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Author Topic: Supply and Demand  (Read 6886 times)

Rowanas

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Re: Supply and Demand
« Reply #15 on: October 25, 2018, 10:41:45 am »

I think there was a thread on economics? AFAIK it did not end in flames.
This one? http://www.bay12forums.com/smf/index.php?topic=142045.0

that one is four years old. as much as I don't like having to back up GC, it's more appropriate to put such a thing here than necro that old thread, or start a new one.
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I agree with Urist. Steampunk is like Darth Vader winning Holland's Next Top Model. It would be awesome but not something I'd like in this game.
Unfortunately dying involves the amputation of the entire body from the dwarf.

KittyTac

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Re: Supply and Demand
« Reply #16 on: October 25, 2018, 11:24:27 am »

I think there was a thread on economics? AFAIK it did not end in flames.
This one? http://www.bay12forums.com/smf/index.php?topic=142045.0

that one is four years old. as much as I don't like having to back up GC, it's more appropriate to put such a thing here than necro that old thread, or start a new one.
Necroing suggestion threads is allowed if you have something to add.
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Shonai_Dweller

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Re: Supply and Demand
« Reply #17 on: October 25, 2018, 04:16:03 pm »

I think there was a thread on economics? AFAIK it did not end in flames.
This one? http://www.bay12forums.com/smf/index.php?topic=142045.0

that one is four years old. as much as I don't like having to back up GC, it's more appropriate to put such a thing here than necro that old thread, or start a new one.
Rules of suggestions forum (that no-one reads apparently...):

BEFORE POSTING A SUGGESTION

Check our development pages. You can find everything in one place at this link.
Search for an existing thread. If you find a thread similar to your idea, you can bump it to expand on the suggestion, even if the thread is old. However, please do not bump threads just to show support.
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Rowanas

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Re: Supply and Demand
« Reply #18 on: October 26, 2018, 05:17:02 pm »

I think there was a thread on economics? AFAIK it did not end in flames.
This one? http://www.bay12forums.com/smf/index.php?topic=142045.0

that one is four years old. as much as I don't like having to back up GC, it's more appropriate to put such a thing here than necro that old thread, or start a new one.

BEFORE POSTING A SUGGESTION

Check our development pages. You can find everything in one place at this link.
Search for an existing thread. If you find a thread similar to your idea, you can bump it to expand on the suggestion, even if the thread is old. However, please do not bump threads just to show support.

I stand corrected, which I appreciate, because standing up for GC runs counter to my preferences.
« Last Edit: October 27, 2018, 05:39:30 am by Rowanas »
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I agree with Urist. Steampunk is like Darth Vader winning Holland's Next Top Model. It would be awesome but not something I'd like in this game.
Unfortunately dying involves the amputation of the entire body from the dwarf.

Rataldo

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Re: Supply and Demand
« Reply #19 on: October 26, 2018, 05:56:47 pm »

This is not actually realistic.  The value of the sand does not change, people just won't buy the sand.  There is nothing realistic in having infinite demand for any item, even if we make the value go down. 

Actually supply and demand determining value is an illusion.  The illusion is actually based upon the fact that the base numerical value of an item is the average amount of labour required to produce each item against the other item.

What that means is that if I employ 100 farmers to grow 1000 plump helmets and also employ 100 carpenters to produce 100 chairs, a chair is worth 10 plump helmets.  But if there is a famine and my farmers produce a total of only 10 plump helmets, because I still employed 100 farmers the value of each plump helmet is actually that of 10 chairs. 

If I however only employed 1 farmer to make 10 plump helmets, the value of the plump helmets would still be 10 plump helmets per chair; even though everyone is starving to death.

This sounds very much like The Labor Theory of Value.

It is by no means widely accepted by modern economists, and to present it as fact (it is a theory with well-documented shortcomings) would be misleading. And no, I'm not going to argue about it. I'm just going to leave the link so people can read about it if they want.
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GoblinCookie

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Re: Supply and Demand
« Reply #20 on: October 27, 2018, 12:02:43 pm »


This sounds very much like The Labor Theory of Value.

It is by no means widely accepted by modern economists, and to present it as fact (it is a theory with well-documented shortcomings) would be misleading. And no, I'm not going to argue about it. I'm just going to leave the link so people can read about it if they want.

I didn't use the LTV except to demonstrate how it might be the case that the relationship between value and supply+demand is an illusory one.

The fact is that it is near-certain that value is *not* determined by supply and demand.  That is because this would only work if the price-setters know the situation as regards supply+demand in the economy as a whole.  If they don't know that X is actually in short-supply, how can they raise their prices accordingly?

The LTV has the advantage over that concept because it does not require anyone to know anything they don't know.  Everyone knows their own costs, which ultimately come down to labour. 
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Rowanas

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Re: Supply and Demand
« Reply #21 on: October 27, 2018, 12:15:45 pm »


This sounds very much like The Labor Theory of Value.

It is by no means widely accepted by modern economists, and to present it as fact (it is a theory with well-documented shortcomings) would be misleading. And no, I'm not going to argue about it. I'm just going to leave the link so people can read about it if they want.

I didn't use the LTV except to demonstrate how it might be the case that the relationship between value and supply+demand is an illusory one.

The fact is that it is near-certain that value is *not* determined by supply and demand.  That is because this would only work if the price-setters know the situation as regards supply+demand in the economy as a whole.  If they don't know that X is actually in short-supply, how can they raise their prices accordingly?

The LTV has the advantage over that concept because it does not require anyone to know anything they don't know.  Everyone knows their own costs, which ultimately come down to labour.

In news that will certainly shock everyone present, there are many factors which determine an item's value, and a system that only accounts for some of them will be flawed. Labour theory, supply and demand, utility value etc.
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I agree with Urist. Steampunk is like Darth Vader winning Holland's Next Top Model. It would be awesome but not something I'd like in this game.
Unfortunately dying involves the amputation of the entire body from the dwarf.

Dozebôm Lolumzalìs

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Re: Supply and Demand
« Reply #22 on: October 28, 2018, 01:22:38 am »

The value of something is what it can be used or exchanged for. The direct utility of a bag of sand doesn’t change when you walk into a desert, but the price changes. I think that should clear everything up and now we don’t need a long argument about economics. (This is hopelessly optimistic.)
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Azerty

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Re: Supply and Demand
« Reply #23 on: October 28, 2018, 03:14:52 pm »

As for the equilibrum prices, we could use the prices already defined for an object.

For exemple, a golden statue is worth ¤750. If ten of them are sold in a place where only eight are wanted, we would see three left on the would be sellers and we could see a drop in local prices corresponding to the fact 70% of the sold golden statues were left without buyers.
Next time, we still have ten on them but the local demand, due to a local noble embellishing his rooms, has mounted to fifteen, resulting to 33% of the demand left insatisfacted and causing the prices to rise.

There is still unresolved points: how to account for the quality of the good and eventual decorations? They might act as modifiers on the final price. And could golden statues be less expalsive than lead ones in some extreme cases?
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Rufflikerex

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Re: Supply and Demand
« Reply #24 on: October 28, 2018, 03:35:56 pm »

Hopefully there's a trade student/professional that could help out with this discussion of the trade mechanics.
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GoblinCookie

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Re: Supply and Demand
« Reply #25 on: October 30, 2018, 08:06:24 am »

In news that will certainly shock everyone present, there are many factors which determine an item's value, and a system that only accounts for some of them will be flawed. Labour theory, supply and demand, utility value etc.

There are really two considerations here.  What quantity of an item the buyer is willing to buy and what price the buyer is willing to pay for each items.  I reckon we should base the economy on three different kinds of value, binary value, eliminative value and numerical value.

Binary Value (Supply+Demand)

This is a simple estimation of the needs of the buying entity against the surplus items it has.  Surplus items are put up for sale while in-demand items are bought up to the quantity that are needed.  Sometimes a party will treat a third party's demands as it's own, so they will acquire items in order to give/sell them to that third-party.  When the entity has no surplus items but still has demands to meet, it will sacrifice some demands to meet other demands, making the items in the less prioritised demands surplus.

Eliminitive Value (Quality comparison)

This is the competition between the higher quality items and the lower quality items which both meet the same demand.  The higher quality item eliminates the demand for the lower-quality item if there is an overall surplus of the item compared to the total demand.  That means if there are 90 tables and 100 tables needed eliminative value is *not* used, all tables are sold irrespective of quality.  But if there is 150 tables and only 100 tables are needed, the bottom 60 tables, defined by quality are eliminated, they cannot be sold or given away. 

Numerical Value (Base determinant of item price)

This is the comparison between the average amount of an item produced against the average number of work-hours required to produce it, to the entity in question.  The entity initially values in exchange the items acquired from other parties according to it's *own* productivity not according to the productivity of the party that they are acquiring the items from; that means how much labour would be required were they to acquire the items themselves without trading.  Over time we adjust the numerical value towards the average of the two parties productivity of the item per hour. 

Neccesery extra mechanics

It will be necessary for us to slow down the productivity of our dwarves per hour in order to guarantee a certain quality of an item be produced.  That is because a totally random production of high-quality items means that since no greater amount of labour was used to produce them than the lower quality items, so the numerical value of such items is the same as that of lower-quality items.

If however we can slow down production in order to guarantee a certain minimal quality, higher quality items will end up being more valuable because they now represent a greater amount of labour.  The current situation with random quality does not serve this function, realistically they would have the same numerical value. 
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Rowanas

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Re: Supply and Demand
« Reply #26 on: October 30, 2018, 08:37:55 am »

Hopefully there's a trade student/professional that could help out with this discussion of the trade mechanics.

I'm not sure I want to deal with price elasticity coefficients (and, god forbid, reverse elasticity!), the mix of labour theory, supply/demand, utility valuing, alternative selection etc.

GC, that last part is nonsense because you haven't considered the increased labour value of a highly-skilled labourer, nor the perceived value of higher quality items that fulfill the same need, regardless of labour.  If I go to a market stall and look at two identical high quality products, but one is twice the price because it took the craftsman twice as long to produce it, that simply shows the relative lesser skill of the craftsman, even if the price remains within the band at which I would normally purchase the item.  With a more nuanced conasideration of labour value it could be workable, but remains incomplete.
« Last Edit: October 30, 2018, 08:48:17 am by Rowanas »
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I agree with Urist. Steampunk is like Darth Vader winning Holland's Next Top Model. It would be awesome but not something I'd like in this game.
Unfortunately dying involves the amputation of the entire body from the dwarf.

GoblinCookie

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Re: Supply and Demand
« Reply #27 on: November 01, 2018, 07:46:57 am »

I'm not sure I want to deal with price elasticity coefficients (and, god forbid, reverse elasticity!), the mix of labour theory, supply/demand, utility valuing, alternative selection etc.

GC, that last part is nonsense because you haven't considered the increased labour value of a highly-skilled labourer, nor the perceived value of higher quality items that fulfill the same need, regardless of labour.  If I go to a market stall and look at two identical high quality products, but one is twice the price because it took the craftsman twice as long to produce it, that simply shows the relative lesser skill of the craftsman, even if the price remains within the band at which I would normally purchase the item.  With a more nuanced conasideration of labour value it could be workable, but remains incomplete.

The value of something is not it's price.  The third part is not nonsense, there is a just a fourth part that is built on top of it because we are now talking about the price rather than the value.

In effect your model represents the competition among buyers chasing (according to the eliminative value) a limited number of items because the value of the lesser items was eliminated to them and the ability of the seller to exploit that in order to raise it's price above it's value (ie make a profit).   
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Dozebôm Lolumzalìs

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Re: Supply and Demand
« Reply #28 on: November 01, 2018, 10:28:30 am »

Neccesery extra mechanics

It will be necessary for us to slow down the productivity of our dwarves per hour in order to guarantee a certain quality of an item be produced.  That is because a totally random production of high-quality items means that since no greater amount of labour was used to produce them than the lower quality items, so the numerical value of such items is the same as that of lower-quality items.

If however we can slow down production in order to guarantee a certain minimal quality, higher quality items will end up being more valuable because they now represent a greater amount of labour.  The current situation with random quality does not serve this function, realistically they would have the same numerical value.
No. Masterworks represent an investment of labor by a highly skilled dwarf as opposed to the same investment of labor by an unskilled dwarf. Skilled dwarves are rarer. Masterworks are subjectively more pleasing, and objectively superior in combat. This alone is sufficient to give masterworks a higher price.
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Quote from: King James Programming
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SixOfSpades

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Re: Supply and Demand
« Reply #29 on: November 01, 2018, 03:21:31 pm »

There is still unresolved points: how to account for the quality of the good and eventual decorations? They might act as modifiers on the final price. And could golden statues be less expalsive than lead ones in some extreme cases?
     As far as decorations are concerned, I can see how in some cases, they could actually reduce the value of the finished good: If they are of noticeably lower quality, and/or of much lower material cost, than the base item, then they effectively mar the item's beauty and make it look cheap. In extreme cases, this could be considered vandalism, albeit unintentional. If you have a +gold statue+ and embellish it with some masterfully-placed brilliant-cut almandines, then that's a considerable improvement. But if it's a ☼gold statue☼ and you mangle the work with your clumsily-laid hunks of schist, then you've made the king look like a beggar! Shame on you!
     Theoretically, lead statues could be worth more than gold ones, although it's rather unlikely, and largely for reasons that would make them worth less than the equivalent of bars of the same metals. As far as DF is concerned, gold & lead are just as useful: Gold's advantages of being ton-toxic, non-tarnishing, and a great electrical conductor aren't included in the game, and both metals are almost equally soft & ductile, so really the only reason to prefer gold is that it's more shiny. And the only reason to prefer lead is because you've got some noble with a material preference. But if you desire lead for the lead itself, then finished goods should actually be worth less than the raw metal, due to the emotional pain that the buyer knows he's going to feel when he melts the artwork back down.


It will be necessary for us to slow down the productivity of our dwarves per hour in order to guarantee a certain quality of an item be produced.  That is because a totally random production of high-quality items means that since no greater amount of labour was used to produce them than the lower quality items, so the numerical value of such items is the same as that of lower-quality items.
No. Masterworks represent an investment of labor by a highly skilled dwarf as opposed to the same investment of labor by an unskilled dwarf. Skilled dwarves are rarer. Masterworks are subjectively more pleasing, and objectively superior in combat. This alone is sufficient to give masterworks a higher price.
     The time/labor costs of an item's production are largely irrelevant to a buyer, and should therefore have no impact on the item's price. Where they are relevant is on the artisan's desire to produce that item: Things that take a long time to make but give only a small return simply aren't worth the maker's time, so of course he chooses not to make them, which creates scarcity, which drives the price up, which makes the item worth making. But in DF, there are three things that break this natural equilibrium: 1) Dwarves don't make capitalisitic decisions in a communist society, 2) Dwarves have no qualms about doing non-cost-effective work, especially when there is often literally nothing else to do, and 3) Legendaries can and will do the same job in the blink of an eye, effectively making the entire concepts of "labor costs" and "competition" obsolete.

Suggested improvements:
     More realistic timeframes, for all products. No Mason, no matter how Legendary, should be able to whip out 15 stone weapon racks in an hour--just as no Cook, no matter how Dabbling, should take 3 days just to prepare some stew.
     Smaller speed increases as an artisan gains ranks in a skill . . . perhaps even none at all.
     Revamp the creation process into a multi-step one, rolling the "quality dice" each time. As the craftsdwarf completes an item, he compares: 1) The time he's taken on it so far, vs. the "average" time for that type of item, 2) The quality level of the item, vs. his own level of skill, 3) The quality level of the item, vs. the odds that any further work would be an improvement, and 4) The time required for further work, vs. his own needs for food/drink/sleep. IF the craftsdwarf is a) not too far behind schedule, b) unsatisfied with his work so far, c) fairly sure that he could do better, and d) not too distracted by physical needs, then he should try to fine-tune and/or salvage his work. Roll the quality dice again, and maybe he'll improve the item, maybe he'll make it worse, and maybe he'll screw up completely & wreck it beyond repair. So the main reason that Legendaries can do work so much faster than other artisans should be because they got it right the first time.
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