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Mechanic

The mechanic is called "market manipulation" and is supposed to work like this:

  • Players can enter the London Stock Exchange (LSE)
  • LSE displays the stock prices of 8 to 10 companies and derivatives. This number is relatively small to ensure that players will collide in their efforts to manipulate the market in their favor. The prices are calculated based on
    • real world prices of these companies and derivatives (in real time)
    • any market manipulations that were conducted by the players
    • any market corrections of the system
  • Players can buy and sell shares with cash, a resource in the game, at current in-game market value
  • Players can manipulate the market, i.e. let the price of a share either rise or fall, by some amount, over a certain period of time. Manipulating the market requires spending certain in-game resources and is therefore limited.
  • The system continuously corrects market manipulations by letting the in-game prices converge towards their real world counterparts at a rate of 2% of the difference between the two per hour. Because of this market correction mechanism, pushing up prices (and screwing down prices) becomes increasingly difficult the higher (lower) the price already is.

Goals

  • Players are supposed to collide (and have incentives to collide) in their efforts to manipulate the market in their favor, especially when it comes to manipulation efforts by different groups.
  • Prices should not resolve around any equilibrium points. The more variance the better.
  • Band-wagoning should always involve risk (recognizing that prices start rising should not be a sure sign that they will keep rising so that everybody can make easy profits even when they don't manipulate the market themselves)

Question

Are there any game-theoretic considerations that prevent the mechanic from achieving these goals?

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3 Answers 3

I'd start by asking where the conflict between players is supposed to come from. At a glance, I see only two potential sources for it:

  • Incomplete information, a.k.a. "Who the bleep is driving this stock down when I'm trying to drive it up?" Unfortunately, while this can easily generate plenty of heated forum posts aimed at those idiot n00bs, it seems unlikely to lead to any sort of organized conflict.

  • Freeloaders letting others manipulate the market and just taking the benefit without the cost. Alas, I don't see much that the non-freeloading players can do about it in your game, except maybe try to make their manipulations unpredictable.

I'd suggest trying to figure out what in your game would seem likely to make the players divide into opposing factions. If you can't find anything like that, you may want to add some.

Of course, another option would be to just implement it, let people playtest it and see what happens. It's hard to predict emergent game dynamics, and sometimes even seemingly trivial games may become interesting once you add actual human players into the mix.

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What about adding a market for put and call options? Then the two participating parties would have opposing interests with regard to the development of a share's price. –  BerndBrot Aug 31 '12 at 14:53

Whether you let the in-game price converge to the real world prices by 2% per hour or some other system, the knowledge that they somehow will converge gives players a lot of certainty about the development of the stock market. If you want the recognition of rising prices to leave uncertainty about whether they will continue to climb, I would be very careful in offering tools to manipulate the market that have a predictable effect after they've been initiated. To maintain the uncertainty of the real stock market, you will have to avoid the in-game market lagging behind.

As far as bandwagoning goes, it depends on what a player's objective is. If the goal is to make money, nothing will stop me from getting on board with the same shares the strongest player bought, knowing he will devote his resources to driving these prices up. If the goal is to outwit other players, there already is a lot of feedback discouraging this play, even with complete information. Buying shares from the same company reduces incentive for people to drive the price up, since that would be advantageous to their opponents, and increases incentive for competitors to bring the price down. The only non-speculative way to determine whether this feedback works, is through playtesting.

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Good point about the predictability of the system correction mechanism. As an alternative, I could just save the accumulated manipulations and add it to the current real world price. The only problem then is that there is no mechanism that makes pushing up prices increasingly difficult. On the other hand, if prices get really high, market manipulations will at least yield less and less relative profits (+5 per share that cost 100 is worse then +5 per share that cost 10). With regard to your second point: you generally don't know which player bought which shares. Does that make a difference? –  BerndBrot Sep 1 '12 at 20:39

I don't understand how players will be able to do any form of in-game market manipulations when your data is feed from the real LSE. The real market will do all the manipulations. Your game will just mimic the real market.

I would recommend to create your own market. Like World of Warcraft Auction House or Eve Online.

A stock exchange "simulation" system. Good luck with that.

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1  
I don't think that the in-game market will mimic the real market. There are incentives to manipulate prices, so players will do that, and they will do it up to the point when further manipulation becomes too costly. The question just is: if we assume that all players are rational in game theory's sense of the word, will their individually dominant strategies lead to collective price manipulations that benefit everyone (bad), or will players try to manipulate the market in different directions and therefore oppose each other (good)? –  BerndBrot Sep 1 '12 at 8:38

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