Thursday, November 1, 2007

Auction House: 48 Hour Auctions

Will 48-hour auctions create the illusion of increased supply, which will decrease demand and prices?

Points to consider:

1) Is supply constant with a 48-hour auction time? This should be true as players will not change their play-time based on AH changes to generate more supply from drops, mobs, etc in the realms. However, if everyone chooses a 48 hour auction time, this would, at first glance create the appearance of twice as many Auctions at any given time. A net increase for all players of twice as many auctions would assume players are currently not re-listing their auctions when they expire. This is likely a false assumption, as even moderately casual players and advanced players will list items when their auctions expire. The amount of supply on the AH will increase by half of the lag-time (seen in patch 2.2) between the expiration of auctions and the re-listing of those auctions. For example:

Idahoe has 2 Primal Might and auctions them for 100g each for 24 hours. He creates the auction at 6:00pm. The auction does not sell and the products are sent back to him. Ida has to cook dinner for his friends the next day at 6:00pm, and cannot log on until 11:00pm, when he re-lists the auctions. In this scenario, the amount of time that Ida's P. Might didn't contribute to the perceived realm supply of P. Might was 5 hours/24 hours.

Ida now tries to sell his two P. Might in patch 2.3 using a 48-hour auction at 6:00pm. The auctions don't sell in 48 hours and he has to cook dinner two days after the auction was created (again!). He again logs in and adds his two P. Might for a 48-hour auction at 11:00. In patch 2.3 the time Ida isn't contributing to the world supply is only 2.5 hours/24 hours.

So, supply is artificially and mildly increased due to 48 hour AH times.

2) Demand also remains the same. Players are limited by their respective play-time/gold and will not be able to buy more goods because of the AH changes auction duration.

3) Most people buy things using buyout. I don't see how a 48-hour auction would change that culture. However, products that currently were not listed in the "lag-time," will now be there for an extra few hours, which may increase visibility and the likelihood of bids instead of buyouts, which may lead to more sales more items sold by bid, which would mean lower prices.

The effect on Buyout and Bids will likely increase the number of sales mildly and increase the number of items sold from Bids, which will mildly decrease prices.

OVERALL: the new 48-hour auctions will reduce prices on very casual servers, while having little effect on more hard-core servers (older servers?). The amount total sales will likely increase by a small amount.


Anonymous said...

One thing which I'm not sure you're taking into account when you say that the number of bids will increase is that people are extremely impatient. Even on small servers, where demand is low, the simple fact that on average, you will need to wait two times longer than before patch 2.3 when bidding will cause people to be more likely to buyout when money isn't an issue.

Idahoe said...

I agree that buyouts will continue to be the most popular manner in which items are sold. There may be a few more bids occurring due to the increased length of auctions, which creates increased visibility of items on the AH. Overall, the amount of increased bids will be very low, due to the truth of your statement, that most AH sales will continue to be transacted by buyout.