True value of early trade: a case study

[La Fayette]

Winning at civ2 is very much a question of choosing the right investment at the right time. That question might be answered using a method named "dicounted cash-flow" in the US, as far as I know. May I try to explain briefly?
If you are getting hungry and you have no money in your pocket, you are likely shortsighted: for you 1$ to-morrow is worth much less than 1$ now. For you, to day's value of 1$ next year is perhaps less than 0.9$ to day or even much lesser than that. On the contrary, some people are very long-sighted. 1$ next year might be worth 0.98 or even 0.99$ to day for those people.
IMHO this method is great because the economist collects the data and does the calculations, but the user, the wise despot, the strong strategist chooses whether to be short or long-sighted. Hence, if a wrong decision is taken, responsibilities are rightly shared.
Anyway, I have recently been busy applying that method to some problems related to civ2. Here are a few results in the field of early trade (#1 briefly describes the method, for those interested, and #2 gives the main rsults for those willing to go trading ASAP).

1) Method
1$ that I'm going to get in n turns from now is worth (1/(1+r) power n)$ now (r being the rate of discount that I am willing to choose).
1 beaker=1 gold (since I always can choose between these using the "tax rate" cursor).
The production cost of a caravan is 125 gold (stepwise rushbuilding with 1 shield in the box to start with).
The "true value" of the caravan is measured on delivery. Therefore the cost, which I name A (since A is not only for Alphabet ), is then 125*(1+r) power m (m being the number of turns travelling between origin and destination city).
The revenue is B (gold bonus) + B (science bonus converted into gold) + C (current value of the continued cash-flow, doubled in case of home trade).
Hence, the "true value" of the caravan is TV=B+B+C-A
(watching TV on the BBC, this should be quite mnemonic for people like SG or EST).

2) Results
The results given here are those of my first case study in that field, playing the Romans on a medium size random map (deity, 7 civs, raging hordes), and sending most caravans to my friendly neighbors, the Indians, onboard mighty triremes, but also a few to my own cities by land, for the sake of comparison.
More precisely, I studied 12 caravans (and the resulting cash-flow during 80 turns). 5 caravans were home trade between roman cities. 4 were fine foreign trade (goods in demand in indian cities) and 3 were second class foreign trade (goods delivered in India, undemanded there).
For each caravan are given:
B=gold bonus on delivery
TV2=true value of the caravan when using a 2% rate of discount ("long-sighted")
TV8=true value of the caravan when using an 8% rate of discount ("shortsighted").

Dye Pompei-Madras (250BC) B=40, TV2=40, TV8=-115
Silk Neapolis-Veii (50BC) B=3O, TV2=5, TV8=-102
Beads Cumae-Pisae (40AD) B=28, TV2=45, TV8=-72
Copper Pisae-Delhi (340AD) B=148, TV2=333, TV8=132
Dye Veii-Delhi (500AD) B=176, TV2=402, TV8=198
Silk Hispalis-Delhi (500AD) B=246, TV2=495, TV8=307
Wool Pompéi-Viroconium(520AD) B=28, TV2=29, TV8=-82
Wine Lugdunum-Viroc.(88OAD) B=80, TV2=159, TV8=-90
Salt Lugdunum-Antium(900AD) B=60, TV2=137, TV8=-37
Gold Pisae-Delhi (980AD) B=76, TV2=168, TV8=-7
Dye Cumae-Delhi (1200AD) B=40, TV2=125, TV8=-23
Dye Hispalis-Delhi (1340AD) B=47, TV2=83, TV8=-83

3) Conclusion
Early trade can be very rewarding (look at that
silk delivered in Delhi in 500AD: net profit ranging from 300 gold (shortsighted) to 500 gold (long-sighted).
But early home trade seems to be questionable (unless one gets much better opportunities than those shown here). All of us would prefer building wonders rather than getting such tiny profits.

[SilverDragon]

Wow! A newbie who doesnt ask questions but instead comes up with strategies. We should put him in a museum!

On a more serious note, I have looked at OCC games, and discovered that the people with the earliest trade routes are always the fastest. Paul in particular seems to get his caravans off quickly.

------------------
Go Redskins!

Email me at
SilverDragon141@aol.com

[Blaupanzer]

La Fayette, somewhere in this is a discounted value of money theory. Based on this start, one should be able to trade off any given economic investment against an enhanced version of that formula. (How much money, LT and ST, will an investment yield, vice another, including a possible caravan?)

This won't solve all of the marginal value of production decisions because of military production. But it could help.

[suas333]

Thanks for your study, howveer early in the game when eve i build a caravan i can't help but think that it could be one more city. And settlers from that one city, especially early can make 5 more cities. Gold would be increased simply by quantity. But as i see players using trade routes with an early republic to get ahead in science and gold, I'll try to use early trade routes in some games inthe future.

[La Fayette]

SD
I am new to Apolyton, but not new to civ2. That's why.
As far as the museum is concerned, I know oedo already has a statue (perhaps two, quite soon, when the unfinished gets finished). If I might deserve a painting one day (even a very tiny one, as long as it is signed Manet or Monet), that would be great!
Blaupanzer
You describe exactly what my current research is about: "di$counted cash-flow" (how could I forget that precious letter?), and trying to improve decision making in civ2 by using that method, which I consider powerful.
Nevertheless, I tried to write a short post yesterday, and it seems to me to day that at least 2 points must be made clearer.
1) I am not arguing against or in favour of early trade; just trying to indicate whether it is rewarding or not.
2) The "true value" is not "true" (after many years of experience I would say nothing is ever "true" in economics). For example:
- 125 gold for 1 caravan is one of many possible values (looked reasonable to me when I chose it, but I wouldn't
blame on someone advocating 100 or 150);
- 1 gold=1 beaker might be discussed with very strong arguments in favor of either gold or science;
- valuing the continued cash-flow in gold is valid only in cities without improvements (in fact that cash-flow is Trade; it would be improved by 50% in a city owing both Market Place and Library).

[La Fayette]

I meant "owning", of course. Sorry!

------------------
aux bords mystérieux du monde occidental

[Scouse Gits]

You omit one tiny detail - for those of us who follow the Goddess ICS the value of a caravan is 200g/50shields when it helps build a Wonder - only later in the game when the vital WoWs are secure do we look for trade/science benefits. How does this fit into your theory?

Further although you are correct that 1 beaker can be changed into 1 gold by manipulation of the tax rate - only by using caravans can one 'buy' beakers in addition to those available from a maxed out tax rate - this can on occasion be beyond price...

Good work keep the ideas coming

------------------
____________
Scouse Git[1]

"CARTAGO DELENDA EST" - Cato the Censor
"The Great Library must be built!"
"A short cut has to be challenging,
were it not so it would be 'the way'." - Paul Craven

[A-Team]

If joining my game, (rules listed under Recruiting Players thread) you will find that when you play without wonder construction, citys must be as strong as possible. Build a marketplace, a bank and a stock exchange. Now Each caravan ( up to 3) will pay for itself via gold revenue if traded between big enough citys or off cont. citys or other civs. But more then that, each caravan will generate 4-8 trade. 3 then will give you say 20 extra trade. with the multiplication of M,B,SE that equals a return of 50 trade per turn!!!! when used for lux or tax. Team up with a partner who trades and uses the extra trade with lib. and universitys and 1 civ produces the tech, the other the gold a marraige made in civ heaven.
This is the kind of things that you can expect in my game. Oh , and by the way, it wont take several months to play a game, it will only take a few sittings as the game has been speeded up.

[markusf]

Look here
http://apolyton.net/forums/Forum2/HTML/001969.html?23

I can regularly build 4 to 5 size 28 cities by 500 AD on 1x 1x, giving me 2 turns a tech for the rest of the game... I also make close to 800 gold per turn at 550 AD. Industrailization by 900 AD with automobile by 1100 AD. The power of early trade and using super cities blows ICS away by a huge margin. I rounded up a couple of players and we did a test, using my strat against ICS, I had over a 15 tech lead, and a launched a spaceship before the other guys got a bit past industrailization.

[Scouse Gits]

markusf - you are of course correct - left to your own devices your strategy will blow we poor benighted ICSers to kingdom come and back. However, do you seriously think that you will be left to your own devices? Fancy defending your five super cities against 100+ vet crusaders with diplo support? Good luck!



------------------
____________
Scouse Git[1]

"CARTAGO DELENDA EST" - Cato the Censor
"The Great Library must be built!"
"A short cut has to be challenging,
were it not so it would be 'the way'." - Paul Craven

[TCO]

How do you get 100+ crusaders while ICSing. Doesn't the time spent building crusaders take away from settler/warrior production?

[Scouse Gits]

Once the Empire has reached it's critical size - depends upon map etc but between 30 & 60 or so cities you are then in position to send out 'orders to the Empire' which might be build barracks, build crusaders - ten turns or so later you field your army - I have never needed more than 30 vet Crusaders against the AI - my MP experience is limited, but would imagine that 150% overkill should suffice...

------------------
____________
Scouse Git[1]

"CARTAGO DELENDA EST" - Cato the Censor
"The Great Library must be built!"
"A short cut has to be challenging,
were it not so it would be 'the way'." - Paul Craven

[La Fayette]

SG
I have no global theory of civ2 and I claim no brilliant results. What I try to achieve is a thorough analysis of some aspects of this great game, especially in the field of decision making (somewhat alike what you did in the field of starting techs).
Then, if we look at one early caravan, my theory would be:
My choice is between using this caravan to help building a wonder (in that case, its value is about 200g, as you stated, which means a "true value" about 75g if we agree to take into account a cost of 125g) and sending this caravan to some big city faraway (in that case, its value is not far from the "true value" that I describe).
Very early, the choice is always in favor of building a wonder (because the supposed big cities are hidden in the black), but then comes the period when I discover at least one big foreign city demanding at least one commodity that I can produce.
I state that if the "true value" of this caravan is much higher than 75g, then the right decision is no longer building the WoW (except in case of strong emergency: "I need that WoW and I know the AI is building it"). The right decision is foreign trade, then buy the WoW and keep the surplus.

[La Fayette]

Settler seems more inspiring than chieftain (at least to me).
Go on posting La Fayette!
Warlord sounds more like it.

[East Street Trader]

Nice thread, La Fayette. And doubly welcome as a Gallic view of matters has previously been sadly lacking in Apolyton.

On top of which you have chosen the most inspiring of the civic subjects for your debut!

Two criticisms of your approach. As A-Team points out that initial trade arrow has value not only in and of itself but additionally by providing the foundation stone upon which the further development of the city can be based. An early local route opens up the possibility of viable and timely investment in the marketplace, the bank, the stock exchange and the superhighway.

Secondly there is the effect on the citizenry. With just a little early trade a city can grow and its citizens be put to productive use, their happiness underpinned by those additional trade arrows. And with a happy citizenry comes the chance of more advanced government. Indeed, from the point of view of success in the game at least, I would go so far as to say it is this which is the primary purpose of trade.

I see no sign that you have factored those elements into your values.

Interesting investigation nonetheless.

PS What a splendid commodity is silk (my favourite I think)!! And how appropriate that a denizen of la belle France should highlight it's merits.