Kramsib's Value Theory

[Kramsib]

Although I want to participate in the Theory Contest, my lack of time prevents me from following that thread as often as I wish. So I have opened this thread to discuss my theory point by point til we reach an agreement or even other theory.

Firstly, I want to discuss the theoretical bases of the theory before passing to practical examples.

Let's start:

First Statement: an approach based on economic theory.

In real world, producers combine productive factors to transform resources into final production.

So we have:

Productive Factors: There are three kind of productive factors.

N Nature: where raw materials are (ground, forests, hills, ...)
L Labour force: workers or number of worked hours per year depending on some authors.
K Capital: machines, buildings, ... anything which improves production.

Resources

Raw materials, or other products used in the middle of the productive process.

Final Output

Final Production, products which don't need no further transformation to be used.

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Once we have the basic concepts, let's see where we can find them in Civ.

Cities are the only productive units in the game, they use the following productive factors to transform resources in final production:

Productive Factors:

N: Terrain Tiles
L: Citizens
K: City and tile improvements.

Resources

Cities get resources (food/shields/trade arrows) from terrain tiles which are worked by citizens. These production can be improved by capital investments on city or tile improvements.

The quantity of food / shields / trade arrows depends on the number of tiles worked by citizens and the presence of city or tile improvements.

Final Output

Food is used to get more citizens.
Shields are accumulated to build city improvements, units or wonders.
Trade arrows are used to get science, luxuries or gold for our treasure.

That is to say, terrain Tiles, Citizens and Capital investments are used to get food / shields and trade arrows which are used to get more citizens, more terrain tiles (by building new cities -settlers- or conquering -military units-), and more capital investments (buildings, terrain improvments), and the cycle goes on.


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¿Do you agree?. Let's discuss it before the second statement.

[Peaster]

If you are talking about real Civ2 rather than our contest, you should include gains from huts, tribute, trade bonuses and so on.

But you will never get a practical set of Civ2 formulas this way. I can't take your approach seriously if you can't handle the highly simplified position in the theory contest.

[Grigor]

Also in the Kapital category: gold on hand for rushbuying.

[Kramsib]

Originally posted by Peaster
If you are talking about real Civ2 rather than our contest, you should include gains from huts, tribute, trade bonuses and so on.

Huts give extraordinary "stock" of gold, science advances and units. They mean extra final production which don't affect on value (as we will see during this exposition).
Caravans give extra "flood" of trade arrows. Their effect is similar to building a road, and can be included in capital investments.

But you will never get a practical set of Civ2 formulas this way. I can't take your approach seriously if you can't handle the highly simplified position in the theory contest.

I don't think so, if you remember my past exposition I had several formulas, but I think I need to establish a strong theoretical base to be understood. In fact, my future examples can be arranged in not a such simplified position, my theory applies whatever the situation, so I can apply from the beginning of a standard game, and this is one of the aims of this thread. Once the theoretical statements are discussed, I will start a practical example to show how this theroy works and how powerful it is.

[Kramsib]

Originally posted by Grigor
Also in the Kapital category: gold on hand for rushbuying.

Gold on treasure is not a productive factor, it doesn't affect production directly.

Rushbuying doesn't affect value directly or at least, present value, but it affects on timing.

The cost of shields under rushbuying was a first approach to shield value, but we must think, that such a value has a penalty for "bringing" production from the future. So this value is distorted. It is more related with value through time and consequently with "interest rates", than present value.

All these interesting questions will be answered in the future as the theory develops.

[rjmatsleepers]

I'm not sure whether it is relevant to the discussion, but there may be a fourth factor of production. It is somewhat similar to the economic idea of entrepreneurship or enterprise. (Perhaps it is somewhat old fashioned to consider this a factor of production these days ) Anyway, it has to do with the tactical skill and micro-management ability of the player - for example manipulating your workers to gain that extra shield that completes a build even though it means a short term food deficit.

I regularly observe that some players get more out of the game's raw materials, labour and capital than others do. But as I said at the begining - I'm not sure how relevant this observation is.

RJM at Sleeper's

[Kramsib]

Originally posted by rjmatsleepers
I'm not sure whether it is relevant to the discussion, but there may be a fourth factor of production. It is somewhat similar to the economic idea of entrepreneurship or enterprise. (Perhaps it is somewhat old fashioned to consider this a factor of production these days ) Anyway, it has to do with the tactical skill and micro-management ability of the player - for example manipulating your workers to gain that extra shield that completes a build even though it means a short term food deficit.

I regularly observe that some players get more out of the game's raw materials, labour and capital than others do. But as I said at the begining - I'm not sure how relevant this observation is.

RJM at Sleeper's

Very interesting observation, I think it was Schumpeter who stated the relevance of the entrepeneurship as one of the most important factors for surviying among economic cycles.

But, as far as we are describing mechanic aspects of the game, personal features of the players are out of the model.

[rah]

And one other factor. At Raging, 150 gold for a barb king, early in the game, can be quite a boost, so resources spent on king chasing/traps must be considered.

[Kramsib]

Second Statement: Cost of production

Production factors have costs.

In real world:

N: The cost of natural resources are related to the cost you pay for purchasing them or the rent you pay for ground.

L: Salaries and wages per unit of time worked.

K: The cost of capital is related to amortisations, depreciation and rent depending on the cases.

In civilization, tiles has no cost except cost of oportunity (the cost of choosing one option and no other):

Example:

Let's imagine we have 2 tiles to place 1 citizen to work.

Tile A) produces: 2 food, 1 shield and 1 trade arrow.
Tile B) produces: 1 food, 2 shields and 1 trade arrow.

Choosing Tile A) has a cost of 1 shield per turn, but it gives 1 extra food in exchange.
Choosing Tile B) has a cost of 1 food per turn, but it gives 1 extra shield in exchange.

Depending what is more valuable 1s or 1f, Tile A) is cheaper than B) or viceversa.

In civilization there is no salaries nor wages, but there is a "cost of time" for citizens. According to Adam Smith, every worker should receive a salary in proportion of the hours worked. As in civ time is divided into turns, the salary for one citizen per turn is the same for every citizen wherever he works.

Note: citizens become unhappy by working on glaciers, it seems salary is unable to compensate for working in such extreme conditions.

Finally, city improvements has a very clear cost, maintenance. But tile improvements have a different cost, the cost of maintaining a settler during the turns a tile improvement is built. That comes from 1 to 2 food per turn, and 0 or 1 shield.

The sum of all these costs (opportunity cost / salaries / maintenance) determines an internal cost of production for our civilization in game.

In other words, the cost of transforming food, shields and trade arrows in final production, is determined by the sum of costs of opportunity, salaries and maintenance.

[Kramsib]

Third Statement: Technical Efficiency

Let's assume we always work on the most efficient tiles.

If plains produce 1f / 1s / 0a
There is no way to produce on a desert 0f/1s/0a

So between producing on plains or on a desert we will produce on plains.

This statement reduce the cost of opportunity of producing on uneffiient tiles.

[Kramsib]

Fourth Statement: Trade arrows are money

Trade arrows turn into three different outputs.

1. Taxes which increases treasure (stock of gold).
2. Science.
3. Luxuries.


It is obvious that taxes means money. Liquid money on your stock of gold.

We can consider science as money invested on science. So scientifical researching is a purchase of technology.

Luxuries can be considered money returned to people under the form of government expenditure, charity, etc., ...

Conseqently, trade arrows can be considered as money, that is to say, 1 trade arrow is equal to 1 gold.

(In fact, in CivIII there aren't trade arrows, there are coins and they are used in the same way as trade arrows in Civ II).

[Kramsib]

Fifth Statement: fc = sc = ac

And the most controversial statement.

As a consequence of what I have stated before.

In one turn, a city exploits its squares, its citizens and its buildings to transform food, shields and trade arrows into final production.

To transform food, a city employs X citizens, Y squares and Z buildings.

To transform shields, a city employs the same quantity of citizens (X), the same (Y) squares and the same number of buildings.

To transform trade arrows, a tity employs the same quantity of citizens, squares and buildings again.

Consequently, in one turn, the transformation of every element uses the same productive factors.

As productive factors has a cost, the cost of employing those productive factors is the cost of transforming the three elements (food/shields/trade arrows) into final production.

So, the cost of transforming food is the same as the cost of transforming shields and the same as the cost of transforming trade arrows, as three of them were transformed by the same quantity of productive factors during that specific turn.

That is to say:

fc = sc = ac

(food cost) = (shield cost) = (trade arrows cost)

Sixth Statement

According to 4th and 5th statements:

food cost = shield cost = trade arrow cost = money

As trade arrows are directly convertible into money we can quantify how much gold the cost of each element is.

Dividing the number of trade arrows directly convertible into gold by the number of other item we get the unitary cost of that element.

An example:

Here is Berlin City, it is transforming 24 f / 9 s / 10 a (one trade arrow comes from trade by caravan).
It is employing 8 citizens in 8 tiles.
Those tiles are technically efficient as they produce 4 items minimum, and there is no other tile with more than 4 items without a citizen on it.

The cost of transforming a trade arrow is:

10 / 10 = 1 gold per trade arrow

The cost of transforming a shield is:

10 / 9 = 1,11 gold per shield.

The cost of transforming a unit of food is:

10 / 24 = 0,41 gold per unit of food.

IMPORTANT NOTE: This is cost, and not the real value yet, but it is the minimum "price" for each item.

[Kramsib]

Re: Fifth Statement: fc = sc = ac

DOBLE POST

[rjmatsleepers]

Re: Fourth Statement: Trade arrows are money

Originally posted by Kramsib

Conseqently, trade arrows can be considered as money, that is to say, 1 trade arrow is equal to 1 gold.

But until you reach democracy you cannot get 10 gold from 10 arrows, unless the roundings are working in your favour. And with a market (bank, etc) you get more than 10 gold from 10 arrows. My conclusion is that the "value" of a trade arrow depends on the form of government and the infrastructure that you have built, but it is very rarely 1 arrow = 1 gold.

RJM at Sleeper's

[rjmatsleepers]

Re: Fifth Statement: fc = sc = ac

Originally posted by Kramsib

Those tiles are technically efficient as they produce 4 items minimum, and there is no other tile with more than 4 items without a citizen on it.

I'm not sure what you mean by "technically efficient". If you move 1 of the workers that is producing no shields on to the forest and another on to a plain, you would get a 10 shield surplus which is much more efficient for producing units. These 3 additional shields would be at the cost of 3 food and 1 arrow, but would eliminate any shield waste in the final row of a unit build - great for rushing vans.

RJM at Sleeper's