Friday, November 18, 2011

Welcome to the Diablo 3 stock exchange

Blizzard's latest beta patch has been released and there's some very good news regarding the Auction House. This proves, yet again, that Blizzard is taking this whole auctioning concept very seriously and they are still tweaking it to make it work well. Here's the relevant quote:

Stackable items can now be purchased and sold on the gold Auction House. These items can be purchased in any quantity provided that the quantity is available for sale, and will pull from multiple auction listings if needed.

I'm bad at economics, I will admit that, but this immediately brought to mind a stock exchange model for the Auction House. If you are confused by Blizzard's statement, I believe I know exactly how this will work. It's quite intuitive actually.

The main thing is that this works on items which stack, such as crafting mats and gold, possibly potions as well. This should work on both the Gold and Real Money Auction Houses. Let's say you have the following stacks of Common Scraps posted on the AH (for this example I will use gold prices but it could just as well translate into actual currency):

Qty    Item                        Buyout price each        Buyout price total
---    ---------                   ----------                    -----------
2      Common Scraps       10 gold                        20 gold
15    Common Scraps       10 gold                        150 gold
10    Common Scraps       11 gold                        110 gold
5      Common Scraps       12 gold                        60 gold
20    Common Scraps       12 gold                        240 gold
8      Common Scraps       13 gold                        104 gold
25    Common Scraps       14 gold                        104 gold
50    Common Scraps       14 gold                        700 gold

Notice that items will always be ordered by default by lowest price per item. I don't know if that's the case now and I don't care. That's the way it should be. Price per unit (as well as total stack price) should always be shown prominently on any Auction House. Notice that this is not currently the case on WoW's AH. You still need addons to tell you that.

Player X comes along and he needs 40 Common Scraps. He enters the quantity that he requires in a box and the game automatically calculates the total he must pay starting with the lowest priced item. The following calculations will happen behind the scenes:

2 Common Scraps @ 10 gold = 20 gold
15 Common Scraps @ 10 gold = 150 gold
10 Common Scraps @ 11 gold = 110 gold
5 Common Scraps @ 12 gold = 60 gold
8 Common Scraps @ 12 gold = 96 gold
Total: 40 scraps @ 436 gold

Once these items are purchased, the Auction House will be updated as follows (provided no new items have been added in the meantime which undercut the lowest price):

Qty    Item                         Buyout price each        Buyout price total
---    ---------                    ----------                    -----------
12     Common Scraps       12 gold                        144 gold
8       Common Scraps       13 gold                        104 gold
25     Common Scraps       14 gold                        104 gold
50     Common Scraps       14 gold                        700 gold

As you can see, items that are stackable are sold in the order of the lowest price per item. If someone needs 5 items and the lowest priced auctions are all stacks of 100, that's not a problem. While in WoW you would be forced to find a higher priced stack of 5 (or a non-ideal stack of, say, 10), Diablo 3's Auction House simply subtracts 5 items from the first stack of 100 it can find, and leaves a stack of 95 items on the market.

I find this a great concept for several reasons. First, it will be easy for everyone to buy stackable items at the lowest price per item. Second, it won't be possible anymore to trick people into buying overpriced stacks because they didn't pay attention to the price per item. This can be a bad thing for those who like to exploit this oversight but I have never been a big fan of this, even as a seller. Third, items will always be ordered by price so there's no ambiguity there. Fourth, and more importantly, it should help stabilize the market and - hopefully - will prevent massive undercutting by eliminating the importance of stack sizes. A 1-stack auction will have the same "weight" as a 100-stack auction. The deciding factor will be price per item. Fifth, I believe sellers won't have to undercut each other so drastically. Yes, undercutting will still play a big role but now everybody has the same chance to sell their items. Sixth, I also believe that turnover will be quicker, as the cheapest items will always sell quickly without requiring so much undercutting from everybody.

In all, this is a great update to Diablo 3's Auction House but it's nothing less than what I was expecting from Blizzard. Diablo 3's Auction House will be a big improvement over WoW's, from the very start. When real money is involved, that's the way it should be.

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