instead of something that should be somehow removed from the game.


*Of the profit.* If I sell at 3, then my profit relative to the opportunity cost is only 0.6; the market fee of 0.3 is 50% of that.

You're right. If you clarify, it helps immensely. ;)

My thinking is that something like 10-20% starting off would be desirable; if that ramped up at the same rate as currently I fear it would quickly become overwhelming.

Hmm, well, yes.. starting at 10-20% and having it be 10-20% per spec point is surely a lot. :eek: I was thinking more like 4-6%... But maybe the first few could be massive.. would make for even *more* interesting gameplay.

Hoborg
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Postby Hoborg » Thu Dec 11, 2008 6:20 pm

I don't particularly want to join the arguments going on here, but I do want to say that this game is entirely about its economy, and without big differences in production or consumption advantages like the ones that exist in the real world, there is no way the economy will ever be that interesting in the long run, and hence the game itself won't. I've posted about this a few times before and how this won't get fixed until it is obvious that it is breaking the game, but the fact that there is at least a discussion going on in this thread is encouraging.

The real world's economy is interesting because there are an unlimited number of products but only a finite number of suppliers in a given geography for who it can be worthwhile to supply any one of them at any point in time. Nile Online's economy is currently doomed to be uninteresting because there are a finite number of products and an unlimited number of suppliers in every geography for who it is worthwhile to supply each of them at any point in time. Cheap long-distance trade and resource uniformity needs to be removed to produce meaningfully-differentiated geographies, and specializations, both chosen and unchosen, need to be emphasized.

Sandra Linkletter
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Postby Sandra Linkletter » Thu Dec 11, 2008 7:04 pm

"Beamup" wrote:Why would you do that? Prices are pretty stable overall; I never see any interesting differences between my markets, or between time of day, since the range upgrade.

- Once you have regular trades set up, yes, that's quick. But how long did it take to *get* them set up? My experience says many hours and hundreds of scrolls, since most people are either uninterested or have saturated their capacity.



Any interesting differences vanish quickly, specifically because of people checking constantly in order to snag those good deals. In principle, buy orders should fulfill that niche. In actuality, I can't recall ever having had a buy order filled. I have fulfilled maybe half-a-dozen myself, but there are usually none up there except for the re-listers offering 1 per for everything that costs 2.4 per or more to make.

I have had probably twice as many offers to trade my gold daily for emeralds as I have gold to trade and still make jewelry with the gold I have left. Half of those offers came from people I met on the trade wall, in my one-off trading, and involved no additional time or labor from me.

Basically there are two economic models being followed here, and each model looks awkward to the practitioners of the other model. You can't get what you want with one click of the button, by direct trading. I can't properly economize, through the market. Besides which, direct trading is just plain fun for me. I find the image of my ships sailing to the four corners, er, two ends, of the Nile, laden with goods in return for those carried by the ships of others, just plain romantic. Nothing about pushing a button to get stuff marked up by several hundred percent, which I pay for by having other people push buttons to buy my own stuff marked up by several hundred percent, can compare with that image in my mind. :)

Daltares
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Postby Daltares » Thu Dec 11, 2008 8:24 pm

I will admit that I spend a chunk of time daily tweaking with things and negotiating deals, but I sometimes get a couple days where I can barely log in. I find as long as I have my cities set to not fill up or run out of a material, I really am not hampered. I just make a couple larger trade deals when I log in instead of multiple smaller ones.

Also, some of my trade partners now require very little interaction...I just send them some materials and a "Hi, how are you! Sent you 300." I will agree there are a few people that drive me bananas because they can't seem to negotiate a deal without sending 5 or 6 scrolls. Overall, I find the game very forgiving for people who don't have much time to play.

As for boom and bust cycles, I don't see it either. I see smaller ones, but for the most part, resource demand seems to be fairly constant for the month I have been playing. Whenever something gets out of line, people step up their production to meet demand, or they found a 2nd or 3rd city for the material that is getting hard to find.

Just curious, is there some other browser game that has an economic model anywhere near as strong as this one? I'm not aware of it.

Czech Centurian
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Postby Czech Centurian » Thu Dec 11, 2008 8:40 pm

Once again I ask my question. Wouldn't consuption of goods by your people solve a few of these problems. That way somebody won't be creating everything themselves. If they do specialise with a new spec system they can trade their surplus.

aeval99
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Postby aeval99 » Thu Dec 11, 2008 9:07 pm

I'm going to go for a completely different tack here. I think the biggest problem with the market/economy is the relatively low number of different goods. What we are seeing in the central nomes (and it will spread to the outer nomes eventually) is that with 3 cities and two trading partners you can be completely self-sufficient. If you can get everything you need by making it or trading for it, why bother to use the market?

I think what's needed are a greater number of goods. Why not bring some other things into the game, like beer, it could be made from a second wheat field and cedar for the barrels. What about acacia wood and reeds for furniture. Make sandals need rushes rather than reeds and also bring mats and papyrus into the game. What about needing tin and copper for those ever annoying kopeshes. Certainly every palace needs some of those.


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