Fwurg

[The Lifebringer Clans]

This discussion keeps leaking into other threads, and now that we have a general forum, there's finally a place to discuss this.

Strategies
The two main strategies currently available are:
1. Produce tax sets, and combine them to tax set 7 through trade.
2. Produce a special good, and sell it to other players.

Strategy 1: Tax Sets
This strategy involves builing tax set 7 and collecting income over this. Because of specialization bonuses (corporations, focus, specials like Heliosheath) it is currently believed to be beneficial to build smaller tax sets and trade for larger ones. For an example of this strategy, see the starting setups of all players. In particular The Lifebringer Clans, The Sundarian Federation and the Unified Republic of Darya are currently following through with this strategy, expanding their tax set production.

Characteristics:
- Stable income
- Makes you dependent on a trading buddy. (if they do unpleasant things, you're associated with them. On the other hand, if they do nice things, you're associated with them)

Strategy 2: Special Goods
In the current climate, MTCF is the only viable special good to produce for export purposes. Prices are high, demand is good or at least higher than that of other goods (strategy 1 requires trade fleets, trade fleets are the bottleneck for new players)

Characteristics:
- Flexible/independent (you can more easily switch trading partners)
- Hyperspecialized (You have 4 zone types: Metals, Gas, vehicles, MTCF. )
- Risky (if you don't have a buyer, your income seriously crashes )


Profit analysis
I'll do a quick cost/benefit analysis. There are a lot of assumptions here, and things related to the current market. If people have different/better assumptions, that's what this thread is for.

For comparison, I'll assume zones with a production capacity of 100.

Strategy 1
12 material zones, 6 production zones and the capacity to trade 300 goods with a partner.
This produces 100 tax set x, of which half is traded with a mirror buddy, resulting in 50 tax set 7, for a profit of 450
Note that currently, the greater capacity in tax sets would fall in the 20% tax bracket for most players. Net profit, 360 .

Strategy 2
At 8 gas zones, 4 metal zones, 4 vehicle zones, 1 MTCF zone and the capacity to trade 100 goods with a buyer, this strategy requires less investment.
At current open market prices, this would give a profit of 664 , over which no taxes are paid.
If no buyer is found, however, this gives a miserable profit of only 68



Accurate comparison is quite difficult, because it mostly hinges on the risk factor. Currently, only one player is selling MTCF. So far, I haven't seen him have any trouble finding buyers, but this is because trade fleets are a tremendous bottleneck in the starting turns. All we have seen so far are starting turns. As play continues, development will slow down, as players are forced to develop suboptimal zones. This will possibly result in fewer trade fleets being commisioned.

Please post your comments, questions, errors in my analysis, add important characteristics of these strategies, propose alternative strategies, etc.

[The Lifebringer Clans]

If I could start a new faction, I would most likely try to play a hybrid build.

I would probably start on tax set 3+4, with surplusses and bonuses heavily focused on metal, gas and vehicles.

I'd build an MTCF zone the first turn (with the Union Grant). Since tax setups need like 10-15 trade fleets (unless they start close to their trading partner ;>_> ), I can be my own customer for quite a while.

Depending on a lot of calculations I'd have to do before starting, I'd have more of the MTCF side or more of the Tax side of the setup prebuilt. The first few turns would then be devoted to completing the other side. After this, the build could continue as a normal tax build.

[Mercury]

664 (best case) + 68 (worst case) / 2 (average) = 366 , very close (this is actually a coincident)

I will do a more in debt analysis at a later time (I already did some of these actually)

Some things to consider however:

- A risky + rewarding vs safe + not-so-rewarding option is not a bad thing, game-wise
- price is not just determined by the seller, but also by the buyer
- As the Floating Factory is slowly rebuilt, over time, prices of MTCF will drop a bit

Currently there is a high demand for MTCF. Some players jumped into that gap - they stand to make a profit since there is little supply. However, others could easily follow their lead and break their apparent monopoly. This reduces the demand and increases the supply.

Personally, I think the free market can balance this out without major adjustments from me. I want to give it that chance at the least.

More detailed analysis will follow.

[The Lifebringer Clans]

Your points are all valid.

I agree that risk/reward considerations is not a bad thing to have in your game. It makes different players try different strategies, and it makes for interesting analysis.

As for the price being determined by the buyer as well, you are correct. I'll have to analyse my current situation further, to see what the rate of return is on developing zones for tax purposes as opposed to buying more trade fleets. I've done this before, but against the old prices. Maybe this will reduce the price at which I'm willing to buy below the current figure of 6.64 /

Finally, regarding the the Open Market prices for MTCF dropping, you are again correct. Comparing against the current price is perhaps unfair. Also, it is possible that more players will start producing MTCF (since it's currently a very good option to do so) I expect this will drop the open market prices somewhat, comparable to the current influx of information. Perhaps it is fairer to compare strategies based on the guaranteed minimum value of 5 /


I still have no feeling for how risky are as a strategy. I haven't seen any problems with a lack of demand, and I don't expect to see them for another 10 turns... but I have no idea what demand will look like in 50 turns.

[Veolian Commonwealth]

In all honesty, Chriz has not yet sold a single to a buyer through the exchange.

[The Lifebringer Clans]

You are currently receiving 150 per turn. I hope Criz is getting something in return. ;>_> This would mean he's selling them.

I've offered to buy several times, and he's always been out of to sell. Also, if you look at the turn reports, trade fleets have been bought on every turn. (I haven't checked, but I'm pretty sure they have) I think the demand is there.

[Praetorian Empire]

Yes, these are payment for (earlier) delivered services.
These were done in since there was no other Union world willing to give a reasonable price for the .

[The Lifebringer Clans]

I know the price I initially offered was less than what you'd accept. You were free to make counteroffers.

Eh... Just to be clear... While I find this an interesting topic for analysis/discussion, I'm not advocating immediate admin intervention on the 'omgoverpoweredstrategy!!!11one'.

As said, it's highly dependent on demand, and I'm fine with seeing how demand develops over the coming months.

[Praetorian Empire]

I ignored that offer because it was below 450 . For me that is the minimum since that is what you would get if you would invest the resources into normal tax sets. Since are a lot of work i am trying to make some profit. I had a better offer delivering them to Brend at the time, thats why i did not negotiate on it.

[Veolian Commonwealth]

This post has a slight 'off-topic' feel to it, but I want to give my two cents about the 'You were free to make counteroffers' remark about negotiation since I feel that such negotiations and economy are tied into each other.

This post is not meant as criticism, so I will apologize up front to both players involved in the situation: I'm afraid I have to use your offer of the 17th June of of buying 100 for 440 . I don't have any other relevant example at the moment, sorry.


This is nearly a textbook example of positional negotiation. Positional negotiation is a form of negotiation in which both parties start out with extreme positions under the assumption that either party can 'win' the negotiation by convincing the other party to shifting closer towards their position.

In this specific case the Praetorian Empire offered to sell 100 for 490 . I'm not sure whether this was their actual valuation or not, but it appears to be overpriced by 40 over the production price, as can be read in the previous post. This might be due to their honest valuation of the added value of producing .

The Lifebringer Clans reacted to this with an offer of only 440 per 100 . I am sure this was not their actual valuation: The Lifebringer Clans' actual valuation is 500 , since that amount was actually paid for 100 in turn 12. So their offer was under priced by 60 .

The positional strategy has led to the negotiation breaking down immediately because the Praetorian Empire did not react to a clearly dishonest offer. I assume they felt that their BATNA (best alternative to negotiated agreement) was better then getting into a positional negotiation when they had posted their actual asking price. As a second point of interest, this form of negotiation works better if the selling party actually has to sell their goods, which is was not the case in this situation, again contributing to the negotiation breaking down.

Positional negotiation has the problem of immediately pushing both partners into an adversarial role. Once a partner opts to start out with an extreme position the other party has two options: get into a positional negotiation, or walk away. Once you get into a positional negotiation the other party will be most displeased if you opt to walk away later, and worse: this might hurt your reputation as an honest negotiator with observing parties.

In this case the effect is even worse, because the positional strategy might given the Lifebringer Clans a slight push toward having a reputation of not declaring their actual valuation -- something that might hinder negotiations with others due to the fact that multiple negotiation rounds are necessary to average out the extreme positions inherent in this strategy.

Other strategies (of which the simplest might be up front honesty about the Lifebringer Clans' valuation) might have been more productive for the acquisition of the required . Both the Praetorian Empire and The Lifebringer Clans could have offered their actual valuation (which was 500 ), or opted to accept the offer stated by the Praetorian Empire because it was lower than their own valuation.


Again, I apologize to both players involved, this post is meant as a short intermezzo on the economic analysis to offer some of my ideas behind the negotiation strategies I've seen used so far, not as criticism on anyone's behaviour in particular.

(If someone wants to discuss negotiation strategies further I will edit this post and add a link to the new thread -- please add a link to this post if you start a new thread on the negotiation strategy topic.)

[The Lifebringer Clans]

@brend: Interesting post. Up front: I know nothing of negotiation theory and do everything by intuition. I do think you misanalysed my position a little.

At the time of the offer, I didn't really need MTCF all that much. I pretty much focused on how much they'd be worth to Chriz. Using more zones, more diverse zones, and more trade fleets, a tax set swapping strategy makes 450 . For this reason, I felt MTCF are worth slightly less. I do admit 440 is on the lower limit if what could be acceptable, but for that price, building trade fleets is still a better investment than tax sets.

The Turn 12 Trade Fleet purchase isn't a good reference point for my valuation, because that purchase was made on the basis of information that I didn't have at the time of negotiation. Buying that trade fleet was a response to the Skulddan accident and the imminent removal of the 'white hole market'. Turned out to be a wrong response, too. It was meant to free one of my trade fleets from a tax swapping route, so I could use it for the open market. I need a second TF upgrade for this, and the white hole market removal hit earlier than anticipated. So, my investment has no effect, and some of my other options (supporting Kalidor or building a Gas zone) would have been more beneficial.

All that aside, earliest I'd actually need a trade fleet would be Turn 15-ish, at which point other players might have joined the MTCF market, reducing prices slightly. At that point, I would re-evalute the offer I'd be willing to make.


EDIT: I just checked, the original offer was indeed for a turn 12 TF, but that was before the negotiations turned into such a quagmire.
EDIT 2: It is possible that at the time, I still considered this to be a 6-player adversarial game. In that case, paying 490 to a player is worse than paying 500 to the bank. I've since changed my opinion, etc.

[Veolian Commonwealth]

I did not have all information, so I might indeed have misanalysed some of the situation. However, my point about the negotiation strategy still holds.

It is nice to get some insight into the actual reasoning behind the offered price though. Hopefully people will take something from my post with them into the next negotiation they enter

Let's get back on topic now though.

[Mercury]

I want to propose a third strategy. Strategy 3 is not to build any tax sets at all, but rather to build a specific raw material or product (or even more than one) really well. This gains the benefit from such things as tertiary zones, corporations and focus. These products are then sold to other players.

Because of the specialization, tertiary zones, focus, etc, the strategy 3 player has both a comparative and an absolute advantage in producing their focus goods, they can produce them cheaper than a strategy 1 player could. This seems potentially unfair.

For example, say a strategy 1 player produces tax set 5. They can trade half their tax sets for tax set 6 and earn 4.5 for every tax set 5 they produce.

However, if they can use money to buy the components of tax set 6 from different strategy 3 players, the picture changes. They can then earn 9 per tax set 5 they produce, minus the cost of buying the tax set. If they pay less than 4.5 for those products, they make a net profit over trading.

Thus, paying for example a total of 4 (2/3rd per product) would actually be better for the strategy 1 player than trading with another strategy 1 player (net profit per produced tax set is 5 instead of 4.5 or 5/6th tax per product instead of 3/4th)

Now, you might counter that this trade is not very profitable for the strategy 3 players producing the tax set 6 materials (since they only get 2/3rd per product, whereas a straight up trade and construction of tax set 7 would net them 3/4th per product. However, by specialising, the strategy 3 player can produce more products for the same investment, so the deal still benefits both parties.

In depth calculation

Note: this calculation ignores the delivery and production of raw materials. It should be used only as an indication, not as a base for a formal strategy. The idea is to explain a concept, not to be completely technically accurate.

On a medium planet in goldilocks orbit, most players expect to produce around 200 per zone with type I atmosphere, oceans and natural life with upgrades.

The planet has climate features that provides a +10 bonus on one of the products without affecting the rest of the production (penalty in something not produced).

The investment cost would be:

19 * 1000 = 19000 (basic zones, including power zone)
18 * 1000 = 18000 (upgrades on everything except power zone)

Total investment: 37.000

Total production would be 18 * 200 + 3 * 10 = 3630 products per turn.

A strategy 3 player can use planetary focus and tertiary zones (we assume 3 for this example). Additionally, the benefits from corporations is much, much higher. Exchanging zones (for the sake of simplicity) we count 15 total with 5 of the own corporation and 10 exchanged. Plus climate bonuses of 10 per zone.

19 * 1000 = 19000 (basic zones, including power zone and 3 tertiary zones)
14 * 1000 = 14000 (specialization of 14 zones)
1 * 5000 = 5000 (corporation + 1 free specialized zone)

Total investment: 38.000

Total production per zone would be 150 (base + atmosphere / ocean) + 15 (focussed planet) + 10 (climate) + 45 (3 tertiary zones) is 195 per zone * 2 for corporation = 390.

15 * 390 = 5850

We ignore the corporate income (60 per turn) as compensation for the slightly higher investment cost (1000).

The strategy 3 player, by virtue of focus on a single product, has a 60% higher output than the strategy 1 player. Thus, he has both a comparative and an absolute advantage in producing this product.

However, because he has more goods, he automatically generates a bigger supply. Since the strategy 3 player cannot produce money by himself, he relies on selling his goods to other players (most likely strategy 1 players).

Of course, if he is the only one capable of supplying them, or if he forms a cartel with the other suppliers and if the buyers need the good to complete their tax sets, the price will be high. However, if there are others who offer the same good, if he produces more product then there is demand for or if the buyers form a counter-cartel, the price will be low.

Then there is of course political power to consider. A player who wants to achieve a political goal may make a favourable trade to get the vote of another. And maybe the player is good friends with another player, and thus willing to give them a little extra.

All those factors influence the actual price and even the best economic minds cannot determine exactly what causes people to buy or not buy things. Those are the limits of our economic understanding.

However, we can add a new assumption to determine the price level - suppose we assume that players on both sides hold equal power and have the same amount of goodwill. Doesn't matter how much exactly, so long as it is equal. Many of the Strategy 1 arrangements are made along those lines - 1 tax set 5 traded for 1 tax set 6. All other things being equal, both parties gain equal benefits.

Assuming both the strategy 1 and the strategy 3 player have equal bargaining power, the price would level at a point where both players make an equal profit on the deal. Let's have a look at that:

p is the price per product.

The profit of the strategy 1 player would be:

605 * (9 - 6*p)

that is he produces 605 tax sets 5, each can be made into a tax set 7 for 6*p, profit per tax set is 9 - 6*p

The profit of strategy 3 would be:

5850 * p

assuming he sells all his products for the price p.



p = 363/632 or 0.57436708860759493670886075949367

At that price, the profits for each player is 3360 per turn.

By comparison if both had followed strategy 1, the net total profit per player would be 2721 (3630 production based on tax set 7 trades) .

Now, the point I was very slowly working towards (besides the fact that strategy 3 can work and people should really look into that) is the price of 363/632. This is significantly lower than the open market price, yet both players profits go up by 1/3rd.

Now again, this is not an accurate calculation. It ignores resources, the power balance, the complex dynamic of such a system (which would require several players following different strategies), the will to cooperate, etc etc.

But the balance does provide that you cannot judge the price merely on the alternatives on the open market. The Strategy 2 player cannot simply sell at half a percent under the Open Market price without offending their trading partner, who will thus be looking for a better deal – if the deal is fair however, they'll be inclined to stay the course.

That in turn has consequences for the actual monetary value of Mass Transit Cargo Freighters at balance – it is basically a strategy 3 based on a special good.

Given players of equal power, the actual price paid between players will eventually settle at a level where everyone profits. I think that balance point lies about the 450 mark, based on rough guestimates (actually a little below because gas and metal are both common compared to other raw materials).

The reason that Chriz can currently ask a high price is based on scarcity.

Lets establish some ground facts on this:

In the last three turns, a total of 5175 has been spent (some as money, some as actual MTCF), assuming the (then current) price of 5 per , vs 3000 on Holonet Relays. In total, 33.600 has been paid on fleet extention over all players in 12 weeks of play vs 10.000 on holonet relays.

That suggests there is indeed a demand for MTCF (and for Holonet Relays mind you). Looking at the past 3 turns (which is actually below the average over the entire game), there is a market for at least 350 per turn, while there is a market for up to 200 per turn, at the old prices.

Given a single zone that produces about 150-200, that means there is room for about 2-3 producers of MTCF and about one producer of Holonet Relays. Besides the white hole market, there has been only 1 MTCF producers. It is therefore not surprising that Chriz is sold out of , nor that he wants more than 440 for them: The demand is bigger than the supply resulting in a shortage!

Currently there is only 1 MTCF producer, with a second one setting up shop and no producers of Holonet Relays. This means that, all fluff and sunken factories aside, there is currently still a shortage in MTCF production (even though demand will be lower due to incremented prices).

Since MTCFs are currently in high demand with little supply, there is a high price. As a result, other players are already jumping in to start producing MTCFs as well. So long as the price stays high, they will continue to do this.

However, eventually there will be more MTCF then there will be buyers, resulting in lower prices and people stepping out of MTCF production.

I remain convinced it will balance itself out.