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Author Topic: Uristonomics: Dynamic Item Value  (Read 15833 times)

GavJ

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Re: Uristonomics: Dynamic Item Value
« Reply #45 on: September 18, 2014, 09:49:30 am »

Goblin, all parts of your post this time were based on snubbing some part of traditional economics, which the opening post says we agree to work with in this thread.

If you think it is all bollocks, feel free to start another alternative economics thread or whatever. It's gumming up discussion.
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Dirst

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Re: Uristonomics: Dynamic Item Value
« Reply #46 on: September 18, 2014, 10:04:13 am »

   "Capital" as a category provides a useful criteria for the site or individual AI to choose whether or not to buy the item.
Just to expand on this a bit, capital is not something that economists have singled out for some reason as a unique special case.  Neo-classical economics works on what's sometimes called the KLEM model where production depends on capital (abbreviated K for arcane reasons), labor, energy, and materials.  It turns out that energy and materials are similar enough in the real world (both are used up in production) that modern models tend to conflate them.  However, energy in Dwarf Fortress is a very distinct thing, and it probably makes sense to keep it as a distinct input (keeping in mind that the energy need for almost everything is zero).

Some people will swear up and down that land is a special category of capital and needs to be treated separately.  Given the size of an embark or civ site, it's not really constrained anyway.  Economics are only important if something is "scarce" (there isn't enough of it to suit all potential uses).

One important asset not accounted for in the KLEM model is information.  Pure uncertainty (vermin might eat some of the food stocks, a caravan might get waylaid by bandits, etc.) can be handled fairly easily with something called expected value.  The basic notion is that if you want X of something, and expect to succeed in getting it Y% of the time, you budget for X/(Y%) attempts.  This re-creates most of the stockpiling behavior described above, but in a larger framework that handles far more general circumstances.  Another type of uncertainty is not so easily handled.

Asymmetric information (Alice knows something that Bob does not and it would affect Bob's willingness to pay if he knew) is a far, far more complicated problem.  Fortunately, a whole class of asymmetric information problems called "adverse selection" are completely absent from Dwarf Fortress.  This is because you can look at an item and know its quality level and wear level with complete certainty.  And you can look at a creature and know its skills with complete certainty.  Huge swathes of real-world law deal with people misrepresenting goods or their own capabilities, and that's just a non-issue here.  Other information issues remain (NPCs should be more careful in what news they relay), but those can safely be considered part of generic NPC social interactions.
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GavJ

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Re: Uristonomics: Dynamic Item Value
« Reply #47 on: September 18, 2014, 10:19:53 am »

What important asymmetric info is there? They know their stocks and I don't, but that's only relevant to making a guess about what to wagon over here. Once a caravan arrives, the information is symmetrical for the actual trading, because other than being at war (which is kinda hard to hide), I don't think we'eve discussed any world events or whatever like that as even being factors for the economic system.

Yet, at least. Have we?
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Scruiser

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Re: Uristonomics: Dynamic Item Value
« Reply #48 on: September 18, 2014, 11:17:05 am »

   If the first iteration of economic system has the AIs act reasonably on complete information, then it could be gradually improved for asymmetric circumstances by giving the AIs information extrapolated from what the AI can reasonably know instead of complete information.  So in the first version of the economic system, the site AIs would know everything about themselves and all other sites.  In the next iteration, it would only get full economic information on allied sites, and estimates on enemy sites.  In the next iteration, the site AI only gets full information for trading partner sites of the same civ, most information with a few estimates for trading partners, some information with mostly estimates on allied civ's sites, and little information with almost all estimates for enemy sites.  Other updates could handle things like information from espionage.
   There are a few issues with this approach.  Its main benefit is separating the AI module from the information, so the underlying AI can be kept the same even while the information's accuracy changes.  Obviously in the real world, people act differently based on the certainty of the information.  Still, I think this approach would be a good starting point.

   "Land" refers to capital that people don't have to develop themselves right?  So in this case arable soil, forests, underground land, oceans, lakes, rivers, and volcanoes would all be separate factors of production with different uses.  Anyway, it would only really be necessary to track them once the economic system is advanced enough to consider all the factors of production in a complete and quantitative way.  At that point, the game could start looking at things like site A has X units of arable land, allowing up to Y amount of farming, site B has a river with W amount of fishing possible.
  The main reason I brought up capital is that I think the AI would benefit from categories that separate out anvils as critical to production, versus furniture which is useful versus amulets/crafts/instruments.
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GoblinCookie

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Re: Uristonomics: Dynamic Item Value
« Reply #49 on: September 18, 2014, 11:21:15 am »

You don't understand economics.  The fact that you interpret all of economics as stealth-politics is more proof of your lack of any knowledge or understanding of it (if you knew economics better, you would know which parts are fundamentally true, which parts are debatable, and which parts are politically biased).  Anyway, the OP and the few posts after that explicitly asks for economics not to be treated as an issue in this thread to avoid cluttering the thread. 

I am going to ignore your discussion of quotas because we already explained why such a system won't work and actually address your unaddressed point:

Yet they discuss nothing but economics in this thread Scruiser, it is clearly the issue being discussed. It has never been aduequately demonstrated why such a system won't work, the reverse is actually true; the lack of quotas will break the system horribly.

The neccesity of quotas is why we have now have something called a SEED LIMIT; the ability to stockpile surplus seeds infinitely ended up breaking the game. If we do not put a solid cap on demand stockpiling we will end up with the possibility of stockpiling to infinity and then the game will start to break at a hardware level, let alone economically. We definately need to limit stockpiling behaviour, if we do not build this into the system at core we end up having to impose it from above arbitrarily.

And The reason I say that all economics is stealth-politics is because it is true; all existing economic theories have repurcusions for government policy, correct economics leads to correct policy, incorrect economics leads to incorrect policy. Emphasis on the stealth part, economic does not openly admit to being politics because if it did it would render itself redundant; it's purpose is to advocate policies from a standpoint of supposed scientific neutrality because if policies can be argued from a seemingly neutral standpoint then that is more persuasive than coming at people with a whole political package. 

   "Capital" as a category provides a useful criteria for the site or individual AI to choose whether or not to buy the item.  The AI can check if all individual site members have their time appropriately filled with occupations, if not, then it will prioritize buying or producing capital to expand the number of occupations available.  The AI can check if it has all its critical areas of production up to some threshold, if not, it buys/produces the appropriate critical capital, if it does it buys non-critical capital.  This way, forges, picks and axes would be prioritized over beehives, screw presses, and other non-critical stuff, while still ensuring that production is expanded overall.  If all occupations are filled, then all things being equal, the AI will know that it doesn't need to buy any capital.
    So yeah, hypothetically you could set up your system to not treat capital as different, but practically speaking, it provides a useful category to the AI to buy/produce it under some conditions and not others.  It ties in well with your idea about tracking occupations also.

That was my original idea. I was just pointing out that as per the system of trading, capital is treated just as any other good. As per the mechanics behind the demand, yes capital does exist. The AI ultimately chucks it's capital demands in with it's other demands and then trades accordingly.  It also stockpiles capital as it does other goods, so it will normally be able to expand production to a limited amount without needing to adjust it's trading arrangements. 

The question here then is whether we should assign professions first and then have them demand capital or whether they should import capital first and then employ the persons in those professions. The problem is that professions use up both consumables and non-consumables as capital; the simplest way would be to have all professions unproductive unless all their capital demands are met but that is not the most realistic. 

Realistically we would distinguish between tools and materials, creating a ratio for the latter while requiring the full demand for the former be met or no production at all regardless of materials available. 

Goblin, all parts of your post this time were based on snubbing some part of traditional economics, which the opening post says we agree to work with in this thread.

If you think it is all bollocks, feel free to start another alternative economics thread or whatever. It's gumming up discussion.

Who do you think that this traditional economics 'rule' existed in the first place? Who do you think it was directed against if not ME! Creating cliques based upon particular economics theories is not what we should be doing, neither is excluding people from threads; so I do not believe I should be creating my own rival economics thread in response. 

I am not here to apply to the game any alternative economic theory that I would apply to real-life.  I am trying to come up with the best economic mechanism in terms of both functionality and realism for the game. There are invevitibly a set of economic theories that are core to the models and clash with your economic ideas but these are custom built for the Dwarf Fortress Universe's mechanics and conditions, not taken out of some textbook of other. 

One important asset not accounted for in the KLEM model is information.  Pure uncertainty (vermin might eat some of the food stocks, a caravan might get waylaid by bandits, etc.) can be handled fairly easily with something called expected value.  The basic notion is that if you want X of something, and expect to succeed in getting it Y% of the time, you budget for X/(Y%) attempts.  This re-creates most of the stockpiling behavior described above, but in a larger framework that handles far more general circumstances.  Another type of uncertainty is not so easily handled.

Asymmetric information (Alice knows something that Bob does not and it would affect Bob's willingness to pay if he knew) is a far, far more complicated problem.  Fortunately, a whole class of asymmetric information problems called "adverse selection" are completely absent from Dwarf Fortress.  This is because you can look at an item and know its quality level and wear level with complete certainty.  And you can look at a creature and know its skills with complete certainty.  Huge swathes of real-world law deal with people misrepresenting goods or their own capabilities, and that's just a non-issue here.  Other information issues remain (NPCs should be more careful in what news they relay), but those can safely be considered part of generic NPC social interactions.

This is one basic issue with my own system (the other is quality).  I can make the AI trade properly with itself, since it can accurately predict what the other settlement's production, demand and quality will be, as they work in a predictable manner.  The hard part is how to get it to correctly estimate what the human player does or does not need.

The basic idea was that the AI would look at the population the player has divided by possession, the available resources locally available and then it would calculate what the player 'should' supply and demand. Once the player has been contacted by them however the player can directly communicate with the other settlement, by means of buying and selling goods; plus actually informing them of what they demand.  In an elastic fashion the game fits the player into it according to a custom economic model built specifically for the player's own settlement. 

The present system artificially bombards the player with all manner of goods hoping that at least a few items will be in demand and accepts an infinite quantity of goods in return based upon an essentially fixed price; this is irrational and unrealistic in the extreme.  My system replaces this with a finite number, quality and quantity being demanded by the AI and a far smaller variety of goods being supplied by them.  If anything this will help reduce the headache of having to go through hundreds of seperate items individually.

They would demand only a few items, in a fixed quantity, equal to or above a certain quality and all this based upon the projected productivity of the player's settlement.  The ratio/price would be based upon how much of the total amount of goods that they demand they are getting against the total percentage of their available stock that is demanded in return. 
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GavJ

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Re: Uristonomics: Dynamic Item Value
« Reply #50 on: September 18, 2014, 11:59:41 am »

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The neccesity of quotas is why we have now have something called a SEED LIMIT
The seed limit is/was (it's adjustable now in init) for lag purposes only due to temporarily non-optimized stacks and item arrays or whatever behind the scenes, and has absolutely nothing to do with an economy situation, because there isn't one...

With proper economic supply and demand curves, you would not ever "stockpile to infinity." It will actually fight against that actively. Your willingness to pay goes down the more you have in stock, and eventually, even though you'd be willing to buy more at rock bottom prices, nobody will be offering it at those prices, so you'll stop buying more. The supply curve prevents infinite stockpiling, even if the consumer might feel like doing it. Do you honestly believe we've been getting by with an economics model for the last 200+ years that predicted infinite stockpiling of everything?!

Again, this is like 1st or 2nd week econ stuff. If you insist on arguing about these concepts in the thread despite the original request, please at least show understanding them first before you say they're wrong...

Quote
these are custom built for the Dwarf Fortress Universe's mechanics and conditions
I don't think you have at any point demonstrated how a quota is optimally customized for dwarf fortress' coding. You've cited various reasons, but none of them are actually problems with a correct conception of the traditional economic alternatives (see example above -- you're worried about preventing infinite stockpiling that would never occur with normal economic rules coded in...)
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Dirst

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Re: Uristonomics: Dynamic Item Value
« Reply #51 on: September 18, 2014, 12:15:59 pm »

I'm not going to quote specific bits, but almost all of the activity Goblin wants can be accomplished with supply and demand curves with a reasonable pass at elasticities of substitution.  These things apply whether you are in a barter economy, a free market, a communist utopia, or whatever.  A curve can be a vertical line (supply: the Overseer has decreed there will be exactly five enormous corkscrews produced, no more, no less. demand: a new site will buy one anvil regardless of price.) or a horizontal one (supply: the Elves will sell any number pine logs at a price of 15. demand: the Mountainhome will buy any number of +giant gave spider silk socks+ at a price of 67.) without breaking the system.  So long as supply is flat or upward-sloping, and demand is flat or downward-sloping, all of the market clearing theories work.  If the "realistic" result is too outlandish, guardrails can be put in place (analogous to consumer protection laws in the real world).

There are issues with scaling a microeconomic model up to macroeconomics (micro and macro fit together about as well as general relativity and quantum mechanics), which is why everyone is supporting a phased approach that can be modified or halted if we start getting bizarro world results.
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GoblinCookie

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Re: Uristonomics: Dynamic Item Value
« Reply #52 on: September 18, 2014, 03:46:39 pm »

The seed limit is/was (it's adjustable now in init) for lag purposes only due to temporarily non-optimized stacks and item arrays or whatever behind the scenes, and has absolutely nothing to do with an economy situation, because there isn't one...

With proper economic supply and demand curves, you would not ever "stockpile to infinity." It will actually fight against that actively. Your willingness to pay goes down the more you have in stock, and eventually, even though you'd be willing to buy more at rock bottom prices, nobody will be offering it at those prices, so you'll stop buying more. The supply curve prevents infinite stockpiling, even if the consumer might feel like doing it. Do you honestly believe we've been getting by with an economics model for the last 200+ years that predicted infinite stockpiling of everything?!

I brought up the seed limit as an example of what happens in the game when there is nothing to limit the growth of a number of something.  The functional problem with your model is that the items never become completely worthless, that may be economically correct in reality but in game terms it means that potentially production is going to continue of massively surplus items because however worthless they become as long as all other available items are equally worthless then it still makes sense to produce them.  Since nobody is consuming the items they just pile up till it breaks the game, not to mention to the sheer insane unrealism of it all. 

We need to make things become worthless at some point to prevent oversupply crisis breaking both the whole game engine and the whole economy. 

Again, this is like 1st or 2nd week econ stuff. If you insist on arguing about these concepts in the thread despite the original request, please at least show understanding them first before you say they're wrong...

I don't think you have at any point demonstrated how a quota is optimally customized for dwarf fortress' coding. You've cited various reasons, but none of them are actually problems with a correct conception of the traditional economic alternatives (see example above -- you're worried about preventing infinite stockpiling that would never occur with normal economic rules coded in...)

Telling me that it 1st or 2nd week economic stuff is more likely to make me disbelieve it than otherwise.  Things that kiddies get told tends to be both out of date and simplified. 

I understand the concepts well enough, you have been teaching me for ages.  Like when you told me that I would spend valuable and scarce money that could instead be spent on something valuable to buy 1000 useless chairs simply because the price was low enough.  :P :P

I'm not going to quote specific bits, but almost all of the activity Goblin wants can be accomplished with supply and demand curves with a reasonable pass at elasticities of substitution.  These things apply whether you are in a barter economy, a free market, a communist utopia, or whatever.  A curve can be a vertical line (supply: the Overseer has decreed there will be exactly five enormous corkscrews produced, no more, no less. demand: a new site will buy one anvil regardless of price.) or a horizontal one (supply: the Elves will sell any number pine logs at a price of 15. demand: the Mountainhome will buy any number of +giant gave spider silk socks+ at a price of 67.) without breaking the system.  So long as supply is flat or upward-sloping, and demand is flat or downward-sloping, all of the market clearing theories work.  If the "realistic" result is too outlandish, guardrails can be put in place (analogous to consumer protection laws in the real world).

There are issues with scaling a microeconomic model up to macroeconomics (micro and macro fit together about as well as general relativity and quantum mechanics), which is why everyone is supporting a phased approach that can be modified or halted if we start getting bizarro world results.

http://en.wikipedia.org/wiki/Demand_curve

Because the supply and demand curve does not *do* anything.  It provides no means for the computer to decides what to produce or consume or buy or sell.  It is a measurement of other processes or mechanisms working but not the mechanisms themselves working, it has no structure to it that would be of any use for anyone.

It is not as if demand is actually created by a low relative price.  If that were the case then millionares would all eat themselves to death and poor people would never be fat.  The low relative price of food to the millionare should cause their demand for food to rise in proportion while the high relative price to the poor person should cause them to always be skinny. 

Instead what we see is some people to whom the price of food is relatively high forgo other possible uses of their money in order to eat or continue to eat too much food.  We end up with both underweight millionares and overweight paupers, despite the vast difference in the price of food for both of them. 
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Dirst

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Re: Uristonomics: Dynamic Item Value
« Reply #53 on: September 18, 2014, 04:39:26 pm »

I'm not going to quote specific bits, but almost all of the activity Goblin wants can be accomplished with supply and demand curves with a reasonable pass at elasticities of substitution.  These things apply whether you are in a barter economy, a free market, a communist utopia, or whatever.  A curve can be a vertical line (supply: the Overseer has decreed there will be exactly five enormous corkscrews produced, no more, no less. demand: a new site will buy one anvil regardless of price.) or a horizontal one (supply: the Elves will sell any number pine logs at a price of 15. demand: the Mountainhome will buy any number of +giant gave spider silk socks+ at a price of 67.) without breaking the system.  So long as supply is flat or upward-sloping, and demand is flat or downward-sloping, all of the market clearing theories work.  If the "realistic" result is too outlandish, guardrails can be put in place (analogous to consumer protection laws in the real world).

There are issues with scaling a microeconomic model up to macroeconomics (micro and macro fit together about as well as general relativity and quantum mechanics), which is why everyone is supporting a phased approach that can be modified or halted if we start getting bizarro world results.

http://en.wikipedia.org/wiki/Demand_curve

Because the supply and demand curve does not *do* anything.  It provides no means for the computer to decides what to produce or consume or buy or sell.  It is a measurement of other processes or mechanisms working but not the mechanisms themselves working, it has no structure to it that would be of any use for anyone.

It is not as if demand is actually created by a low relative price.  If that were the case then millionares would all eat themselves to death and poor people would never be fat.  The low relative price of food to the millionare should cause their demand for food to rise in proportion while the high relative price to the poor person should cause them to always be skinny. 

Instead what we see is some people to whom the price of food is relatively high forgo other possible uses of their money in order to eat or continue to eat too much food.  We end up with both underweight millionares and overweight paupers, despite the vast difference in the price of food for both of them.
First, there is nothing to prevent a demand curve from crash-diving after satiation.  Willingness to pay can actually go negative (You want me to store extra food beyond what I want for myself?  You pay me to rent my space.) without any modification to the underlying system.

Second, supply curves and demand curves do tell the computer what to do.  Individual-level demand (based on utility functions) is aggregated to the site level.  This lets the computer "know" how much of each good would sell at any given set of prices.  The supply curve is constructed from the site's resources including capital (available reactions), labor and materials.  This lets the computer "know" what is the best mix of goods to produce at any given set of prices.  These are high-dimensional curves that are difficult to visualize, but a "shadow" of the two curves reflecting a single good would look like the supply-and-demand curves in that Wikipedia article.  Importantly, that pair of curves is conditional on all of the other goods' supply and demand.

For example, if we're looking at the price of cave wheat and off-screen I manipulate the supply of plump helmets, I would expect a change in the demand curve for cave wheat.  How big an effect depends on how closely the two work as substitutes or complements.

The high-dimensional point where the supply hypercurve intersects the demand hypercurve gives you the set of quantities traded and their prices.  The computer sets production to match the supply implied by that point, and trade occurs at those prices.

When you look at the whole set of goods in the economy as one big optimization problem, some of the weirder results in economics actually pop out as perfectly rational outcomes.  Your example about overweight paupers is a version of the Giffen Behavior effect.  If bare sustenance food (which in industrialized countries means highly processed junk because "who has time to cook?") takes up a big fraction of your income, you can't afford to supplement it with healthier food.  As the price of crappy food does up, you actually end up buying more of it because you're substituting out more and more of the healthy stuff (this ends abruptly when the price of crappy food gets remotely close to that of good food).

The Giffen Behavior can only occur in a multi-good market with budget constraints.  You'd never see that in a simple one-good model, and one would probably never think to hard-code it into a quota system, but it emerges naturally from the kind of integrated economy engine we're discussing here. 

Edit: typo.
« Last Edit: September 18, 2014, 04:41:12 pm by Dirst »
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GavJ

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Re: Uristonomics: Dynamic Item Value
« Reply #54 on: September 18, 2014, 05:00:29 pm »

Quote
I brought up the seed limit as an example of what happens in the game when there is nothing to limit the growth of a number of something.
The supply curve limits growth of stockpiles. Simple as that. Explaining what a supply curve is and how it fundamentally does this is not within the scope of the thread.

Quote
Because the supply and demand curve does not *do* anything.  It provides no means for the computer to decides what to produce or consume or buy or sell.
The intersection of the curves is a direct instruction to the simulator for how much gets traded. I am frankly at a loss for how you are possibly interpreting "exchange exactly this amount at exactly this price" as "not providing any means for decision."

Quote
It is not as if demand is actually created by a low relative price.
Yes, it is exactly as if that.



Price is always *A* factor, with lower prices always leading to higher amounts desired at that price.

Nobody ever said it was the ONLY factor. You seem to be confusing these two concepts.

A person's food preferences are influenced by a bunch of things and habits and whatever. Including their general socioeconomic status.  But for any given person, all other factors already accoutned for, however much of X they demand at price A, they will demand as much or more of it at a lower price B. That's all a demand curve requires.

A millionaire will demand as much or more X at lower prices than that millionaire demands at higher prices.
A poor person will demand as much or more X at lower prices than that poor person demand at higher prices.
A whole fortress will demand as much or more X at lower prices than the fortress will demand at higher prices (because its curve is just a sum of its members')
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Scruiser

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Re: Uristonomics: Dynamic Item Value
« Reply #55 on: September 18, 2014, 05:44:24 pm »

Nothing is going to convince GoblinCookie.  You are just going to end up typing wall of text posts that he misunderstands.  This thread now has almost an entire page filled with long wall of text posts arguing about basic economics.  I don't mind debating, but it is annoying when the suggestion ideas get buried beneath the arguments.

GoblinCookie, I don't see why you couldn't just start a debate thread so we can argue about economics there instead of turning every suggestion thread even vaguely related to economics into a debate.
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GavJ

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Re: Uristonomics: Dynamic Item Value
« Reply #56 on: September 18, 2014, 05:59:21 pm »

Quote
Creating cliques based upon particular economics theories is not what we should be doing, neither is excluding people from threads; so I do not believe I should be creating my own rival economics thread in response. 
By the way, as much as I hate to press the point, the forum rules do actually specify that rules with specific guidelines should be followed whenever possible:

Quote
If the creator of a thread gives appropriate additional guidelines for an individual thread, please try to respect them.  Threads often drift away from their opening themes here, and there isn't a strong sense of thread "ownership", so there's a gray area, but if a thread has been designed for a specific purpose, please try to adhere to that, especially if the creator urges you to do so.  Do not derail threads.

Note that this is not "excluding you from the thread." It is only excluding you (and anybody else equally) from talking about a whole bunch of stuff the OP asked you not to.



Anyway, what was the last major issue of discussion before all this quota stuff?
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c6r

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Re: Uristonomics: Dynamic Item Value
« Reply #57 on: September 18, 2014, 07:03:13 pm »

Quote
I brought up the seed limit as an example of what happens in the game when there is nothing to limit the growth of a number of something.
The supply curve limits growth of stockpiles. Simple as that. Explaining what a supply curve is and how it fundamentally does this is not within the scope of the thread.

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Because the supply and demand curve does not *do* anything.  It provides no means for the computer to decides what to produce or consume or buy or sell.
The intersection of the curves is a direct instruction to the simulator for how much gets traded. I am frankly at a loss for how you are possibly interpreting "exchange exactly this amount at exactly this price" as "not providing any means for decision."

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It is not as if demand is actually created by a low relative price.
Yes, it is exactly as if that.



Price is always *A* factor, with lower prices always leading to higher amounts desired at that price.

Nobody ever said it was the ONLY factor. You seem to be confusing these two concepts.

A person's food preferences are influenced by a bunch of things and habits and whatever. Including their general socioeconomic status.  But for any given person, all other factors already accoutned for, however much of X they demand at price A, they will demand as much or more of it at a lower price B. That's all a demand curve requires.

A millionaire will demand as much or more X at lower prices than that millionaire demands at higher prices.
A poor person will demand as much or more X at lower prices than that poor person demand at higher prices.
A whole fortress will demand as much or more X at lower prices than the fortress will demand at higher prices (because its curve is just a sum of its members')

Basically, this.  There are other basic economic principles that contribute to why the millionaire isn't fat and why the poor person is.  Inferior vs normal goods are a prime example of that.  An inferior good is one where the demand falls as the means to purchase it goes up.  Going back to the idea of food, first, because it was used in the original example and, second, because it really is a clear example of it, just because a millionaire has... well, a million dollars... does that mean that he's going to buy and consume a million dollars worth of ramen?  No... ramen is an inferior good.  If you have a million dollars, you aren't going to eat ramen (at least not to the extent that, say, a college student does); you're going to eat fillet mignot and drink expensive champaign.

The increase in wealth and purchasing power, while it does effect the quantity of food to a certain extent, its biggest effect is on the quality of food.  Rich people and poor people eat different things, so their demand curves are going to be different.
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GavJ

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Re: Uristonomics: Dynamic Item Value
« Reply #58 on: September 18, 2014, 07:05:54 pm »

Although if you offer the millionaire 100,000 cases of ramen at way below normal rates like $0.01 a box, he will still be willing to trade, because he will realize that he can sell them for closer to their market value later and become more of a millionaire.

Both personal consumption and potential feasible resale value can contribute to utility. And also other things (like capital/production value if it's a tool, etc.)
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Cauliflower Labs – Geologically realistic world generator devblog

Dwarf fortress in 50 words: You start with seven alcoholic, manic-depressive dwarves. You build a fortress in the wilderness where EVERYTHING tries to kill you, including your own dwarves. Usually, your chief imports are immigrants, beer, and optimism. Your chief exports are misery, limestone violins, forest fires, elf tallow soap, and carved kitten bone.

c6r

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Re: Uristonomics: Dynamic Item Value
« Reply #59 on: September 18, 2014, 07:13:10 pm »

Although if you offer the millionaire 100,000 cases of ramen at way below normal rates like $0.01 a box, he will still be willing to trade, because he will realize that he can sell them for closer to their market value later and become more of a millionaire.

Both personal consumption and potential feasible resale value can contribute to utility. And also other things (like capital/production value if it's a tool, etc.)

That is very true.  Food can be a either a consumable consumer good or a producer good.  Good point.
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