User:Quizzical/Discount

To start, I'm only talking about selling goods to guildies, and not services. In some games, for example, one person may craft something for another in the guild that really costs him nothing to craft, but just a lot of time to level the crafting skill to the point that he can. Rather, I'm only talking about goods where giving away the good means you no longer have it.

Here's a common scenario in many online games. One guild member goes to sell an item to another guild member. They both understand that the item is worth about ten platinum on the open market. Because they are in the same guild, however, the seller is expected to give the buyer a guild discount. As such, he sells the item to his guildmate for 5 platinum instead of 10.

So what's wrong with this picture? A lot of people would probably say, there's nothing wrong with it. Guildmates are supposed to help each other, right? The buyer was certainly helped by getting the item at a discount.

But what about the seller? The seller has been hurt by the transaction. Before, he had an item worth 10 platinum. He could have sold that for 10 platinum and bought something else he wanted for 10 platinum. Now all he has is 5 platinum, and can't buy something he wants that costs 10 platinum. So much for helping a guildmate. The buyer could have been more helpful to his fellow guild member by declining the trade and telling him to go sell it for 10 platinum instead--or, of course, by simply paying the 10 platinum himself.

What has happened is equivalent to the transaction taking place at the normal market value, and then the seller giving the buyer a gift of 5 platinum. I'm not against charity, and if someone wants to give away his own goods for free, I don't see anything wrong with that. What is wrong is trying to give away someone else's goods for free. That's larceny, not charity. Yet that's what guilds that push for guild discounts effectively do, by insisting that if you sell an item to a guildmate, you have to also give him some money that is rightfully yours. I guess a more charitable interpretation would be that they also give you the option to refuse to sell, but a prohibition on selling to people in your guild doesn't strike me as terribly beneficial to anyone in the guild.

And really, why should it be the seller giving money to the buyer? Why not the other way around, where all transactions are expected to occur at a guild premium, rather than a guild discount? Why not let the seller benefit at the expense of the buyer instead? Why is this unheard of, while guild discounts are so common? Most arguments against that are also arguments against a guild discount.

Some claim that it will even out in the long run, as someone who is a seller today may well be a buyer tomorrow. Except that it doesn't work that way. If it were desired for the forced monetary gifts to even out in the long run, there is a very simple way to do that: scrap them. Let all trades be done at market value. Encouraging a standard guild discount is an intentional effort at avoiding this. The immediate consequence is that in the long run, it doesn't even out, and some guild members to benefit at the expense of others.

Who benefits in the long run is not random, either. Someone who knows that he can sell an item on the open market for 10 platinum is likely to decline to sell to a guild member for 5 platinum, so that he can get 10 platinum instead. Someone who only buys from guildmates and refuses to sell to them can thus ensure that the payments forced by a guild discount are only others paying him and not the other way around.

Furthermore, getting goods at a discount is highly abuseable. If someone buys an item that is worth 10 platinum for only 5 from a guildmate, what stops him from reselling it for 10 platinum and pocketing the difference? While that may be frowned upon, that's not going to stop it. To think that it doesn't happen would be about as naive as thinking that no one actually sells gold for real-life money. Surely the latter has a stronger taboo than the former.

So it tends to be the dishonest members of a guild who benefit at the expense of the honest ones. Surely it is better to kick the dishonest members from the guild than to subsidize them. Subsidies will attract more of them, not fewer.

One might ask, what if the buyer does not have enough gold to buy the item? Wouldn't a guild discount facilitate more trades in this way? But that flies in the face of economic theory. Any decent introductory microeconomics course will explain that setting a price ceiling below the equilibrium market value leads to less of a good being sold, not more. Sure, more people would be willing to buy at a lower price, but more would be willing to sell at a higher price, too. The reasons why requiring a guild premium to sell to guildmates won't faciliate more trades should be self-evident.

Furthermore, who are the buyers who want to buy items for which they do not have the gold? They are not members of the gaming community chosen at random, though they might think they are. They are the economically incompetent, who are unable or unwilling to learn the economics of the game and be able to afford what they want. A large subset of this is the people who want way too much, and far more than their reasonable share of goods by any plausible definition of "reasonable". The reason they do not have the money for what they want to buy is that they spend whatever they get almost as soon as they get it. They will never have the money for what they want to buy, and that is an immediate consequence of their own actions. So the ones subsidized by guild discounts are the incompetent and the greedy. Is that the ideal demographic that guilds seek to attract?

The problems with guild discounts are really the same as the problems with begging. If a guild encourages giving beggars what they want, then it encourages people to beg a lot to take a lot of money from the guild and not put any in. That attracts a lot of beggars to fill the guild chat with obnoxious begging. The difference between this and expecting sellers to offer a guild discount is only one of degree and not of type.

So what's the solution? The default price at which items are sold within a guild should be the market equilibrium price, as best as it can be ascertained. If one guildmate wants to additionally give free money to another, that's fine, but it should not be expected. That will facilitate the maximum number of trades between guildmates, and help to ensure that everyone in the guild benefits by being in the guild, rather than only some systematically benefiting at the expense of others. After all, why should the others remain in the guild when the result is to make them worse off than they could be elsewhere?