Less is More

One advice I always hear for Inscription is "Buy Adder/Icethorn/Lichbloom". The reason is that those herbs give more Ink than the other one. There is a ratio for how much you should pay for your herbs.

When Adder's tongue costs 18g and Lichbloom costs 20g, the decision is obvious. You buy the Adder because it gives the same amount of ink. But What if Tiger's Lily is 10g/stack. What should you buy?
Well, the decision depends on whether you care about Snowfall Ink or not.

High End herbs give 1 Snowfall Ink and 6 Ink of the Sea.
Low End herbs give 0.5 Snowfall Ink and 5 Ink of the Sea.

If you care about Snowfall Ink, then the ratio is 8:5 or 1.6, so an 18g stack of Adder is the same value as 11.25stack of Tiger Lily.
If you don't care about snowfall ink, then the ratio becomes 6:5 or 1.2.

Divide the price of high-end herbs by 1.6 to find if it's more profitable to buy low end ones instead. Those are: Goldclover, Fireleaf, Tiger's Lily, Talandra's Rose and Deadnettle. 

Of Cows and Milk

I wrote a few days ago on the JMTC forums about the directly proportional relationship between herb and lotus prices. Check out the thread if you're interested.
If you're a herbalist, you might be interested in these numbers as well:
Herbs: 1.65 per node average
Lotus: 0.0825 per node
Crystallized Life: 0.4125
The Lotus works out to about 1 Lotus per stack of herbs.

Since farmers are only willing to pick herbs until they drop to a certain price(it becomes more profitable to do dailys at a certain price point) the demand for herbs largely influences the price of Lotus.

This relationship is perfect for manipulating the alchemy market.
If you find a way to increase demand for herbs significantly, (I estimate 500 or so stacks of herbs a day, and you can easily use up that much by making Decks) Lotus prices will creep down after a while because of increased supply. Then, when lotus drops, you can buy it in bulk, stop buying herbs for a few weeks, and sell the Lotus when it's expensive again.

I found out that in economics, the phenomenon is called 'Joint Supply'

Some products or
production processes have more than one use. For instance, cows can
both provide milk and be eaten. If farmers increase the number of cows
they own in response to an increase in DEMAND for milk, they are also likely to increase, a little later, the supply of meat, causing beef prices to fall.

Wasted Opportunity

If you're an enchanter, you're probably familiar with Enchanting Rods. Sometimes they are difficult to acquire, but if you ask me, they are a very well thought out item. In order for an enchanter to advance in the profession, he needs to get one of these rods. But even before he can do that, a miner has to mine the ore for the rod, the ore then has to be smelted, and a blacksmith has to create the rod. Only then the Enchanter gets to progress to the next level. This encourages trade and cooperation between players, like any MMO with a market should.

However, let's take a look at the other professions. The same miners we just mentioned require mining picks, and Blacksmith require Blacksmith Hammers. It seems ill thought out and very oversimplified that the rest of these profession items are bought from vendors.
Let's take mining for example. There could be different levels of Mining Picks, crafted by Engineers. The reagents for the first one might use some special items dropped by certain mobs. The following versions could use smelted bars. The possibilities are endless. And profession items like there aren't the only ones. What about Alchemy Vials and Tailoring threads.
And why limit this just to professions, what about food/drink that players sometimes buy.
Blizzard missed a big opportunity by trivializing a chunk of the professions.

I said I wouldn't speculate, but I did. Click the picture for link.

The probable is that which for the most part happens

Today's post is a short math lesson. If you remember probability from middle school you probably want to skip the post. If not, you might find it helpful. I decided to write about probability because so many things in the game are based on RNG(Random Number Generator). Spells/Droprates/Profession Procs all are based on RNG. It's very common to see players say:
"I made 3 Darkmoon Cards and None of them were Nobles, making cards is bad"
"I farmed 30 Stacks of Herbs and got 0 Frost Lotuses, Blizzard nerfed Frost Lotus!"
"I made flasks 20 times and it never procced. Elixir Mastery sucks!"
Or an even better one:
"I prospected 1 stack of Titanium and got 2 epic gems, prospecting titanium is awesome!"
The reply to all of these usually is "Random number generator is random". Quite insightful, eh?

So let's begin our short math lesson. Since WoW uses a random number generator, no previous draw has an effect on the next one. This makes all the calculations in the game very easy.
Let's assume that every time you kill a certain mob, you have a chance to loot 1 to 6 cloth from the mob. How many mobs do you have to kill to get 100 cloth(5 stacks)?
Got an answer? Let's see if you're right. The answer was that you need to kill 28-29 mobs on average.
How did we arrive to this conclusion? First we found the probability of getting cloth from the mob.
Each time we kill a mob we have the chance of getting = 3.5 cloth. 100 divided by 3.5 is 28.57, which was the answer to the problem.
How did I get ? Since we loot 1-6 cloth each time, and the RNG is indeed random and doesn't care about how many cloth we got last time we have to add up all the probabilities of getting cloth:

Does that mean that you are going to get 3.5 cloth each time you kill a mob? No, you might kill 300 mobs and only loot 1 cloth at a time, and somebody else might kill 300 mobs and loot 6 cloth each time. However the more cloth you loot, the more likely you are to reach this number.

You can interpret the graph the following way: 1000 mobs were looted total and the blue line shows how much cloth was looted each time. Notice that it took about 200 tries before the graph reached 3.5 and that the line didn't become completely flat until about 400 mobs were looted.

Hopefully this refreshed your memory about probability. I'll end this thread with some of the % for common drop/proc rates.

Frost Lotus: 5% chance from Northrend Herbs
Nobles Cards: 1/32 chance to get any specific card and 25% chance to get a random Nobles Card.
Prospecting Saronite Ore: 24% chance to get Rare gem (There is something special about prospecting, and there might be a followup post sometime in the future.)
Parrot Cage (Hyacinth Macaw) .07% or roughly 1:1400, which once again doesn't mean that killing 1400 will guarantee one.

Everyone's a hero in their own way

"It may not feel too classy
begging just to eat.
But you know who does that? Lassie!
And she always gets a treat!"

It's difficult to start writing this topic, since so many aspects of the game are affected by it. The issue of course is entitlement. There's a lot of discussion on casual v hardcore players, but that is not the issue. There are many players that play 3 hours per week but accomplish a lot more than players that spend 8 hours a day. The problem is that the various ways the game works and is advertised gives players a sense of entitlement to almost everything in the game. Let's examine where this sense of entitlement comes from starting from the very beginning.

When a player buys the game, he is drawn by the advertisements and box art. Both suggest that the player will be a hero in the game. This would be fine for a single player game, where the game is designed to cater to every individual playing it. But, in an immerssive synthetic reality, where you have to play and compete with millions of other players, how does the game make everyone a hero? It doesn't, the advertisement is a lie. No matter how trivial the game is some will still be casuals while others are hardcore.
Different people have different levels of intelligence, skill and devotion.

The second biggest factor that brings this sense of entitlement of players is that loss is meaningless. Dying in World of Warcraft doesn't really matter because the punishment is not severe enough. You lose a bit of armor points and you have to run back to your body(even this was nerfed since now you can run to your body faster and more graveyards were added). When you fail to kill a raid boss it doesn't matter, you can try again next week. And if you're so bad that you can't complete a dungeon, again it does not matter. The developers will just nerf the instance. For example, Occulus:

It's funny. Last week several community managers, developers, encounter
designers, and quality assurance folk logged in to the test realms to
try out the Dungeon tool by playing in pick-up groups with players via
the Random Dungeon option. One of the encounter designers was hit with
Oculus first. In jest, we all had a good laugh at the choice provided
him for his first go. No one left the group and they cleared it in a
flash, I believe getting the 20-minute achievement as well. This was
before creatures and bosses were tuned down a bit, and vehicle
gear-scaling improved on the test realms. It's anecdotal to be
sure, but players certainly didn't shy away from enjoying the time
running the dungeon with a Blizzard employee; and they had little
trouble clearing it. It's one of the faster dungeons in Wrath if done
right. Maybe we should implement a system where, every time Oculus is
selected for you in the Dungeon tool, a Blizzard employee is put in
your group. :p [...] This might not fully address your
question, but part of the reason the changes were made to Oculus was
due to the fact that players were shying away from that dungeon while
testing the Dungeon system more often than they were from other
dungeons. This is the type of data we're watching on the test realms,
particularly when features such as this come along.

Occulus is an easy enough instance, Blizzard knows it, we know it. But because the majority of the players don't know how to properly do it, the instance becomes a nightmare and nobody wanted to do it unless they were running it with friends who did it multiple times. What would have happened if Blizzard didn't nerf the instance? Probably nothing major. There would be a few people whining about it, but eventually most would learn how to quickly kill the bosses, and Occulus would be no different from Nexus. Because Blizzard didn't want to risk the launch of the new LFG tool, they chose to nerf the already easy dungeon.

Is Blizzard correct to appeal to the majority of the playerbase? Depends how you look at it.
From my perspective, it is not. I am not not a hardcore raider by any means. I am content with being just a civilian of Azeroth instead of the hero that slays Arthas. Since WoW is an immersive virtual reality I get the feeling that I contributed to the success of the top raiding guilds on my server by providing cheaper consumables, raw materials, glyphs, gems, enchants and by buying some of the items they bought from raiding.

On the other hand, WoW is not reality, it's escapism. Someone who deals with the reality of getting laid off or simply having a difficult day at work does not want to log on into a fantasy, only to make himself feel like he accomplished even less there. Looking at the game as a business model, it make perfect sense for Blizzard to trivialize the game, if it brings in more subscriptions.

Everyone's a hero in their own way:
you, and you, and mostly me, and you!

Speculation

Patch 3.3 is coming up and there is a lot of speculation as to what to stockpile and what to dump. My personal prediction is that you should buy Infinite Dust, but as far as predictions go, it's a lousy one, so I won't provide an explanation or recommend it to anyone. Other bloggers have written some pretty good analysis of patch notes. I am going to talk about specific items, but about speculation in general.

Let's assume bananas are going to cost more because of some change next patch. But the information is for free everywhere, and considering the number of people reading gold blogs these days, speculation shifts from predicting the demand for bananas next patch, to 'How many people are stockpiling them on my server".
Patch 3.3 comes out very soon, so if you've been stockpiling an item, but you see a price spike on the AH, then you're probably not the only one, and on patch day, the price of the item is actually going to go down instead of rising. Here you have two options:
1. Start selling the items you decided to stockpile before patch, let your competitors take the risk after patch.
2. Buy even more of the item to create panic buying. This second option is very risky, but high risks have high rewards. If your competitors are noticing that you're buying up a lot they might join in, spiking the prices even higher. That's when you sell.

Auctioneers stabilize the economy

I have written two previous posts about RMT and my views on the impact of gold-farmers already, but these have been just my own observations.
Post One
Post Two
Metatron also wrote a concise post that explains the buyer=>farmer=>auctioneer gold cycle.

I decided to investigate the matter further and to my surprise I found a lot of information on the matter.
I started with the WoWWiki and Wikipedia articles about gold farmers and ended up reading a lot of articles in various newspapers, blogs, research papers, and even ordered a book on the topic which I will review as soon as it comes in the mail.

The interest in MMO economies in relation to real world ones started in 2001, when Edward Castronova published a paper titled

Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier. In the paper he claimed that EverQuest had a GDP higher than China and the currency was stronger than the Yen. Since then, there have been many more studies done on the subject and I've found reading them to be quite intriguing.

Another paper on the subject that I read was Current Analysis and Future Research Agenda on "Gold Farming": Real-World Production in Developing Countries for the Virtual Economies of Online Games This one was less about the effects of gold farming on the game, and more on how and why the gold farming phenomenon exists. I'll leave it to you to read the whole thing, but I wanted to quote a few interesting parts.

"Economics sees value wherever humans decide that some construct of theirs has utility but is scarce. Synthetic world goods have utility and are scarce; thus they have value that can be measured in terms of real dollars."

The structure of gold farming firms:

"Three people do research and find the most efficient way of gold farming and power leveling, three people who are good at English do marketing and the rest are divided into four groups, the best gold farmer as group leader, farming gold."

Beyond the basic "gold farmer" epithet are many different roles that gold farmers may
play in-game (expanded from Davis 2007 and Zonk 2007):
• Hunter: these players kill non-player characters/"monsters".  They will then take
any currency dropped from the kill, and sell valuable dropped items in-game for
more currency.
• Fighter: helps the hunter to kill NPCs but does not take the drop.
• Gatherer: undertakes a non-fighting role in the game to gather resources that can
be sold for in-game currency, such as mining or wood-cutting.
• Producer: undertakes a non-fighting role in the game to manufacture items that
can be sold for in-game currency, such as blacksmithing or potion-making.
• Banker: stores assets; may also "mule" the assets from one area of the game to
another (e.g. a bank or trading location).
• Dealer: delivers the currency or item to the purchaser in the game.
• Marketer: "barkers" who generally advertise gold farming services to other
players; "peddlers" who contact individual players with advertising messages.
 Leveller: takes over a purchaser's character and plays it in order to raise it levels
(or plays a firm-owned character, raises its levels and then sells that account).
In practice, a gold-farmer's avatar may play more than one of these roles (e.g. both
marketer and dealer: Bell 2006).  Gold farmers may play these roles alone or work in
groups (e.g. Jin 2006d, Dibbell 2007).  Some of these roles (e.g. barker) seem more
likely to be automated than others.

The paper then goes into the profitability of farming gold, wages and working conditions of the workers.

The general conclusion of what I read seemed to be that "The real problem is the perception of gold farming, not the fact of gold farming" and that game companies don't do much to combat it for various reasons(all related to their profits). For one, there is a good chunk of players who will quit if they can no longer buy gold. Secondly,

"Size of effect: there are few signs that gold farmers or gold buyers have become the dominant
force in game economies.  Thus the effect they – as opposed to regular players – have on the
virtual economy will be fractional; possibly even marginal.  How regular players behave
economically matters more. "

Regular players obviously implies those who love to play the AH extensively. A regular player will pay the cost of a specific item and move on, but those of us who enjoy the buying/crafting/reselling game are the ones who control the what happens with the economy on our servers and keep the supply of an item in check, as to avoid deflation. Some of us, even find clever ways with dealing with oversupply.