The Bull Run Continues
November 15th, 2007 by mrjefe
The Hattrick economy is on a bull run of late and transfer fees have been magma hot. I’ve tried drawing some comparisons with the real world i.e. rising crude oil prices for example, to explain this, frankly, ridiculous situation. That aside, I am also looking at the possible impact of recent training and future gameplay changes on this same transfer market.
To begin with, let me scribe without shame that I am not an economist by any stretch of the imagination. My last economics paper ended with a pass, but just barely… and therefore this is just my take on things and all views supporting or to the contrary are most welcome!
With crude oil prices hovering slightly below US$ 100 per barrel compared to US$ 11 in 1999 (source: Capital Talk, The Star Newspaper) it is impossible not to parallel this with what is happening in Hattrick. A keeper that I purchased for over RM 5 million last season is now valued at almost double the price, while a trainee I purchased 2 seasons ago is going at a 200% premium – not bad returns by most measurements!
Is this simply a case of limited resources or possibly a result of some market provocation (i.e. the threat of war and the resulting rising oil prices)? I venture to conclude: Both. Until last season, players from the level of titanic and above fetched little premium. This had to do with the relatively high wages that accompanied such talents. The new changes in training makes it harder for players at such high skill levels to level up and even maintain for that matter.
Firstly, I expect the pool of highly mono-skilled players to decrease somewhat in the near future. Secondly, rather than wait to train a primary skill to very high levels, the better to buy one and train the secondary skill instead – more so if the accelerated training regime for low skill levels turns out to be favorable. Thirdly, the customary early season coupled with cup matches demand only aggravates the market further.
With all these market transfers, add in the fourth effect, which is the vicious cycle of selling and replacing – i.e. the higher the selling price, the higher the corresponding cost of replacement. Question is how long this will go on until the cycle burns itself up? I am thinking it will be in tandem with the cup…
Another reference to the real world is this thing called the “herd mentality”. We always hear the phrase “buy low, sell high” but pay little attention in practice. In theory it is easy enough to comprehend, but faced against an opponent who has compromised his long-er term plans and purchased one heck of a player, we tend to do the same and sometimes even more. Personally, I believe that the bulk of team building needs to be completed before the beginning of the new season – save 1 or 2 strategic buys which may be planned if we practice good money management; or the required trainee which should be funded by sales in the first place.
So what are we to do in such an economic climate? Get infected by the craze? Sit tight and pray that the storm will tide over? Take speculative bit sized bids and hope you get lucky? Well, maybe this question will help some of you make a better decision: If Hattrick money were real money, would you still be spending the way you are?
November 16th, 2007 at 12:07 pm
Then how come I got only little money left???
November 16th, 2007 at 2:26 pm
Because you spent it all like a bull!
November 16th, 2007 at 2:44 pm
I think it funny you never mentioned demand. Oil is the way it is because, in Bush Jr.’s words, the world “thirsts for oil”. I think Hattrick players thirst for the Ronaldinho as ManU thirsts for a new Schmeichel. Tie that in to that thing you pointed out in how much more difficult it would seem to train a uniskilled master… I think it’s only natural for the jump in price.
I’ve not played HT long enough, but I’d wager that prices have been rising steadily since its inaugural. It’s up to HT players to drive the demand down: reward players who have homegrown talents form the bulk of their team. If FIFA is thinking of limiting foreign players of entrants in their cup competitions, I don’t see why HT can’t go down the same road.
Maybe HT players themselves can form leagues or competitions with such rulings in place.
But maybe there’s no need for it. I think HT money mint must be exploding every season so inflation is natural. With people having tonnes in their banks, what’s a 10million keeper to them?
November 16th, 2007 at 5:29 pm
Actually only a couple of seasons ago we experienced a period of recession. Again using my limited economics understanding, supply and demand, is relative. As the number of team increase, so does the pool of players in the transfer market.
Anyway, I think tampering by HT only makes things worse – better the market to decide… as bullish as the market is right now!
November 29th, 2007 at 11:57 am
Haha… I’m the only econometrician here (with a degree of it of course) and let me assure you that no economic principle can fully explained what’s in the real nor in HT world. Otherwise, I would be practicing it rather than doing some finance job buried under the piles of work.
The economic situation in HT world is in the state of flux (i.e. plenty of fluctuation) due mainly to the response of the users towards the changes made (or the perceived change). People tend to react too optimistic / pessimistic to the actual situation and thus overshooting / undershooting in the projection of economic trend / cycle.
In real world, we have Bernanke, King and the like to intervene and stabilize the financial markets but here in HT world, we look to each other and stuck in the herd mentality.
In real world too that we roughly know the fundamental and when / how if there is an intervention coming. Here we pray to the imaginary HT-God.
I can carry on and on but the gist to the above is…. expect the HT market to be volatile, stay away fron short-term gain (unless your goal is equally short) and brace yourself with changes lie ahead (which could be disappointment or windfall gain to you).
November 29th, 2007 at 5:27 pm
Hmmm… I beg to differ that normal economics don’t apply here. Whether it is a different set of rules or unusual herd mentality, the study of economics is precisely that – an interpretation of a reaction to a factor (or factors) of stimulation…
Add to what I wrote, I believe people are buying because:
1. They need the muscle – the cup necessitates and ironically facilitates this
2. They have excess and view this as not temporary
3. They took advantage of the inflation but need to restock
If 1 applies, it will diminish over the season.
If 2 applies, they may not have played long enough to know that someones recession happens too… but reality will hit in the last quarter of the season.
If 3 applies, this should burn out along with the above.
Hence I predict that prices will spike a couple of times in the second half of the season but the markets will find a lower equilibrium as soon as teams realize that they are unable to support high wages with high purchase prices.
December 6th, 2007 at 3:27 pm
I’m not saying that the basic principles of Economics are not applicable here (after all Economics is indeed social science). All I’m saying is the stabilizing factor is less obvious here and thus the HT economics tend to overshoot / undershoot more frequent than in real world.
So to have a more stable HT-economy, there is a need to introduce more stabilizing factors. In the same time, any changes made (that could potentially have an impact on the financial state) should be communicated more thoroughly and given ample time to digest and internalize.
In fact, I was toying with an idea to get HT to provide me with the assess into some of their database so that I can run some regression / correlation…. etc so to (1) help to stabilize the economy (2) how best can we learn from HT-Economy and translate that into the real world.
I must say this is very very interesting but I doubt they will even bother to look at my ideas so I scrap that thinking of mine. After all, I do have a day job that provide the bread and butter (with some honey and whip cream to go along).
December 6th, 2007 at 5:14 pm
But… but… isn’t a stable economy an artificial one?
Anyway, I think your and my efforts are better spent trying to mitigate and even profit from the economy rather than trying to control one
December 12th, 2007 at 10:21 pm
In the perfect economy, everyone would have perfect knowledge and thus no one will then be able to have any extra bit to benefit oneself and thus the economy is “dead” stable.
I think most of us (esp those in the easy series) are in fact trying to manipulate the market sentiments and make the best out of it. Hopefully, I can beat the market and not the other way. Haha…
January 13th, 2008 at 1:42 pm
I believe it all started since “The New Deal” in the beginning of the season. And if i hadn’t remembered wrong, there was also increase in stadium ticket prices and sponsor contributions. All of a sudden comes an influx of cash and everyone started buying everything they want(at nearly whatever price). Many tried to bid slightly above market value in order to secure their buys but unexpected to them, other bidders were willing to bid even higher… …
A simple rule of economics applied here : great demand -> price inflation.
December 2nd, 2008 at 11:17 pm
Yeah….Ronaldinho ROcks!!