The Auction House isn't What you think. Here's why.Follow

I'll get the rate downs, the beating a dead horse icon thingy, whatever, but there is an angle to the inflation problem people have really ignored (not everyone, some people have correctly pointed it out in the past). Aside from the fact that inflation, within limits, is actually a GOOD thing, here's what people are missing, in a big way, in this game....
(and BTW if this was posted here before I didn't see it, sorry)

THE AUCTION HOUSE

If you really want to ‘fix’ the problem of wild inflation and rampant price spikes. Why don’t you? SquareEnix has a system, within the game, to insure that you, the end user/buyer has full control over the economic system in game. How do you ask? It’s called the “Auction House”.

First, let’s dispel a myth. The “AH” is not “E-bay”. It doesn’t work that way, or even close. In a traditional straight auction one seller places an item for sale and multiple buyers bid on the item until one of two conditions is met.
1- The time limit for the auction expires and the highest bid wins the item
2- The time limit for the auction expires and the ‘reserve’ price is not met, the item does not sell and is returned to the seller.

The AH in FFXI does not separate each individual item into its own ‘auction’. It lumps them into one auction. All Emperor’s Hairpins are placed up for auction in the same ‘place’. You have no ability to bid on a specific pin. This means the traditional 1 seller to many buyers model is not in play. You have a many to many model at the very least. But even this is not accurate. What you really have is a different form of auction entirely.

The AH system in FFXI works more like a ‘reverse’ auction. In this model of auctions there are many sellers selling to a single buyer. While you may argue that “no! There are many people bidding at once!” You are correct. But each bid is viewed as a single “Buyer”. The AH will attempt to match a buyer’s price to a seller’s listed price. Until it finds one that matches, starting with the lowest priced item first. The effect is one ‘buyer’ judging multiple sellers on price. If you understand how stocks are traded you don’t need to read any more, you got it. Likewise, if you know how a government bid system works, this is similar.

What this means is that the vast majority of players are ‘running backwards’ when dealing with the AH. If you need proof, just look at the number of complaints about the ‘broken’ AH, and about people who ‘cheat’ buy ‘undercutting’. Guess what? The AH is not broken these people are not cheating, and they are not ‘undercutting’ in the way most people mean. What most people mean when they cry “undercut” is really “underselling”. If I undersell an item I am knowingly selling it for a price below its “real value”. If I undercut my competitor I am merely accepting a lower price for my goods, though that price is still within the scope of ‘real value’. It’s called competition.

So what does it all mean? First, it means the buyer and not the seller is in the driver’s seat (to a certain extent obviously). What is really being auctioned off here is not the item (or as in a traditional system a bidder’s right to buy said item), but rather the seller is bidding on the right to sell the item. You, as the seller, are bidding on the buyer. By placing your bid you are telling the AH system “I will sell this item for X gil”. I may have the same item and place it up for sale with a different bid. “ I will sell this item for Y gil”. When the seller comes along and submits his “bid”, he is really saying “I am looking for someone who is willing to sell me this item for Z gil”. The AH system is then going to look to see if any items are available, it will then find the two listed items and look at both and the listed prices. It will compare the buyer’s Z bid to the X and Y prices. The system will continue to compare the items and the buyers bid until it establishes which item, X or Y, is priced at or below the bid. If BOTH X and Y are at or below the buyer’s bid price, the system then checks to see which of the two is the LEAST expensive for the buyer. It then ‘sells’ that item to the buyer. The "auction house" is really acting like a buyer's advocate here.

Of course the AH will not refund to the buyer the overbid amount, it still passes that to the seller. It's the one area in the system that 'punishes' the buyer and actually advocaes for the seller. If you are overbidding you will over pay. The AH is simply saying that becasue seller X had the lowest offer to sell, and you exceeded it, you won, at your overpriced bid.


What you need to realize is the system is designed to give the BUYER the best deal it can. NOT to make the seller the most money they can. This is why sellers pay not just an AH fee but a tax as well, and buyers pay neither. People who know this, and use it to their advantage are not cheating. If more people would do it, you would start to see a significant check on price increases (again, to an extent) and a likely decrease in certain areas.

The way the system holds prices in check is based a great deal on certain suppliers accepting a relatively ‘set’ price for certain goods. Yes a single buyer can come in and buy out all 20 stacks of fire crystals and re-list them for 500 gil more, but there is a check in place on that. People only have so much gil. He can only do it to a fairly small number of items and in small amounts. You can only sell 7 items at once, and if there are 30 items listed, you’re shooting yourself in the foot. And if there were only 7 stacks to start with? All it will take is one person, fresh from leveling, with a few stacks of fire crystals to load them into the AH at the old, lower price, and everything goes back to where it was. The higher priced goods sit, unsold.

All of this is wholly dependant on the buyer understanding how the system is supposed to work. It is also dependant on the sellers understanding the inherent truth of maximized revenue through volume as opposed to revenue per sale. If I can sell 7 stacks of fire crystals at 2500gil in 10 minutes, and you can sell 7 stacks of fire crystals at 3000gil in 20 minutes. Who will be making more money per hour? I will. My 105,000 in an hour at a lower price point trumps your 63,000 in the same hour. Now consider another truth, as long as I have crystals, and sell them at 2500g per stack, you will never sell yours in that AH for 3000g until I run out. Further lowering your earning ability.

But all of this goes right out the window the moment the buyer looks at the AH history and says “Oh, Fire Crystals sold for 3k last sale, so I guess that’s what I have to pay.” Oddly, I’ll still be out selling you and out earning you, only now I am making even more and the buyer is ‘giving away’ money to me for no reason. The AH History is there for the SELLER, not the buyer. It is a way for the seller to judge the current demand of the market, and to price their goods accordingly. Onthe buyer's end it merely acts as a guide to the MOST the items has sold for lately. Not what the item was actually listed at and COULD have sold for, usually less.

Learn to use the AH correctly and you will increase your own earnings per hour, and save a huge sum of money in the process. Remember, money you saved is also money earned. Imagine how much more money you will be ‘making’ just by being a little smarter and a little more patient than the other guy.

EDIT:
Oh, almost forgot. There are two inherent checks in the system to prevent price fixing and collusion. First is the 7 item limit (you wanted to know why it exists, this is why). You can work around it a bit with mules, but at the end of the day, you are still limited in how much of the market for an item you can control. Oddly in part by how much real money you're willing to spend to do it ($1 per mule). Many MMOs do not allow you to have multiple characters on the same server for this very reason.

Second is a double blind, sealed bid system. All sales are double blind until the transaction is closed and the record is entered. I do not, and cannot know who I am buying from and the seller does not and cannot know who he is selling to. Additionally the bids are 'sealed'. No buyer can know what any seller has 'bid' their item for. This protects the sellers from having somone come behind them and deliberately under bid any specific person in an attempt to force them out, move their item faster, or block their sales. This also prevents the 'wal mart' effect where a person can come in and grossly undervalue their goods, driving others out, and then raise the prices once they control the market.


Edited, Thu Jun 23 12:39:06 2005 by airamis

Edited, Thu Jun 23 12:40:08 2005 by airamis

Edited, Thu Jun 23 12:46:36 2005 by airamis

lol it's already dropping like a rock and no one has posted.

Pepole don't like it when you point out that they are in fact their own worst enemies.

Tempting, but I wont...even though a million posts have talked about this. I just can't believe it took you that much space to explain how the autcion house works.

It should be painfully obvious that the buyer is in the driving seat- items are only listed for a short amount of time, if they aren't sold, they are returned to the seller & he/she eats the listing fee.

I know you called it a 'reverse auction,' however, your wording is a little backwards:


A 'bid' is a price set by a buyer- what they are willing to pay. An 'offer' is the asking price that the seller sets- since you mentioned stocks, I'll stick with bid/offer. The seller is 'gambling' the listing fee that someone will bids up to - or over the asking price.



As you pointed out- the key to that holding true is the amount of crystals you can supply at 2500/stack. However, if there are only your 7 & his 7, and a buyer needs 14 stacks, and bids up until he has purchased the necessary 14 stacks, his 21k is more than your 17.5k.

Supply and demand basics- if there is more demand than supply, prices will rise; if there is more supply than demand, prices will fall.

/em searches for that dead horse icon

Its partly caused by the players but the conditions are setup by SE. Supply and demand is the main cause for the items.

If an item was easy to get then why would it go for millions?
If an item was hard to get and in high demand then why would it go for low amounts of gil?

Players will more often than not charge the amount of gil they can get for the item. If it doesn't sell for that price then they will in most cases lower that price. Also works on the flipside. IF the item sells too well then the next time the price will most likely rise.

PART II


I notice everyone has laid the blame on two factors.

Player Ignorance
Player Greed

Congrats. That's exactly my point. Inflation is caused, primarily, by player ignorance and player greed. If players would be a little less ignorant, they could reduce the impact of greed. Not going to happen I know, but it's true non the less.

Impossible to make everyone happy XD

This is a good point (the OP), but I guess I just thought most people already knew it after playing frequently for a few months or more. *shrug* If not, then they need to know it, for their own sanity's sake. ^^b