Re: Floating Markets Revisited

Ed Bailey (
Fri, 26 Aug 1994 12:23:05 -0500

Scott Turner <> answers:
> [large price changes != worthwhile market manipulation]
> It may be that manipulating the market takes too long, or
> costs too much. Or that the profit margin from market manipulation is
> low in comparison to other ways of making money.

If market manipulation is too costly (in terms of time, capital expense,
or whatever) to be profitable, why have it at all? Just because it's an
"offense to realism" to have static markets?

> Has no one on this list studied economics? Beyond playing Supremacy,
> I mean? By no means would I call myself an expert, but I certainly
> don't have this unreasoned fear of a floating market. A floating
> market doesn't increase the chance of market manipulation, it
> decreases it.

Yes, some of us have studied economics. But Olympia is *NOT* an economic
simulation, it is a game set in a medieval fantasy world.

And I'd hardly call it an "unreasoned" fear, at least *MY* fear. I have
played (and am, in fact) playing another PBM with floating markets.
The market comes close to ruining the game. The only thing that saves
it is that some people are working to raise prices while others are
working to lower prices -- and the next result is generally a very
unstable equilibrium.

> As the Olympia system stands right now, you can shuttle
> 12 linen between Aethelarn and Newleaf endlessly, earning 180 gold a
> trip. Despite the continuous demand for linen, Aethelarn will
> continue to sell it at 35 gold, and despite the constant supply,
> Newleaf will buy it at 50 gold. Now *that's* market manipulation.

I'd hardly call it manipulation. That's making a profit. And a small
one at that. It's seven weeks (plus slop) each way -- for a total of
3-1/2 months for each round trip. That barely breaks the 50 gold/turn
needed to have the noble pay for himself -- and even a few guards will
mean that he's losing money.

And in return for this ridiculously small profit, the merchant in question
gets the honor of tying up 700 gold in capital (including the ox) and
traipsing around in the most clogged area of the world -- a double-edged
sword at best.

FWIW, I wanted to start a merchant "empire" when I joined Olympia, but the
reward seems too small to justify the cost. :(

> All a floating market will do will be to slowly drive up the cost of
> linen in Aethelarn and slowly bring it down in Newleaf.

Which will destroy the already slim margin that the merchant is making.

> If this model can be manipulated, then please point out how. I'm very
> interested in that, if it is true.

Well, it is buggy...

-- snip -- snip --
A buying 20 at 19.000000.
IC selling 0 at 5.000000.
You have 1908.825684 gold, 20 linen and are averaging 67.086937 profit/turn.
sell a 2
The market in is only buying 536914765.
A buying 0 at 19.000000.
IC selling 0 at 5.000000.
You have 2288.825684 gold, 0 linen and are averaging 85.182175 profit/turn.
-- snip -- snip --

...but (of course) you can't rig the demo to make more than 300 gold/turn.

However, it does have some interesting properties....

After 14 turns of "buy 20 - sell 20" you get:
% A buying 20 at 9.753499.
% IC selling 20 at 9.899658.
% You have 2638.737061 gold, 0 linen and are averaging 152.766933 profit/turn.

So you are now losing money! In contrast, if you skip every other turn, then
on turn 15 you have:

% A buying 20 at 18.669981.
% IC selling 20 at 5.250000.
% You have 2872.139404 gold, 0 linen and are averaging 158.142627 profit/turn.

While a two-on, one-off strategy gives this on turn 14:

% A buying 20 at 14.555370.
% IC selling 20 at 6.633723.
% You have 2885.487061 gold, 0 linen and are averaging 170.391933 profit/turn.

So, in practice, what this does is cut the profit margin by about 40-50%.

Since this is a *game*, I'd like to know what game effect you want to
create/encourage by having floating markets.

* If it's simply an offense to realism, then this is a relatively minor one.
* If you think mercantilism is too profitable, then your model will cut
profit margins for the "boring" merchant by some amount, at the risk
of opening up a hole for speculators to exploit.
* If you wish to encourage new trade routes, then this is easier patched
by having cities pay a bonus (say 10-20%) if someone sells something
that they haven't bought [ever|in N years].
* If you wish to encourage continuing trade, this is probably done better
by manipulating the supply & demand, rather than the price. [I would
suggest (semi-)permanently raising the amount of trade (i.e. things that
must be bought, not made with COLLECT, MAKE, or TRAIN) goods available
if the market limit is bought/sold.]

Ed Bailey

Ed Bailey                | Voice: (512) 471-4198   Fax: (512) 471-6715
Inst. for Fusion Studies | Internet: bailey@{hagar,ziggy},
Univ. of Texas at Austin |, or
Austin TX  78712         | "No pithy quotes.  Just email addresses."

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