Inflation and Goozex

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jrtman Posted: 08-06-2008 1:55 AM

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This post is about inflation and how it affects the number of games available on Goozex at any given time. I am using small numbers to make it easier to keep track of.

Let's say there are 100 games available at an average of 700 points each, which equates to 70,000 Goozex points. Now imagine the Goozex system has a combined total of 150,000 points over all active users due to Goozex handing out imaginary points (not backed by a game trade) when a user signs up, and creating more imaginary points whenever someone purchases them for real cash. This leaves an excess of 80,000 points, enough to purchase 114 games.

Since the price of games are fixed and cannot be bartered, this means that the price of any game cannot be inflated. However, this doesn't mean that inflation goes away. Instead, inflation in Goozex must then take the form of limiting the number of games within the market. Whenever there is a difference between the amount of available games and the amount of money available to all users there will either be a lack of selling or buying.

In my example, since there is more money available than needed to purchase every game title, fewer people will list their games for trade because they won't need the points. This will keep, more or less, the average number of games on or around 100.

New members can help, but since the number of available games is low they will be less likely to stay and won't have any long-term impact on the market.

Perhaps I'm completely off base here, but what I've noticed is that there are more requests than the number of games available, and I attribute that to there being too much money in the market. If I'm wrong I'd like to be corrected, and a good discussion would help work this out one way or the other.

If I'm right, Goozex needs to figure out a way to remedy the situation before it eventually reaches its breaking point and perishes.

EDIT: I'm also not sure if this should be in the Suggestions forum or another one altogether. If so, please move.

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madfigs replied on 08-06-2008 2:12 AM

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The reason why there seem to be more requests than games available is because people can request all the games they want to, even if they don't have any points for them.  Right now I have about 20,000 points worth of requests active or on hold, and to be honest I kinda doubt I'll ever be able to afford all of them. But I might as well keep them on the list in case I want a certain one in the future.  On the other hand the offers tend to be more "realistic" since they're firmly based on what people actually have on hand.

This topic has been discussed many times before, in great depth here for example. I think the biggest problem with the argument is that you're just making up arbitrary numbers that have absolutely no basis in reality... if it started becoming difficult to buy or sell games it might be time to look at solutions, but right now Goozex seems to be working just as well as it always has (better actually, since a lot of new features have been added).  I don't mean to blast your opinions or anything, but you may want to try making more than 1 trade before deciding that the system needs to be completely overhauled.

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jrtman replied on 08-06-2008 2:37 AM

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madfigs:

The reason why there seem to be more requests than games available is because people can request all the games they want to, even if they don't have any points for them.

This isn't necessarily true. While its true that the bulk of requests for most games are with restrictions or on-hold, the number of active requests without restrictions still outweigh the number of available games by a large margin.

This topic has been discussed many times before, in great depth here for example.

I'll have to read that in full, however a precursory glance didn't yield the answers I wanted.

I think the biggest problem with the argument is that you're just making up arbitrary numbers that have absolutely no basis in reality...

The numbers are made up, however I feel that they're representative of the market. You can't create imaginary points without also creating a surplus of points.

if it started becoming difficult to buy or sell games it might be time to look at solutions, but right now Goozex seems to be working just as well as it always has (better actually, since a lot of new features have been added).

It's never a good idea to wait until something becomes a problem, especially when you're trying to expand a business.

I don't mean to blast your opinions or anything, but you may want to try making more than 1 trade before deciding that the system needs to be completely overhauled.

I don't see how a lack of trades on my behalf somehow changes the laws of economics. Also, the fact that there are so many active, unrestricted requests waiting to be matched up with a game proves that there's a problem which needs addressing.

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Shady replied on 08-06-2008 3:00 AM

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jrtman:

This isn't necessarily true. While its true that the bulk of requests for most games are with restrictions or on-hold, the number of active requests without restrictions still outweigh the number of available games by a large margin.

Maybe only on the newer or rare games out there, but most people end up trading like 700< point games.

jrtman:

The numbers are made up, however I feel that they're representative of the market. You can't create imaginary points without also creating a surplus of points

yeah but there are many points that are never used and when new games come out it helps decrease some of the "inflation"

jrtman:

It's never a good idea to wait until something becomes a problem, especially when you're trying to expand a business.

true, but you need to identify the problem and observe what measures you can take so that it is best for all

jrtman:

I don't see how a lack of trades on my behalf somehow changes the laws of economics. Also, the fact that there are so many active, unrestricted requests waiting to be matched up with a game proves that there's a problem which needs addressing.

he was just saying your inexperienced in how the site operates, and they have addressed it because if a game is requested enough and supply is low then each week the price of the game would go up 50 points till it starts to level out again, and vise versa if its offered too much compared to the amount of requests, the law of supply and demand is one of the most well known economic theories to date,

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madfigs replied on 08-06-2008 3:03 AM

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Sure there are a ton of active requests - I personally have 9 games that I want right now.  However, I also only have 350 points and 1 trade credit, so once I get matched for one of those the other 8 will disappear until I actually contribute something by trading another game.  That's why the number of requests is "inflated" versus the number of offers.

One concept you really can't hold on to is the application of proper economic principles to Goozex.  There are soooo many differences between this system and any real economy that the concepts really don't transfer well.  You can read through that other thread for more detail, but a couple of huge problems:

-Goozex points are non-transferrable through any method other than buying and selling games, and don't work with any other system besides Goozex.  They can't really be treated like a currency.
-It's not a closed system.  New users are not necessary to keep games coming in, since there are many other similar services where people can get used games (eBay, gametz.com, CAG, GameTap, EB Games, etc).  Also, a lot of people still buy new games they want at release.

Edit: I'm not a girl, and also not an anime character for anyone wondering

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dbenoy replied on 03-05-2010 10:30 PM

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Yeah if people's accounts develop an overabundance of points, then it will be hard to successfully get games, because you will have more competition for the name number of games. (recv queues long, send queues short)

Likewise, if there aren't enough points in circulation, people will try to offer games, but people won't be able to afford them. (recv queues short, send queues long)

The amount of points in the Goozex system is always going up from cash payments, and never going down unless you count people quitting or getting banned while they still have points.  But, so are the number of participants, which decreases the average amount per account, and increases the number of offerings out there.

Goozex should be careful not to mess up the equilibrium.  By selling points (inflating the point supply) they have the ability to disturb the balance.  They should increase the cost of points if the point supply gets overabundant, and decrease the cost of points if the supply gets sparse.

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zoro69 replied on 03-05-2010 10:49 PM

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There was spike in active trades with the half price gc promo(well over 6000 at peak)...but its dropping very fast the past week or so.  Hopefully that turns around fast as if it continues it can snowball fast as people fear they'll send games and not be bale to get one

Only goozex knows how many points were sold (im guessing a lot).  The new user growth can absorb that, and the user number is growing (though Im sure many sign up but never trade).   Activity down around 25% from peak, not worried ...yet.  If it keeps going down another 25% I'll start to wonder.  Hopefully they can keep bringing in lors of new users

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dbenoy replied on 03-06-2010 2:06 PM

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Yeah.  Points will tend to try to maintain equilibrium.

If it's easy to offload games, people will see less need to buy points, and if it's hard to offload games, there will be a high incentive to buy points because request queues will be super-short and buying will be easy.

However, Goozex is fully capable of wrecking that balance by charging the wrong price for their points.  If they inflate the number of points per member to a certain point, people will be trying desparately to get rid of their points, and will stop providing games because they already have plenty of points.

In effect, Goozex could kill the goose that lays the golden eggs, by trying to milk money from point sales.

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slushersa replied on 03-06-2010 2:36 PM

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You just need to press the "I believe button".  For those of you who are not familiar with this button.  It is referred to alot in military training, when an instructor doesn't have time to explain how something works, but you just need to know that it does.  So we collectivelly hit the "I believe button" and move on.  This thread has to be one of the most reduntant out there.  Sometimes things just work and do not need explanation in detail.  This is one of those cases.  Mathematically maybe it doesn't all add up, but who cares, it works.  I believe so i dont bother to ask how, why? 

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madfigs replied on 03-06-2010 2:44 PM

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I opened this thread and was like "Woah, have I been sleep posting or something?"  But then I saw it was from 2008

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jrtman replied on 03-06-2010 2:52 PM

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Wow, I must say that I'm shocked this discussion has picked up again after two years.

slushersa:

Sometimes things just work and do not need explanation in detail.  This is one of those cases.  Mathematically maybe it doesn't all add up, but who cares, it works.  I believe so i dont bother to ask how, why? 

madfigs:

I opened this thread and was like "Woah, have I been sleep posting or something?"  But then I saw it was from 2008

Lmfao, I can imagine your confusion.