This is a very interesting discussion about the in-game economy -specifically the auction house system that I caught on a message board:

One person said:

“The difference is between potential profit (which you allude to) and realized profit (when it actually becomes gils). This is why people undercut, and why you don’t understand why the do so. If you have 7 items up for sale, you haven’t made a single gil until they sell. Lets say those 7 items are worth 7,000 gils total (1000 each). If they take a day to sell, you made 7,000 gils after a day. If they sell in 12 hours, for say 6,300 gils (900 each, because you undercut the market), and you do the same thing over the next 12 hours…..then you made 12,600 gils in a day, instead of the 7,000.”

Another person said:

“pricing is a bell curve- there is a point at which you end up with an ideal rate of sale and if you drop below that you won’t substantially increase your rate of sale (meaning you start losing out on profits bigtime). In FF terms, this is the difference between knocking something a little off your price to be the “first out the door” and knocking upwards of 10% off, especially as small price fluctuations are easy to recover from, but a big dip can take a lot of time if everyone else panics.”

Hum… good stuff isn’t it? A silly little online game can really teach us something about how economy works. Or can it?