When will goods substitution be fixed?

[yurcick]

At the moment the system doesn't make much sense. Pops buy goods to fulfill their needs proportional to the supply of these goods, which is not a natural behavour and not really how goods substitution must work.
This leads to pops overpaying for needs fulfillment and industries getting unfair profits or disadvantages, sometimes killing them outright.

How it works now?
See these screenshots:

After the initial tinkering, the price of wood and oil stabilized at 29,3 and 27,2 respectively (see pics 1 and 2). But one unit of oil is equivalent to two units of wood (see pic 3), meaning that for a unit of heating_fulfillment people pay 13,6 in case of oil and 29,3 in case of wood. So those that use wood overpay for it more than twice (!) at the moment (although pops in general are overpaying only about 5% compared to the equilibrium, this is stil not minimal for them, and more importantly, it's life and death for the whaling industry).

How it should work?
Prices should try to reach a reasonable equilibrium. Pops should shift their purchasing behaviour to the point where there is no way to marginally decrease price for the same level of need fulfillment.
Here it would be achieved, if my math is correct and no other goods are used for heating (like cloth), at about 28 and 56 per unit of wood and oil (compare with 29,3 and 27,2 in current design). So the market price of oil is lowered massively due to this.

Why is this important?
First of all, this is only logical. Goods substitution demands that the price per utility is minimized, and failing this causes all sorts of weirdness.
Examples of wierdness:
Death spirals with undersupply of whale oil and other similar substitutable goods. If the supply is low, the current system sets pop demand as low too, making whalers even less profitable until industrial oil consumption kicks in. If meat is cheap too, they would simply close, despite the fact that pops could pay significantly less for heating and provide whalers with huge income in the process if the system worked correctly.
A farther but a more important example is that the same likely affects services price, leading to them being massively underused for art, free movement and communication needs, which leads to urban centers being unprofitable, which is one of the leading causes of massive, ahistorical and game-breaking late-game unemployment. There are also limits in place on how much of a need can be fulfilled with a substitution good (services in the example), but I believe that the actual consumption is always very far from those anyway.

So the questions to the devs are:
Do you agree that the problem exists?
Do you agree with my assessment of its severity?
Are there any hidden problems in attempts to tackle this head on (make pops correct their purchasing behaviour every week towards equilibrium prices for a unit of utility, instead of correcting it towards supply share)?
Are you going to fix this all and when?

I was really surprised to not hear about it in the "what we're going to do in 1.3" dev diary.

UPD in 1.4, late August 2023: no major changes here. The 1836 situation is slightly more bearable and the whaling industry isn't dead from the start, but overall the system isn't logical or mathematically correct yet, oil is still underused, and the death loops that kill whaling still happen. No amount of playing with weights can fix the fundamental problem, using sell share as a model distribution just can't work and thus doesn't work

 

[Notme1]

This is intentional design - its all about sell orders!
Try to have equal amount of oil, coal, wood and fabric sell orders to have them consumed by pops in equal measure.
Of course its subtracted by buy orders, so you need bit more of other goods that are consumed by industry.

So to fix it oil would have to be consumed by buildings from beginning if you wanted equal buy orders from pops.

 

[yurcick]

This is intentional design - its all about sell orders!
Try to have equal amount of oil, coal, wood and fabric sell orders to have them consumed by pops in equal measure.
Of course its subtracted by buy orders, so you need bit more of other goods that are consumed by industry.

So to fix it oil would have to be consumed by buildings from beginning if you wanted equal buy orders from pops.

This completely misses the point, sorry. I don't want the orders equal for different goods, I want the prices to be in equilibrium.

In the example above, it would be achieved at about 31 unit of oil and 368 units of wood purchased for heating instead of 14 and 402.

 

[Notme1]

Pops don't care about price - that is they won't consume more of least common good even if its cheapest.
You have to increase its supply to be comparable with other heating goods

 

[yurcick]

Pops don't care about price

Well, they should.

 

[Alpha2518]

Pops don't care about price - that is they won't consume more of least common good even if its cheapest.
You have to increase its supply to be comparable with other heating goods

Thats backwards because even businessmen in the real world when they offer a superior product at a higher price to customers who might be interested complain when they still buy the cheaper and inferior product.

Real world demonstrates you're wrong and the op is correct.

 

[Notme1]

People are X'ing my post - I don't agree with dev decisions too.
I also want it so least used pops are consumed more so you want to build more until prices are roughly equal and pop buy orders in needs are roughly equally distributed.

 

[Notme1]

Thats backwards because even businessmen in the real world when they offer a superior product at a higher price to customers who might be interested complain when they still buy the cheaper and inferior product.

Real world demonstrates you're wrong and the op is correct.

I'm describing how game works

 

[Askorti]

I'm describing how game works

We know how the game works, and the point of this thread is very clearly that the way the game works is illogical and should be changed.

 

[maxirage]

My guess is it never will be fixed, because doing a proper market simulation is too expensive. Just like market access, it's there to create the illusion of a complex simulation, when it's actually fairly simple.

 

[henriqueb1]

I would like an answer from the devs if this is working as designed. I can see the argument for pops not buying exotic products that they never even heard of (some kind of marketplace building could be used to correct this), but this would cause all kinds of issues and also bring up the need to create geographical limits on product distribution (makes no sense that the people in Kanto wouldn't buy 2 oil instead of a wood since there is whaling there and it's not exotic).

 

[Silesian Burd]

The devs wanted people to accept the game's command economy from launch at base. Hence they released it as it was.

A significant amount of people didn't end up doing that, but that doesn't mean that the devs are going to change everything to make sense.

 

[yurcick]

The devs wanted people to accept the game's command economy from launch at base. Hence they released it as it was.

A significant amount of people didn't end up doing that, but that doesn't mean that the devs are going to change everything to make sense.

Some things are desirable abstractions, even if they have caveats. Some aren't.
I argue that the current approach to goods substitution brings so many problems that is should be changed. Also I don't really understand the reason for this approach to be taken (more on that in the following paragraph).

My guess is it never will be fixed, because doing a proper market simulation is too expensive

To be honest, I don't quite see the computational difference. Pops preferences in consumption are already recalculated every week, although the recalculation is done towards supply shares, which makes no sense.

I have a slight suspicion that this is intended to avoid weird purchasing behaviour when one of the goods hits +75% price but still is more desirable than another.
But the prices and relative substitutional effectiveness are for some reasons aligned, so all goods would hit +75% or -75% simultaneously under proper equilibrium simulation. I believe this is set this way for all substitutable goods for all needs (at least I haven't seen any exceptions). This also means that when this happens and the prices are at the minimum or maximum, any composition of goods would be the most effective purchasing behaviour, and it isn't nice to allow 100%/0% goods bought in such cases, however rare. In these cases, striving towards a share-based goal sounds like a reasonable thing. However, it eludes me, why is the share-based goal active all the time, and not only turned on as a rare safeguard for cases of all prices at minimum or maximum.

 

[icon41gimp]

How frequently do you change heating your home between electricity, natural gas, crude oil, wood, coal, etc just because one is cheaper than the other? The current state does a decent job at representing the real costs of switching substitutes in some cases. A home designed to burn wood for heat probably doesn't have the correct stuff for using oil instead.

 

[durbal]

How frequently do you change heating your home between electricity, natural gas, crude oil, wood, coal, etc just because one is cheaper than the other? The current state does a decent job at representing the real costs of switching substitutes in some cases. A home designed to burn wood for heat probably doesn't have the correct stuff for using oil instead.

No it doesn't. If there was 49 wood supply one week with 50 oil and 51 the next week pops would still swap goods just as fast. The system makes no sense.

Also your argument doesn't hold up regarding wine/liquor, meat/grain, etc. It's just a dumb system.

 

[BeauNiddle]

To be honest, I don't quite see the computational difference. Pops preferences in consumption are already recalculated every week, although the recalculation is done towards supply shares, which makes no sense.

There will never be perfect price purchasing since the very act of pop consumption alters the prices themselves. If they keep the weekly recalculation then there will be a lag in the market knowledge. By creating a tight feedback loop (alter consumption on price, which then alters the price) and having lag you run the risk of out of phase signalling or ping ponging (where it alternates between each side of a boundary but never stabilises.) Now it's seems the feedback loop should be damping so maybe it would work but I can quite easily imagine there are weird edge cases and gotchas out there. [the current system is random sampling - that should have a fairly stable statistical spread]

My personal guess is they went for a close enough approximation that they could get the system working and someone somewhere has a low priority note to go back and improve the system. It is a sad fact of project management that the last third of time is usually a debate of what you cut from the plans to hit the deadlines.

 

[myrogia]

How frequently do you change heating your home between electricity, natural gas, crude oil, wood, coal, etc just because one is cheaper than the other? The current state does a decent job at representing the real costs of switching substitutes in some cases. A home designed to burn wood for heat probably doesn't have the correct stuff for using oil instead.

Stop doing this.

Every thread where somebody points out "hey this system is either completely broken or terribly designed", you get somebody writing up elaborate fanfiction to defend it. "Well if you squint your eyes, and pretend a dozen different mechanics that aren't in the game are actually in the game, it sort of resembles this one time in 1894 whe-". Does the game simulate the different amount of water that the tea plant consumer per pound of product vs the coffee plant? Does the game simulate the massively important difference between coal grades? No.

No, it doesn't make sense that pops are effectively paying 2x as much for one good as its substitute good. No, this is not a deliberate master plan by Paradox to simulate every subatomic particle of the universe. It's either a bug or just terrible game design. It's not possible for anybody to look at this situation and believe otherwise, so just stop doing whatever it is you're trying to do here.

 

[yurcick]

There will never be perfect price purchasing since the very act of pop consumption alters the prices themselves

But this happens now anyways, just less directly (supply share affects pops purchases which affect price which affects employment levels which affect supply share).

And I don't think that oscillating between slightly off-balance positions on alternating sides is that big of a problem if possible price and purchase volume values are granular enough.

 

[Me_]

Dear Cthulhu. This has to be one of the most absurd XIX-century economics thread I've seen. Obviously, when the price of gasoline goes down, people instantly abandon their gasoline-powered cars and swich to their gas-powered ones that they keep in their pockets.

What insanity still makes makes people believe in perfect substitution and has them make judgments based on outdated "utilitarian" economic theories?

Just because wood and oil are substitutes in a broad sense does not mean that they are perfect substitutes. Heck, I've lived for two years in a city where tons of people kept using overpriced coal for heating, just because wait for it, changing house heathing method is costly (not to mention other sources of inertia like personal preferences, proximity to the good suppliers etc.). Now, the game does not model such factors at all, insted opting for a simple abstraction of proportions, but this is just a model, and every model is a simplification of reality. "Fixing" these "problems" would result in things such as societies where the only consumed good is wheat or buying porcelain as their only luxury good, abandoning entirely clothing and furniture.

 

[yurcick]

Dear Cthulhu. This has to be one of the most absurd XIX-century economics thread I've seen. Obviously, when the price of gasoline goes down, people instantly abandon their gasoline-powered cars and swich to their gas-powered ones that they keep in their pockets.

What insanity still makes makes people believe in perfect substitution and has them make judgments based on outdated "utilitarian" economic theories?

Any economic theories that are simple enough to be included in a videogame are probably outdated. Doesn't mean they're completely wrong, just that they're not specific enough or work only on subsets of data.
In the same way Newton's laws are "wrong" for ignoring the discoveries of Einstein (the former are still very much true when the velocities are very very far from the speed of light, which is still acceptable for most everyday usage). Economics, of course, doesn't have the level of strictness of physics, but still the "outdated" argument doesn't stand. After all, the "prices simply go up and everybody consumes more than everybody produces" is also an abstraction, and a very useful one.

this is just a model, and every model is a simplification of reality

Quite agree with that.
Everything we're going to see is macro models without much micro to support it in detail. This is not a problem, unless the model is so bad that there are huge unintended effects to other systems. I believe that in the goods substitution there are problems of this magnitude, which I described in the original post.

Just because wood and oil are substitutes in a broad sense does not mean that they are perfect substitutes. Heck, I've lived for two years in a city where tons of people kept using overpriced coal for heating, just because wait for it, changing house heathing method is costly (not to mention other sources of inertia like personal preferences, proximity to the good suppliers etc.). Now, the game does not model such factors at all, insted opting for a simple abstraction of proportions, but this is just a model, and every model is a simplification of reality

For exactly heating the "cost to switch" argument does make certain sense, but

1. pops now in the game have no tendency to switch to more effective uses even in long-term for them (decades), which is completely uneconomical
2. for many other goods (like food) there are no such obvious refitting costs, and pops still don't switch
3. this all switching thing, if we take it into account, demands that these considerations and effects must also apply to industry, where it would affect the economy many times more. This is in fact a very valid discussion (an instant penaltiless switch of PMs being a harmful oversimplification), but while we don't have it, speaking of it for the pops, where this is much less important, seems redundant
4. this is still not a good explanation of why actually the share of supply should somehow be used as a model distribution of usage

"Fixing" these "problems" would result in things such as societies where the only consumed good is wheat or buying porcelain as their only luxury good, abandoning entirely clothing and furniture.

No, not really. Fixing them would mean that the prices would lock and be interdependable between certain goods (say, wood is -43% and both wood and oil are used for heating, so oil is also -43%). But people wouldn't stop buying some good unless
a) industry needs the good more and is willing to pay more
b) for some of the goods this level of price makes production unsustainable
For me, those consequences are very much intended.
UPD: and if some substitution provides weird outcomes, an easier means to fix that would be to separate the needs, so that pops couldn't sit on porcelain, or consolidate the production output, so that new "luxury items" goods could be both made in glassworks or furniture factories. Although I don't really think the game needs it, as the needs are already granular enough, you can't subsitute clothing with either wheat or porcelain

Having the prices at the same level would be a bit ugly, true, but hopefully a more diverse market access fixes that later in development. I'm still absolutely sure that this is a much smaller problem than what we have now.