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Everything is looking up: Economy is under control and 1.7 has awesome new features!

blaze Spinnaker
1/2 Serious
Join date: 12 Aug 2004
Posts: 5,898
09-03-2005 09:16
Can't wait to see all the new games HUD brings in and the thousands of new users who will be able to fully and immersively play card games and such with each other on the internet. Something they could never do before.

Plus, with Korea / Japan / etc coming on line.. we'll have a huge influx of new residents, which should be great for the economy.
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Taken from The last paragraph on pg. 16 of Cory Ondrejka's paper "Changing Realities: User Creation, Communication, and Innovation in Digital Worlds :

"User-created content takes the idea of leveraging player opinions a step further by allowing them to effectively prototype new ideas and features. Developers can then measure which new concepts most improve the products and incorporate them into the game in future patches."
Dnate Mars
Lost
Join date: 27 Jan 2004
Posts: 1,309
09-03-2005 09:21
Things are looking up all around in SL, it seems that the people are coming back now that school is starting, lots of bugs have been fixed, better sim preformance, and an all around recovery is looking like it is coming for SL. I think SL future is bright.
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Wes Callahan
... whatever ...
Join date: 9 Jul 2004
Posts: 278
09-03-2005 09:25
yay :D
this is really good to hear
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Ellie Edo
Registered User
Join date: 13 Mar 2005
Posts: 1,425
09-03-2005 09:42
I just want to see stability on GOM, and stability in land prices.

The former we certainly don't have. Even if things are going to boom, that's as bad as a bust for business planning, because of the near certainty of overswing and subsequent bust.

Stability stability stability.
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blaze Spinnaker
1/2 Serious
Join date: 12 Aug 2004
Posts: 5,898
09-03-2005 09:54
True, maybe I should have said economy is being managed. Whether or not it's under control yet remains to be seen.

Still, to be honest, a dropping L$ doesn't really hurt me. What hurts me are fewer gross sales when converted into USD .. which I have not seen..

What happens is the L$ drops and my prices drop.. but then more people buy because things are cheaper.

So, really, it's not really bugging me
_____________________
Taken from The last paragraph on pg. 16 of Cory Ondrejka's paper "Changing Realities: User Creation, Communication, and Innovation in Digital Worlds :

"User-created content takes the idea of leveraging player opinions a step further by allowing them to effectively prototype new ideas and features. Developers can then measure which new concepts most improve the products and incorporate them into the game in future patches."
Surina Skallagrimson
Queen of Amazon Nations
Join date: 19 Jun 2003
Posts: 941
09-03-2005 10:28
Alternativly you could argue that a cheaper L$ means people can buy more of them for the same amount of US$, therefore they can spend more in-world...
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blaze Spinnaker
1/2 Serious
Join date: 12 Aug 2004
Posts: 5,898
09-03-2005 10:42
Exactly...

Sometimes a currency dropping in value can actually be good for an economy because it makes their exports cheaper.

Now, only if we could buy food, shelter, and clothing with L$ .. we'd be set!
_____________________
Taken from The last paragraph on pg. 16 of Cory Ondrejka's paper "Changing Realities: User Creation, Communication, and Innovation in Digital Worlds :

"User-created content takes the idea of leveraging player opinions a step further by allowing them to effectively prototype new ideas and features. Developers can then measure which new concepts most improve the products and incorporate them into the game in future patches."
Ellie Edo
Registered User
Join date: 13 Mar 2005
Posts: 1,425
09-03-2005 17:05
From: blaze Spinnaker
Still, to be honest, a dropping L$ doesn't really hurt me. What hurts me are fewer gross sales when converted into USD .. which I have not seen..

What happens is the L$ drops and my prices drop.. but then more people buy because things are cheaper.

So, really, it's not really bugging me
But surely, Blaze, thats a question for you, and your individual product line. Some products, you drop the price, the sales increase and more than compensate - some other products, sales don't increase enough, and it doesn't compensate.

Price drop is not a universal good for all traders. Indeed, you could argue that any price change not chosen by the trader can benefit only a mistaken trader who has got his price on a non-optimal part of the curve anyway. If you have your price exactly right, then increasing it or decreasing it should cause you to make less money. Surely that is the skill of pricing.

This curve, and the optimum price, all relate to what economists call "Price elasticity of demand", which is well described here:
http://en.wikipedia.org/wiki/Price_elasticity_of_demand

So you see, the smartest traders will have got their prices just right, and any involuntary price change forced upon them by, for instance, exchange rate movement, should cause them loss, forcing them to change their prices to compensate.

The only traders who should benefit will be those who are on the wrong part of the curve, and should have changed their prices anyway, so that the exchange rate change accidentally corrects their error.

It's more complicated than this, because changing everyone's prices together, wholesale, also chnges the shape of everyones curve. But the point remains, all the people who had their prices right will be skewed off and be almost certain to lose (unless their curve accidentally reshapes to peak at the new position by accident). They will be forced to adjust their prices (by mostly trial and error again) if they want the best return. Half the people who had non-optimal pricing may benefit by accident, but only because they were losing out before.

The concept of "Price elasticity of demand" may seem daunting, but it is just exactly what we are discussing. It puts a number on whether you gain or lose overall by increasing your prices.

Edit: The point of this posting is not to suggest that we can all in practice experiment with our prices until we get them optimum and in line with theory. But rather that understanding the fundamental principles shows us that we can never be confident that an overall pricedrop will be of value to the business community, because everybody will in truth be on different bits of the curve. Some will accidentally gain, more will lose, and most will never understand why.
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