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Looking for input on Stock Market Mechanic

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Grall Ritnos
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Joined: 02/07/2011

Hey gang, first time poster. I'm working on an idea for a new production based game with the primary method of resource collection being a stock market where players can buy and sell raw materials, and I would love some input.

I have a computer science background, so my plan is to write a program to run on one computer next to the game board that would simulate the market. It would allow rounds of 1-3 minutes (testing will determine the time) where players are able to buy and sell four different resources at current market rates, which fluctuate at "random" throughout the round. I think the rest of the game is going to be fairly cerebral, so I'm looking for a mechanic that will be fast, exciting, simple and fun to appeal to players who don't relish tons of heavy thinking.

My big issue at this point is how to actually implement the transactions. I'm thinking prices will range from $1-25 in $1 increments, so the mental math required to quickly calculate the price of buying/selling multiple resources would be challenging for some, but not impossible. I could give each player a small calculator, but that seems expensive and I suspect would turn players off. I'm worried that buying/selling goods one at a time may be too slow, especially as players try to make change with the bank.

My other thought would be to give players a notepad or small whiteboard on which they can take notes of transactions in shorthand (Buy two ore at $13 becomes B 2 O 13), and the transactions can then be processed after the market closes for that round. The issue here would be that players could accidentally spend money or sell goods they don't have, and that players have to be trusted to accurately and truthfully record the market prices.

I'm in the very early stages of design, so I'm open to any and all input. Are there ways to simplify the transactions? Any suggestions for removing the computer but keeping things fast paced and exciting? Thanks in advance!

innuendo
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I'm a CS major myself and

I'm a CS major myself and have spent some time trying to design exactly what you've done, using a pc to compliment a board game. The issue with this game is it seems you have time sensitive transactions, and no way to record or process transactions instantly. Basically players would be scrambling for the sake of scrambling. Why not just simulate the market in a more "supply and demand" style? Something really simple, but more interactive than a random market simulator program.

Say at the start of each market round each player has a secret notepad that they can write transactions on. Then players reveal and then the price of the goods each player purchases scales with the number of players buying/selling that same resource. If a player can't afford an order they are take only what they can afford but can't replace orders (because the market has closed).

So say you have ore, wood, oil, and gold for example. Each player places bids like so

Player A:
Buy 2 Ore, 2 Wood
Sell 1 Oil

Player B:
Buy 3 Oil
Sell 5 Wood

Player C:
Buy 1 Ore, 1 Wood, 3 Gold
Sell 1 Oil

Player D:
Buy 2 Gold

And then for the price of each good just keep a sliding scale (1-10) starting a 5 for each resource and keep track through the game. For each order to buy a good the price goes up 1, for each order to sell the good the price goes down 1. So say this is the first round, first you move the price indicators based on each order leaving the prices as such:

Ore: +3 (3 buys, no sells) -> 8
Wood: -2 (3 buys, 5 sells) -> 3
Oil: +1 (3 buys, 2 sells) -> 6
Gold: +5 (5 buys, no sells) -> 10

Then each player transfers resources and pays the new market price. This is a simple system (relatively), but allows a lot of great interactions. Players can attempt to drive the price up on goods, or flood the market with them to lower their value. And assuming you do a good job of making each resource equally useful (or at least universally useful at all points in the game), then the market should self balance since players will instinctively sell high priced goods and buy low priced goods.

You could even put a mechanic in the game where if any 3 resources reach 1 price in the same turn, the market crashes all players lose half their wealth or some other global negative effect (halt on production as the workers strike, for example).

This system benefits from not needing a pc to play a boardgame, as well as being more more cerebral and strategic, while still being simple and elegant enough to need only one section of the board to be the market price ticker and 4 pegs to track the prices.

sedjtroll
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innuendo wrote:I'm a CS major

innuendo wrote:
I'm a CS major myself and have spent some time trying to design exactly what you've done, using a pc to compliment a board game. The issue with this game is it seems you have time sensitive transactions, and no way to record or process transactions instantly. Basically players would be scrambling for the sake of scrambling. Why not just simulate the market in a more "supply and demand" style? Something really simple, but more interactive than a random market simulator program.

Say at the start of each market round each player has a secret notepad that they can write transactions on. Then players reveal and then the price of the goods each player purchases scales with the number of players buying/selling that same resource. If a player can't afford an order they are take only what they can afford but can't replace orders (because the market has closed).

So say you have ore, wood, oil, and gold for example. Each player places bids like so

Player A:
Buy 2 Ore, 2 Wood
Sell 1 Oil

Player B:
Buy 3 Oil
Sell 5 Wood

Player C:
Buy 1 Ore, 1 Wood, 3 Gold
Sell 1 Oil

Player D:
Buy 2 Gold

And then for the price of each good just keep a sliding scale (1-10) starting a 5 for each resource and keep track through the game. For each order to buy a good the price goes up 1, for each order to sell the good the price goes down 1. So say this is the first round, first you move the price indicators based on each order leaving the prices as such:

Ore: +3 (3 buys, no sells) -> 8
Wood: -2 (3 buys, 5 sells) -> 3
Oil: +1 (3 buys, 2 sells) -> 6
Gold: +5 (5 buys, no sells) -> 10

Then each player transfers resources and pays the new market price. This is a simple system (relatively), but allows a lot of great interactions. Players can attempt to drive the price up on goods, or flood the market with them to lower their value. And assuming you do a good job of making each resource equally useful (or at least universally useful at all points in the game), then the market should self balance since players will instinctively sell high priced goods and buy low priced goods.

You could even put a mechanic in the game where if any 3 resources reach 1 price in the same turn, the market crashes all players lose half their wealth or some other global negative effect (halt on production as the workers strike, for example).

This system benefits from not needing a pc to play a boardgame, as well as being more more cerebral and strategic, while still being simple and elegant enough to need only one section of the board to be the market price ticker and 4 pegs to track the prices.


This is a really neat idea - but what if there are more Buy orders for wood than there are Sell orders? Is there assumed to be as much Wood as everybody might want, and the only difference is the cost of wood this round? So you can be sure to get all the wood you want, so long as you have enough money to pay for it?

If you DON'T have enough money to pay for it, do all of your buy orders still affect the price (they'd have to, as you wouldn't know if you could afford it until the price has been set).

And at this rate, you'd never actually bu anything at a cost of 1 per unit, because even if the price were 1, it would go up (due to buy orders and presumably no sell orders) before you pay... right? Or is it that everyone who bus gets it at the listed price, and the modification to the price goes into effect NEXT turn? That sounds like it could be cool. Maybe you don't need wood, but the price dropped to 1, so you decide to buy some while it's cheap, for later use. But then, so would everybody, no?

Grall Ritnos
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Ooh, neat idea

Thanks a lot for the input, innuendo. I do like this idea quite a bit, since one of the big issues I've been wrestling with in other parts of the game is a way to increase interactivity between players. I will have to tailor things a bit, because my initial feeling was that not all resources would be equally important throughout the game, but this could be flexible.

sedjtroll, from my read of the idea, each player would put in a buy or sell request before knowing the prices for that round, and those requests would determine the prices. Once the prices are set, each player would then buy or sell the correct number at the market price, which could actually be 1 (i.e. if starting price is 5, and 6 sell requests and 2 buy requests were submitted, the price would be 5+2-6=1 for all buying and selling for that round). Also, there would a theoretically limitless supply of each resource.

I am a little sad to lose the frantic pace of the computer version, which innuendo described as "scrambling for the sake of scrambling", just because I thought this could actually create some fun game play moments. I may end up adopting the idea suggested above, but these comments gave me a new idea:

Note: This involves bringing back the computer
Instead of players writing down orders during the round and resolving them after market closes, what if players prepared orders at prices of their choosing before the round? Then, as the round progresses, if the market conditions ever hit their "reserve" price, they can trigger the transaction (with $ pre-counted) on the spot. This might be a little confusing if , for example, gold had a starting price of $20, a player put in an order to buy 3 at 17, and the price immediately dropped to 15 (they would still pay $17/unit), but it could create some interesting moments and maintain tension. My only concern is that this could lead to some very frustrating moments if the market does not swing your way and you end up sitting there for a round with none of your transactions panning out. I should note however that the market isn't the only way to get resources in the game, it is just the most common way.

Thoughts?

innuendo
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Joined: 05/25/2010
The Concept was that you pay

The Concept was that you pay the price after the price adjusts. So you are bidding on what the price is before the round, but have no way of knowing the final price you'll pay.

And you could pay 1 for an item. Say the price is at 3 at the start of the round and you put in an order to buy 2, but another player sells 4. The price adjusts -2 (making it 1), the other player makes 4 and you pay 2 (1 per).

By the same token if you know a player is about to place a large buy order you can try to sell a couple extra you have to rake in the profits, but if for some reason that player doesn't place that order the same turn as you place the sell order you could potentially flood the market with the resource and get almost nothing from your sale.

The more I think about how this might actually work in a game the more it seems very fun. Feel free to use it for whatever game you like, but I may still use it at some point.

And to answer your sub question: yes, even orders you can't pay for adjust to price. What's concerning is that players with no current money could potentially just put in dummy orders to drive up the price. Possibly a rule would be in place that you can't place an order you couldn't pay for at current market price, and since you reveal all orders before the prices adjust you can always check against that. now if all order are valid at current market price, you adjust the price and then complete all possible orders.

What's great about this mechanic is how it could tie into player trading. For instance in catan if I want to trade wood for wool it's pretty much a "well i have extra so sure" sort of thing. But in this game each resource would have a very public value in relation to other resources. So if you allow market trading, and player to player trading, you could really spice things up. Especially if player to player trades don't effect market price, sort of a way to move goods securely, possibly at less than market price.

And you made a point that your resources weren't all equal importance, and when I htink about it that should be okay. You can either have the starting price of the more valuable resources higher (say that start at 7 price) or have them on a larger scale all together say 1-20, and start them at 10. That allows for a bigger boom/bust on the resource, but could be very fun if say one resource (like oil for instance) was on a huge scale while the others were on smaller 1-10 resoruce scales. You could be an oil trader and risk huge gains/losses, or trade in stuff like wood and gold that are less volatile.

You are right, this is flexible, I hope it works for you game!

rcjames14
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Market Mechanics

A stock or commodity marketplace can be described as a version of the minority game where the payoff is inversely correlated to the number of other people who make the same choice. If everyone is selling, you want to buy. If everyone is buying, you want to sell. All things being equal.

Now, in the real marketplace, there are exogenous reasons for both buying and selling. It won't do you much good to be buy up all the stock in the Titanic as it is sinking just because everyone else is selling. So... as long as your market mechanic is tied to some other mechanic that puts those commodities to use (producing and consuming them), it no longer becomes a strict minority game.

Likewise, speculative behavior in the marketplace cannot be described as a strict minority game. In speculation, you aren't buying or selling something because you or someone else requires its use value, but because of your belief in its future exchange value. So, in this case, you're choosing to buy something precisely because you think everyone else will. However, this can actually still be seen as a form of the minority game, once you introduce time. No one wants it now... but they will.

So, when both external use value and temporal exchange value matter, you end up with a very complicated valuation system that sufficiently complicates the minority game to make it interesting to players. Perhaps that is why both trading and stockmarket exchanges are some of the most popular game dynamics outside of auctions. They give you a wide variety of strategies to pursue whose advantage depend greatly upon those of the other players.

You have already noticed a few issue with simultaneous trades (false or naked bids), but I think there are a few others that might turn out to be a nuisance:

What if the value of an asset falls below 0? This is a problem not only for asset valuation but also for liquidity.
What if the value of an asset rises above 10? The math required to process these trades may become quite taxing.
What if I buy something now, and sell it the next turn without anyone else trading that commodity? Under your pricing system, I would lose $1. The same problem also occurs if you sell then buy. Transactions with the market inherently lose you money unless someone else is involved. Is this fair? And who gets this money?

A marketplace really represents an aggregation of buyers and sellers and the brokers who maintain the liquidity. Marketplaces without a sufficient amount of liquidity often breakdown and operate in strange, counter-productive, ways because there aren't enough buyers to cover all the sellers (or vice versa). Under these circumstances, it actually becomes much more efficient to bypass the marketplace and buy/sell/trade directly between the asset owners. This occurs whenever the owners are selling/buying in such large volumes that it represents a significant proportion of the total liquidity or when there aren't enough counterparties willing to participate (such as in an economic crash).

Without a computer and a thousand other players, you are likely to find yourself in a situation where liquidity matters. The proportion of goods each player holds compared to the total available will be very high. You will end up with situations where asset prices will swing wildly and perhaps even dip below 0. Although speculators like volatility, I'm not sure that this kind of volatility will be fun for a player. At best it will be a degenerate marketplace. But, more likely, it will be an empty one as player's natural risk aversion will make them cautious to trade in an environment where the value of a good is prospectively indeterminant.

As a result, you will probably want to introduce an actual pool/market with structure (turn based decisions) or allow players to trade goods/assets directly with each other. If there is a turn based structure, then the marketplace will provide a certain degree of liquidity and prices will rise fall incrementally as players buy/sell to it. Speculation, hedging and commodity hording can still take place as long as there are enough turns and enough commodities that players want at different times and you will not have a problem with verification ( fake or naked bid) . But, you won't be able to pump and dump or do other things that rely upon other people's ignorance and there is a chance that there may be permanent commodity shortages if the use value of a good is higher than its market value.

On the other hand, trading goods directly will allow players to always determine the true value between themselves. Liquidity is dictated by the mechanism that generates goods to trade and the rate that producers decide to consume them. And, verification would be self-enforcing in each bilateral interaction. However, direct trades will enable greater collusion and deliberate favoritism... which may or may not be enjoyable. As long as trade is voluntary, a trading game can frequently curtail the trading opportunities for the winning player. Since it is often strategically better to trade with person in last place, there is a built in catch up mechanism which may or may not seem fair.

innuendo
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A couple of answers to the

A couple of answers to the list of questions

What if the value of an asset falls below 0? This is a problem not only for asset valuation but also for liquidity.

Simply say no price may ever fall below 1. I know this doesn't make sense in real world terms, but at some point you have to draw the line between mechanic and reality. This rule just makes sense and ensure everything still has value.

What if the value of an asset rises above 10? The math required to process these trades may become quite taxing.

Same as before, just set a maximum price. But honestly I doubt this would happen, it would require players to purchase in mass without ever selling what is an extremely high value item. As long as the "cash" resource is sufficiently valuable at some point around 7 or 8 price for any resource there will be players with the resource who could use the cash more.

What if I buy something now, and sell it the next turn without anyone else trading that commodity? Under your pricing system, I would lose $1. The same problem also occurs if you sell then buy. Transactions with the market inherently lose you money unless someone else is involved. Is this fair? And who gets this money?

Probably the equivalent of the monopoly bank, and infinitely large pool or nobody's money. I don't honestly see this as a problem though. It will be a self regulator to protect the mechanic from players using other game mechanics to buy/sell at no loss, because in any game like this you will undoubtedly have other things happen when you trade commodities with the market. So this is basically a transaction fee if you chose to do these sorts of things, which isn't a bad thing for the mechanic. At least when I theorize about how it would work turn to turn.

You are 100% correct though, you need player to player trade to compliment this system, and some other mechanic to pull resources out of the system (consumption/production). That way the value of a good isn't simply based on it's market value. The market value becomes just one indicator of it's value, and like you said, provides a source of liquidity for players.

I'm not sure however that you need to introduce scarcity into the buying pool however. As long as the cash resource is sufficiently hard enough to obtain, the lack of cash in the game should be a limiting enough factor.

Grall Ritnos
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Thanks for the continued input

Thanks for the continued input on this mechanic. I'm very glad to have people with a much greater understanding of the underlying principles than I do explaining things to me. The big concern I have right now as I read your suggestions is that within the context of my game, the market is primarily a way to acquire resources that are quickly used for production. It is not the central mechanic of the game, but merely a method of resource acquisition. Thus, although I want players to be able to buy and sell speculatively as a way to make money, the main focus for most players will be to buy what they need so they can immediately turn around and spend it on production. The game has another mechanic where players will be bidding to complete contracts, and that will be the primary source of player revenue, as well as the victory condition. Thus, I'm concerned that some of these ideas in practice will perpetually drive up the price, either leading to an unsustainable spiral upwards, or hitting the maximum early on and staying there, making the market irrelevant. The fact that demand will almost always be greater than supply is the reason I was considering the computer model, since it would provide random price modulation that is independent of supply and demand. I'm not opposed to an S&D model on principle, but I wanted to clarify the larger environment this mechanic will be placed in.

innuendo
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What else is cash used for?

What else is cash used for? Even though demmand will be higher, as long as there is enough value in cash, when the price gets high enough I'm envisioning players will value the cash more.

But at this point you are correct, you need to test in context...

Grall Ritnos
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New thoughts

Cash is used both to purchase resources and to upgrade a player's production facilities (allowing new products to be produced and at a faster rate). Cash may also be used in relation to various "event" cards, although that deck is still at an earlier stage of development, and may or may not make the final cut. I'm also considering an option to allow players to place a negative bid for a contract, essentially stating that they will pay money for the chance to complete the contract (since contracts grant victory points), but I wouldn't see this option kicking in until late in the game, possibly in an effort to keep a player who is close to winning from gaining new contracts, or by that player to secure a final few points.

Since my last post, I did consider a new implementation of the random market mechanic which would move away from the computer but could still be quite interesting. I would create a deck of cards where each one corresponds to a resource and a change in value (Ore +3, Gold -2, etc.). For each market trading round, five cards would be dealt from the top of the deck, but would be revealed Texas Hold 'em style (flip 3, then 1, then 1). At each point when Hold 'em players have a chance to bet (that is, before cards are revealed and after each flip), all players would have a chance to buy and sell resources at the current price. The deck would have a balanced number of positives and negatives for each resource, with a certain percentage of the cards held aside on each trip through the deck to ensure randomization (i.e. only 35 of the 40 cards are used before shuffling). This would allow careful players to still project market trends, but would enable more stable market pricing over the long haul.

Thoughts?

innuendo
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Great way to simply model

Great way to simply model varrious prices, but takes a lot of the interactivity ouy of the system.

You'll want to consider if more interactivty is important or a simpler market system...whichever is better suited to you game I would go with

rcjames14
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Dynamic Prices

Interesting.

Would the price reset at the beginning of each round, or would it persist between rounds and reshufflings? If there are an equal number of positive as well as negative numbers, I believe that the random walk will create a normal distribution with a bias towards the initial price fluctuation. So... if the first card is negative, the mean value of the commodity will tend to be slightly negative unless a significant number of trials are performed (probably too many for your game).

However, if each card has multiple values, there will also be a correlative relationship between all the commodity values. Depending upon how many commodities you have, you may be able to balance this correlative effect by including all possible combinations of values to prevent any systemic bias in the game. But, there will still be a dynamic correlation (based upon which cards are drawn) in each game. The end result, I suspect, will be a somewhat complex statistical environment, but not something that is responsive to play decisions.

Since random card draws will determine commodity values, the buying/selling mechanic will be completely independent of the rest of the game. Players won't necessarily be responding to S&D as much as exploiting statistical imbalances. As a result, it is not clear to me how this system will be interactive in any meaningful way. Like blackjack with a 1000 deck shoe, it really doesn't matter what anyone else does... your decision will always be based upon what the house has and what you have. When a price is lower than average, you buy. When it is higher than average, you sell. All things being equal.

There may be exogenous reasons for why you would want to buy high or sell low, but they won't be based upon what other players are buying. So... you're not really talking about a stockmarket at all as much as a store. In a stockmarket, the price that is discovered through each voluntary buy/sell order is really the outcome of a trade where each party has a different opinion of the direction of the price... And that direction is as much determined by what other people think as it is the use value of the good/asset.

But, it sounds to me that you need to model a commodities market more than a stockmarket. In a merchantile exchange, people buy/sell contracts for certain goods that are yet to be produced, but which they anticipate that they will need. Producers sell these contracts in order to raise funds to employ people to produce the good based upon their projected costs, estimated yield and desired profitability. The farther out the time frame that a contract is, the more likely it will be either undervalued or overvalued because there are a number of events which could happen in the meantime that affect supply and demand. So... merchantile traders buy these contracts and buy and sell them to each other and end consumers and charge prices based upon their most current estimates of price when the contract becomes due... exploiting informational arbitrage in most cases. The closer to the close of the contract, the more 'true' the value of the price of the commodity will be.

Since speculative behavior in an exchange is based equally upon exogenous S&D as from their own internal minority gamesmanship, it is possible for merchantile exchanges to discover prices which are wildly out of balance with sustainable S&D. In fact, asset bubbles and commodity spikes frequently occur when there is a positive feedback between the process of merchantile evaluation and the supply of the goods being evaluated. But, under normal circumstances, commodity prices bridge the rate of consumption with the rate of production.

In games like Power Grid, the production of commodities is steady, but the consumption is determined by the actions of the players. In general, you want to buy a type of power plant that no one else is using so that you don't have to compete for fuel, but there are, of course, a lot of other reasons to buy them, least of which is the question of timing in the game. To make sure you run your plants at peak efficiency, you can stockpile fuel, but usually the opportunity cost of doing so makes stockpiling limited. If there were a mechanism to sell back the fuel for the current market rate, you might be able to engage in speculative behavior. But, ultimately, the game is structured tightly enough that it would be difficult to make this a significant advantage. With players constantly upgrading their plants, a built in mechanism that favors self-sufficient energy sources and so few rounds in the game, it is not likely that buying up goods would overcome the opportunity cost of doing so. So, Power Grid often comes down to having the right amount of money at the right time. With a side show of auction based price discovery that tests your familiarity with the rules, expected values of resources and the cost of lines on the map.

But, the lesson of Power Grid for any player is to avoid competition: try to be the only one building in this area, the only one buying this fuel, the only one with cash to bid, etc... And, the end result of the game is a somewhat disappointing realization that the game never escapes a king-maker scenario. From the very beginning, players are forced to choose who they will compete with. Once two people have chosen a separate direction. The third person is forced to compete with one or the other and in so doing will lose the game for both players (all things being equal). But, this degenerate multiplayer Hawk-Dove dynamic is dressed up in enough complexity that it is still worth a few games, and they keep making new versions... so apparently it is something fun.

However, a lot of Power Grid's dynamic emerges from mechanics exogenous to the commodity exchange. The actual purchasing mechanism is quite robust and as I said, it might allow players to engage in some degree of speculator behavior if there were enough rounds to do so. So, you might consider using something similar to Power Grid if you want to build gamesmanship into how players acquire commodities. An even more robust system may also allow players to also produce commodities to add to the market. But it really all depends upon the level of complexity and number of steps you wish to introduce.

Catan gets away with a simple trading system because players are both consumers and producers of goods. The barter system works because you risk losing what you have accumulated beyond 7 cards and the price structure is not very fine grained. On the other hand, all you can do in Power Grid is bet on the level of demand because there are a significant number of issues that effect it and a variety of other factors to consider. So, perhaps, if the market mechanic is only a minor part of the game you have in mind, the Texas Hold'em idea will work. But, I believe that it still needs to have some way for the players to effect price based upon either the supply, the demand or both, or otherwise it becomes a game of statistics and you might as well keep the price constant.

Grall Ritnos
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Having fun with the market

rcjames14, I wish I understood the economic and game theory ramifications of these proposed systems 1/10th as well as you do. I'm quite a novice when it comes to economic theory. I had heard of Power Grid, but had never played it or read the rules. I just finished my first pass, and I'll have to take some time to think about whether these mechanics (or something similar) would be a good fit. You're quite right in noting that I'm looking for something that is closer to a store than a fully modeled stock market. I was thinking of a stock market the way an average individual with an etrade account would interact with the NYSE, where my money will not significantly impact stock prices, but the externally driven stock prices will impact my money (although perhaps even in this statement I'm demonstrating my ignorance of economics). In regards to your question, my initial thought would be that prices would persist between rounds and shuffling. I definitely like your suggestion of allowing cards to impact multiple resources, and I may well use that idea, although the bookkeeping may be a bit odious on "the flop" if I stick with the Hold 'em system.

As I've continued to give thought to this mechanic, I've come to realize that the primary reason I envisioned a market at all was to add variance, excitement, and hopefully replayability. I think players would enjoy the unknowns of market fluctuations and my hope would be that each flip of a card would bring anticipation and be a fun game play moment. Having not played market driven games, can others speak to this? Is this actually any fun?

Finally, the interactivity issue continues to be on my radar. Random market fluctuations do take away a large degree of interactivity, which does come at a price. The last thing I want is for my game to be a race to see which person can finish his or her game of solitare the quickest. I'm hoping to combat that with the event deck, which I intend to make highly interactive, involving both cooperative and competitive decision making, as well as the contract bidding mechanic.

As an aside, I have been leaning towards a "silent auction" mechanic where players write down bids secretly and reveal them, mainly in the interest of time and in keeping the margins wide enough for players to be able to operate. Would a live auction (similar to buying power plants in Power Grid) be more enjoyable and increase interactivity, or might it simply bog down the game, since these auctions will be fairly frequent? Which will be more fun?

Keep in mind, bidding for contracts involves placing bids on the amount earned from the contract, so one player may submit a bid of $150, while another player may end up winning the bid by saying they will accept $120 for fulfilling the contract. Thus bidding is done with money earned in the future, not money currently possessed, allowing any player to theoretically bid almost any amount (although starting bids would be set).

As always, thanks for the wonderful insights. As a massively overbooked grad student, this project is part of keeping my life sane, and I have thoroughly enjoyed swapping ideas with you.

rcjames14
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Emergent Dynamics

innuendo wrote:
I don't honestly see this as a problem though. It will be a self regulator to protect the mechanic from players using other game mechanics to buy/sell at no loss, because in any game like this you will undoubtedly have other things happen when you trade commodities with the market. So this is basically a transaction fee if you chose to do these sorts of things, which isn't a bad thing for the mechanic. At least when I theorize about how it would work turn to turn.

The problem is non-linear. If I buy then sell two of the same good, I lose 4. Three, I lose 9. Although this will prohibit players from 'gaming' the other part of the system, it will have a significant chilling effect on speculative behavior. Your loss due to speculation will be exponentially inversely ( 1 / x^2) related to the degree of uncertainty about the actions of your counterparties. If they don't do what you expect them to do, then you risk losing a lot. But, what is the corresponding payoff. Let's say you guess right. You correctly expect the value of a good to be driven up by demand, so you sell into it, and to drop again, so you buy it back. What's the upside:

If it starts at 5 and you have unlimited stocks, and everyone else wants to collectively buy 5, then you will make 4 if you sell one, 6 if you sell two, 6 if you sell three, 4 if you sell 4 and 0 if you sell five. The optimum is to sell two to gain 6. The same can be said for selling.

Now, let's see how that number changes based upon true demand. If it is even higher, you earn windfall profits, and possibly lose out to having sold 3 or 4 into higher demand, but always less than half the number of the actual demand. On the other hand, if there is only 2 demand, you earn nothing, and everything less than 2 is a loss to you.

So... the calculation shows that you need to not only be pretty sure of direction but also of degree if you are going to make any money speculating. And, when the yield is compared to the principal, it is very likely that only correct guesses with big demand will overcome the opportunity cost of putting those same resources to work for production/consumption.

I don't know exactly how many rounds or the number of commodities traded each round there will be... but it becomes clear that unless there is both a large number of rounds and a large number of commodities traded (two conditions unlikely in a tabletop game), this mechanism will not support speculative behavior.

And, the problem with not supporting speculative behavior is the problem of the degenerate coordination game (aka.... multiplayer Hawk-Dove). If it doesn't make sense for you to both buy and sell, then you will either aways be selling (if you are a producer) or you will always be buying (if you are a consumer). If you are the consumer, you basically want to pick the commodity that no one else is buying to keep prices low. The same can be said as a producer if you are selling. Unfortunately, let's say that you are absolutely certain that player X will buy Y copies of commodity Z. If you also buy it, you both lose. If you buy something else, you do nothing to stop him and if it turns out that he wants what you want, then you will lose no matter what you do.

Being able to sell into an aggressive buyer is what allows people to take advantage of another player's lack of hidden agenda or desperation. But, if the actual mechanism for doing so has a negative expectation value, then everyone will be naturally disinclined to exercise this option in the absence of perfect knowledge. If accuracy is distributed evenly at random across the entirety of the game, then you will not only lose through a speculative strategy, you will end up with less than you started with.

So, I still think you need a mechanism that has no transaction cost. Something where price movements are symmetric. Where if you buy at a price and sell back immediately, the cost is 0. Such a system requires incremental price increases (and hence probably turn based structure) or direct selling between buyers and sellers.

innuendo
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Joined: 05/25/2010
I hadn't noticed the

I hadn't noticed the "transaction price" is actually a "per item transaction price" and you're right, that is an issue since it stops the one thing you want to do, which is unload a resource when the price is high.

What if you simply stagger the prices. You sell at the current market price (so you sell before the price adjusts) and then buy at the new market price? That stops the issue completely, but still allows risky buying, but less risky selling.

As proposed the mechanic basically makes selling a losers game every time since what you sell is undervalued by the fact you are selling it, and devalues any sell transaction you take.

In steps:
///
Initial Market Prices: A4, B7, C5
///
Player 1 Bid: Sell 2B, Buy 3A
Player 2 Bid: Buy 2B, Buy 2C
Player 3 Bid: Sell 1B, Sell 1C
///
Sellers cash out (Player 1 makes 14, Player 3 makes 12)
///
Prices adjust to bids: A7, B6, C6
///
Buyers pay out (Player 1 pays 21, Player 2 pays 24)

That seems better. The only thing odd about the system is that it costs less to buy 1 three times as apposed to 3 once. But that actually makes sense from a market standpoint I suspect (at least dealing with goods). Since a sudden spike in demand will shoot prices up, but a steady stream of sells over a couple of turns will make the price go up, but steadily and not spike. Plus the cost of time.

You keep alluding to number of rounds and you are exactly right, this mechanic needs *many* rounds to be relevant and decent. A 10 round game is not fit for this mechanic, you need many many turns before this mechanic's strengths can be emphasized.

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