YoEconomy: Auctions And Their YoEconomic Affects

YoEconomyWhen people hear the word auction they automatically assume it’s a fast-paced and loud version of a sale where people compete for goods. The auctions may have a “Reserve Price”, which is a minimum price that the buyer is willing to accept or it may have no reserve at all, opening the auction to any bid.  On YoVille, the environment may be a little different, but the concept is still the same.  People pile into a room hoping for a good deal on items.  However, what do these auctions do for the YoEconomy?  Are they good or bad, and do they hold a higher benefit for the seller or the buyer?

Well, auctions have always been an uncertain market – even in YoVille.  If you have ever been to an auction you can see people buying items really cheap, compared to their estimated value, or even paying more than it is said to be worth.  Although supply and demand can have much to do with this, the final price has a lot to do with the people that are bidding.  Personal experience has showed me that auctions tend to benefit the buyer.  Buyers, myself included, have bought many items for only a fraction of their worth, which is a resellers dream.  With this said, it may seem that auctions actually burden the seller with a loss of profit, yet many more auctions have been showing up in the last few months.   Therefore, there has to be some benefit to the seller.  My theory is that a seller is able to get rid of a larger amount of items more quickly than if they were to run a sale and can closely reach their goal selling price.  In this case, it may be said that it is more profitable to run one auction compared to ten sales depending on the total value of the items.

Open Auctions

In addition to seeing more auctions, you may have noticed a popular type of auction, called an “Open Auction“, where a buyer or seller sets up a room and anyone that comes is allowed to sell to the group that sits in the room–in auction format of course. Where are the benefits of these you may wonder?

Well, if you happen to be the person that sets up the auction there are several benefits:

1) You are able to bid on other peoples’ items hoping to get a good deal or a truly desired item.

2) You can sell your items as well, hoping to make a profit on an item so that you may increase your buying power.

On the other hand, if you are a visitor to this event, you can engage in selling a single item that would have otherwise been trouble to sell in a lone event, while also hoping to acquire some items for low bids.  This can all be explained by consumer surplus (benefit to the buyer) and producer surplus (benefit to the seller).  When both parties are happy with the price in a transaction or multiple transactions we economists call this economic efficiency (a point where buyers and sellers gain the most benefit in an economy).  This may not always be the case, but if it were not true most of the time, the auctions would not be seen as much in YoVille.

Finally, what do auctions do for prices in YoVille?  Prices of items are always a huge debate, hence the reason for the YoRehab Price Guide where we attempt to show the prices at which buyers and sellers are happy to trade.

Auctions, however, make these values almost obsolete as items may be sold too high or too low depending on the bids. What I mean by this is that auctions tend to have items sold at a lower value than would generally be seen in sales.  Similarly, there are auctions wherein the seller gets bids way higher than normal, but this seems to happen only when the auctioneer holds a private event to auctions off his/her items to friends.

Consequently, the auctions can be seen as a form of price control, preventing sellers from raising prices too high, when people can simply bounce from auction to auction hoping to find the right item for cheaper than what people are selling it.  This means that auctions can possibly be the stabilizing force in the value of the in game items.

What are your thoughts on auctions? Are you constantly on the hunt for auctions in the game? Do you think auctions are good or bad for the YoEconomy? Let us know in the comment section below!

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