Economics, Bidding, and my plight.

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Alias72
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Economics, Bidding, and my plight.

Post by Alias72 »

well I'm stumped. and no amount of pacing and soda has helped. thankfully I stopped before I ran out of Pepsi, however this still leaves me with a problem...

a suggestion I gave earlier (not sure if it has been approved yet) sparked a torrent of creative thinking. I am picturing a game (don't dare get your hopes up I have never finished anything of this sort) simulating economics and empire building. for a time period I have chosen 1400 CE to 1933 CE, so I shouldn't have any problems at all :roll:

the reason I chose this period has to do with the political, scientific, and economic developments during this period (fall of feudalism rise and fall of mercantilism, rise of capitalism and Marxism) provide an excellent backdrop for empire building (and breaking, I forgot to mention breaking!). but as to my plight!

lets assume we have a series of producers. actually lets talk about that. It is nonsensical for a series of farmers who own a set piece of land to produce anything less than the maximum. first off they must eat, and second better to use the last two acres producing wheat at a diminished price than have idle land. (some cash is better than none) however it may make perfect sense for a Victorian steel mill to tone down production in the wake of an economic downturn. my hypothesized solution is abstraction.

Bring forth the guilds! I am not representing individual producers. not only would that kill your computer, but it would bring about many complications with respect to the farmer and the steel mill (unless someone demonstrates otherwise) additional abstractions shall be included.

if you hate background and reading skip to here------------------------------------------------------
I have a series of producers that take input and provide output. These suppliers have to be able to trade with consumers. problem, there are no fixed prices in this game (unless the kings a royal arse) therefore, I need a method of simulating a market economy on a laptop. I have come up with many flawed ideas, and I need additional input.

1. bid by cost - everyone designates a quantity of currency to use to get their resources. the total supply is divided by the total bids to get cost per unit.
2. bid by quantity - everyone designates a number to buy, some magic happens, and a price per unit is calculated.
3. complete liquidation - no one ever leaves goods to rot, they sell EVERYTHING even if it is at a discount

specifically I need a means of determining how much each nation should pay and how many goods they get (there might not be enough to go around)

Problems:

1. Nations can subsidies and embargo each other so the consumers can't be lumped and divided at a whim.
2. Not everyone wants to stockpile so buying all that you can is nonsensical
3. Nations will have their own currency so suppliers cannot simply be grouped
4. Turn order shouldn't notably affect cost (to prevent people getting screwed)
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Trilarion
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Post by Trilarion »

I always liked thinking about such simulations. You can surely even learn something about history and how technological or civilisatory advances shaped us.

Abstraction is surely a major thing you have to do when designing a game. Instead of having an invisible hand and letting all individuals act, you can always just apply your model of how economy works.

I actually also thought about a closed, self-contained economy model and after some headaches gave up. Not for games design.

For the bidding I always like the idea, that people have a certain demand and a certain amount of money. With increasing price the demand will decrease and vice versa, but there will always be a minimum demand. Below they starve and die. If prices are low, demand just increases. So far in history people were never really satisfied. More, more, more. So I like to think about economy as something driven by demand. You wish for something and then somebody satisfies this wish. Supply and demand are two sides of the same coin, you cannot have one without the other.

Otherwise what people do is, that they produce a certain amount of goods or services and sell them at a price others want to pay. The ratio of the price of a bread versus a smartphone... is formed by our own judgement and by availability. It's difficult to give a good reason for relative prices without taking human nature into account. Then everybody decides what he/she would like to consume. Again personal preferences at work. Simulations about these things will never really come close to history or explain anything, but you could just assume some rules for demand. Then you buy stuff. Naturally you would like to have more, so you must increase your productivity. The government just takes its share by taxing, as did the king in the good old times. Now it becomes complicated. Money. It allows you to produce now and consume later or the other way, provided you find somebody who accepts your money or lends you money. It can even become worthless.

If you get all this into a single model, you not only have a great economic model for our game but also at the same time are master of micro-/ and macroeconomics. :)
Alias72
Posts: 12
Joined: Tue May 14, 2013 9:08 pm

Re: Economics, Bidding, and my plight.

Post by Alias72 »

one problem I find is that so much of the game idea is in my head, and a majority of it is currently intangible. I have a feel for how it will work (and know it wont be too bad to implement, but without it I cannot properly explain what I need assistance with.

I suppose I should try to reiterate my request and hope for a miracle.

here are a few problems I would like input on.

1: Should business have reduced production, or should they always attempt to produce everything, closing only if they go bankrupt.
-business have multiple levels. each level acts independently. each one can foreclose separately preventing massive failure.
-alternately one business cold have a degree of production, and magically produce less. this is harder to deal with in game terms.

2: Each nation has control of their own monetary supply. They may also maintain foreign cash reserves. Should money be handled as if it were any other commodity, or should I make an allowance by calculating exchange rates before standard transactions. should I allow nations to automatically purchase money when they need it?
- Monetary policy is important. It is a tool used by every state to screw itself. unforgiving, merciless, monetary policy is like the ex wife of economics.
-the game simulates liquidity requirements, not just between markets (that's easy) but WITHIN markets (makes investment an important factor.)

3: The game needs to recalculate price every turn. this is based on supply and demand. the problem is that each entity interacts with portions of the main market, not the whole (by embargo and subsidy.) oh, and I forgot to mention, this portion of the game gets screwed by all the preceding sections. the solution must conform to them. this is also where assumptions about economics need to be made. the problem is... which ones?
- Bidding for resources may or may not happen before exchange rate calculations. last turns data can be stored to allow constancy.
- should I assume that all products get offloaded on people?
- should consumers set a price to buy or a quota to buy? (I want 5 units or I want $20 of goods)
- should I allow both of the previous? should I allow both at once? which one should AI business choose?
- what does the effect of an embargo have on the market? not every nation will embargo one sucker, so influences from is market still hit the embargoer. the embargoer may even inadvertently by the embargoed goods through the UP I mean neutrals.
- how do I cheat-calculate the new price of a good, not just in a market, but in a partially segmented market with controls and walls between segments of it? I cant just sum supply and demand and divide.
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Trilarion
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Post by Trilarion »

Now that you are more specific I think I understand you. Only I am not sure yet, how much is about our game and how much about economy simulations in general.

A general remark: Making a detailed simulation of an economy might not make a good game. So you are free in a way to make your model of a real economy as simple or complex as you want. So one question is what you really want to have included?

Regarding your points:

1: A good business strives to maximize profit. They adjust production according to the profit they make. To make it more easy for growth in the model I would actually bias them to produce a bit more.

2: You obviously would like to have single currencies for each nation. That's nice and realistic although again it adds complexity. For example with a currency you always have two options to gain competition, either devalue the currency via monetary policy or to cut wages of the workers which in real life is quite difficult to achieve. In our Imperialism remake I wouldn't like to have the additional complexity of currencies just yet.

3: Price calculation is indeed a critical point of our economy model. There are different possibilities: the price could be the same for all market actors and the price is calculated by overall demand and supply. Or the price is different for all market actors and there is an order in which the actors do their haggling with the first actor getting the highes price and the prices dropping lower and lower with each new round. The order could translate to something like quality of their products or marketing strength.

For the consumers I feel they should give a range, like: I want 4-8 units but I don't want to spend more then 20$. So if the price is lower they'll buy more. Something like would probably feel realistic. However then we would arrive at the next problem: Consumers are flexible but suppliers might also be flexible, they might lower the price if they can sell more units at the same time. Then there would be too much flexibility in the model. However I would definitely incorporate a saturation, i.e. people do not buy more than a certain amount, because they effectively do not need more or do not have the money to buy more.

Embargoes just means that there isn't any chance for direct trade. But you can trade indirectly. Interesting point. We need to think about this more.

Calculation of the price is either self-contained in the model, if it is a closed model with independent actors. In approximate models you have to assume something. Here are some rules:
- More supply than demand should decrease the price because of higher competition
- More demand than supply should increase the price but not beyond the amount of money the consumers have available at all
- Insufficient supply should result in unrest and starvings
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