Welcome to Gaia! ::

To me it depends it's good if you have the item that is being AI'ed because you get to make a profit but when your questing the item thats being AI'ed it sucks because you'll ethier have to wait for it to go back down or you have to buy it at the AI'ed price which would be good.

I agree that it can really suck if you have a quest for an item, and inflation takes that item up 20-50k due to inflation, but usually within a day or so, the price will return to the regular level and buyers can purchase the item for the original price.

I have to say that I disagree with the term "artificial inflation."

In a free market, the balance of supply and demand set the price for an item. If you have more buyers than sellers, the price goes up. If you have more sellers than buyers, the price drops. Even when you have a coordinated group of people buying a particular item with the express purpose of increasing the price, you cannot call the inflation "artificial" since the group has created an actual demand for the price. An increase in buyers (i.e., an increase in demand) makes the price go up -- this follows a basic rule of supply and demand economics. Since the inflation follows along with a specific principle of economics, the inflation (although planned and executed with intent) doesn't happen artificially.

I would prefer to use a term like "engineered inflation" or "manipulated inflation." Both of those terms would give a much more accurate description of what happens in these cases.

Although some individuals might benefit during the time the price remains inflated, market pressures act quickly to restore the price to very close to the original market price. As the market price goes up, more and more people become willing to sell their item. For example, say a consortium inflates Ancient Katanas from its usual price around 65k up to 100k. Someone who worked really hard to buy a 65k Kanata might not want to sell the Katana at that level, but at 100k, the person would make a 35k profit over the original purchase. And since you can usually count on the price returning to the original 65k within a day or so, the person can buy another Ancient Katana and still remain 30k ahead.

So, contrary to popular opinion, I have nothing against manipulated inflation, especially since the market quickly reacts and restores the price to the original levels.

Also, I don't think that you can cheat anyone out of their gold in the marketplace. When a buyer purchases an item, that person feels that the gold traded for the item creates a fair value. The buyer and seller essentially come to an agreement and make the trade, and both parties feel that they have benefited from the transaction. The seller set a price at which he or she can willingly part with the item, and the buyer pays a price that represents the value the buyer has for the item. Transactions only take place when you have a buyer and sell that essentially agree on the value of an item. No one forces you to pay more for an item. If someone inflates Spirit Falcons from 8k to 20k, you wont find very many people willing to pay 20k for a Spirit Falcon, and the price will quickly drop back down to the 8k that the market has established as a fair price for the item.

Even when a buyer buys at an inflated price out of ignorance to the prices in the marketplace, the buyer wouldn't buy if he or she weren't willing to spend that much gold to get the item. In that case, the item really does have the inflated value.

I love the Gaian marketplace because we don't have any government entity regulating the market. The Gaian staff doesn't set price caps, volume limits, or trading hours. The market remains open 24x7, you can list items for any amount, and you can buy and sell an unlimited number of items each day. You won't find that much freedom in the real stock market -- and you don't even have to pay capitol gains taxes on the profits.

lol, lol...

Nah I think its a good explanation. Though I still disagree with one thing, that simply because someone bought an item at the A.Ied price means that he thought it was worth the value. For instance when I never used to vend I never knew the price and I bought an OMG inflated by like 600k and the only reason I bought it was because it was my favorite item, and sure I was satisfied when I bought it but after I realized I got totally jipped I was pissed off and wanted to re-sell it but I couldnt cause then I would lose gold and that would suck.

Yeah in that situation I had to sell the rest of my avatar to afford the extra 600k for the OMG, so in the end I was not satisfied and had I been informed I would not have agreed to the purchase, unfortunately A.I. leaves the irregular vendors the victims.

razz Now of course that I am active in the exchange and market everyday I don't think I would be a victim of artificial inflation or manipulated inflation.

I wonder if someone did long term inflation how that would work, like if I had 8 million gold and I purchased with the 8 million gold as many june 2007's and I could, I wonder how fast the price would increase and how supply/demand would be effected. Of course and I also hoarded all of those letters. mrgreen

If I become a huge millionarre I may consider trying that sometime. Cause its not really manipulating the system if you plan to keep the items for a long time.

Artificial Inflation, when someone under the intent of increasing the market-value of an item to earn a profit purchases a large amount of a single item then resells when the price fluctuates. This can be done by a single person or a large group of people.

In some ways it is out of control- but if you could get an angelic halo for 1k, it wouldn't make sense. It makes people realize the values of the items that are being sold on gaia. Inflation is natural, but I don't like it when people force it to happen

In order to have a long term effect, you would have to not just buy all the items up at once, but have enough capitol to keep buying every item that fall below your inflated price.

I tried this with Mimzys once. I pushed the price up from 300 to 400g, listed my Mimzy for sale at 399g, and bought out anyone that tried to undercut me. In the long run, I was buying three or four Mimzys for every one I sold. After about 8 hours, I started selling only and got rid of all the Mimzys I had bought. You know me, I kept copious records of the transactions. I ended up buying and selling about the same number of Mimzys as I had the day before when I didn't try to inflate the market and the profits were about equal.

Personally, I think AI -- to use the popular term -- only works when you have a person willing to take a loss so another can benefit. Say I buy all the Spirit Falcons and raise the price to 10k, then my friend lists his Spirit Falcons at the inflated price. My freind benefits because he didn't have to expend the capital to inflate the price, but he can take advantage of the inflated price.

You're my new favorite person!
(I like it when people actually discuss, and in my nearly 3 years on gaia, your the first I've ever seen to actually discuss.)

I only enjoy A.I. whenever someone inflates an item that will have long term inflation. (I made my first 50k (after being hacked) on mimzies and labu's.)