Parity Resource Trading (Arbitrage) inca911 is back

[inca911]

Well, I'm back. It's been a long time since I dusted off Civ3 and I'm getting back up to speed with the AI tactics. So, I was trying Deity again (I can once again consistently win on Emperor again without any cheats), and of course I was behind the other civs looking for any edge possible via trading when I saw:

Luxuries:
Silk (0)

Hmm... I wonder what they will give me for my only Silk. Well, I then made an interesting discovery. I could trade my Silk resource for an extra resource of theirs (so I still have a resource) and get extra compensation as well in the process!

I focused on trading with civs that were not the top tier civs (to avoid strengthening them even more) and was still able to obtain extra value for my civ by this trading practice while bolstering the competition faced by the rival top AI civs. This arbitrage helped me catch up a bit, at least until an unfortunate MPP resulted in sudden and certain death from my neighbors.

So, have you all used this parity resource trading to your advantage yet?

[dexters]

Let's not get carried away with throwing fancy economics jargon aorund. How did you do it? I think if you want to make a post about this in a strategy thread, you'd let people know and not just vaguely assure people you did it.

As for arbitrage, it is about buying low in one market and selling it at the market price (higher) in another to generate a profit. Economic theory would suggest that arbitrage would tend to raise the value of the goods in the market where its prices is depressed (because of increased demand from people who are buying in one market to sell in another) and the price of the good in market 2, where it is inflated will tend to fall as supply increases.

The very vague description of the exploit, and it is an exploit if you somehow trade away your single resource of luxury, is by definition not arbitrage, unless you want to say tricking the AI to give you extra luxuries for your resource is somehow profit. But in Emperor, the AI don't do 1 to 1 trades.

Edit: oh, and make you have the latest patch. 1/29f, considering you haven;t played for a while.

[Arrian]

If your empire is smaller (pop) than the AI empire, and/or it has more marketplaces than you (more luxury effect), your luxury will be worth more happy faces to him than his does to you. So yeah, it's worth it for them to trade you a luxury for yours and pay you for it. You, of course, make out like a bandit.

Dexters, I'm not so sure it's an exploit. The AI is still getting value out of the deal. The AI won't ever trade away their only supply of something, so in this case they still have access to the luxury they were trading to inca911, plus his silks. Since it's Deity, and the AI empire is bigger, it makes sense they should pay the weak human for his luxury supply.

-Arrian

[Catt]

Re: Parity Resource Trading (Arbitrage) inca911 is back

Originally posted by inca911
So, have you all used this parity resource trading to your advantage yet?

It's a handy little tool that doesn't seem to get used often because, I think, human playstyle tends to emphasize building a larger empire early and building marketplaces widely before the AI does. Like you, I also find it comes in handy at Deity, and in lower levels when I adopt a peaceful, small-state, trading / diplomatic strategy.

dexters: the AI will never trade its last resource, but there is nothing in the code from preventing you to trade your sole source away - you just select it from your available trade items and put it on the table. It can be used as inca911 describes for luxuries where it is particularly helpful in turning the AI luxury valuation model to your advantage (luxuries valued on the happiness effects) -- i.e., as the small-fry trading away a sole source luxury for a different luxury plus extra goodies. I've also seen other posters use it with strategics (I haven't really done this much myself) to both: (1) prop up a weaker ally; and (2) enable building a lower cost unit for future upgrade when the resource deal ends (i.e., trading away iron and building lots of horsies for a future mass upgrade to knights).

Catt

EDIT: x-post with Arrian. What Arrian said.

[dexters]

Arrian, I'm a little confused by his post actually.

He seems to be suggesting that he was able to trade away his only resource of silk and still keep its effect.

As far as I understand it, if you have 1 resource of anything, it is for your empire and cannot be traded away.

If he has more than 1, then, I'm not sure if it is anything worth noting. Obviously, the idea behind his post was that he has found some magical way to have his cake and eat it too, and as far as I can see, it is a bug exploit and should be fixed, it not already done so in the next PTW patch.

[dexters]

Edit: If 1 have one resource of say, Silk, I can trade it away to another civ? That's news to me :/ I guess I'm not adventurous enough to discover these things.

Any how many civs can I trade it to? Just 1 other civ?

[Catt]

Originally posted by dexters
Arrian, I'm a little confused by his post actually.

He seems to be suggesting that he was able to trade away his only resource of silk and still keep its effect.

You trade your sole silk for an AI's extra spices and some additional goodies. After the trade your empire still experiences the effects of having one luxury -- an imported spice instead of a local silk, but your people don;t know the difference -- but you also got the extra goodies that the AI threw in to make the deal "fair" in light of the respective benefits provided to the two different empires from the "one luxury trade."

Catt

[Arrian]

Bingo, what Catt said.

-Arrian

[nbarclay]

It's not an exploit because the AI is trading an excess luxury for one it has a shortage of. Excess quantities of something are, by nature, less valuable to the owner. If the AI can use an excess supply that would otherwise just sit there doing nothing to help pay for something it needs, it is getting a good deal. Similarly, if the human civ would just as soon have one luxury as another (which, under Civ 3's rules, is the case), trading luxuries and getting something extra in the process is a good deal. It's a win/win arrangement, and thus not an exploit.

[vulture]

As previously mentioned, you can do it with strategic resources as well. Sometimes you can use this to insert yourself as a middle man in between two AI civs, although you'll rarely see one with a surplus of, say iron, and another needing iron, unless they don't have a trade route (or haven't met / are at war). Sometimes you can turn a profit by selling your 1 resource, and buying from the other civ (an sometimes you make a loss of course). If possible, buy from friendly commercial civs, as they charge you the lowest price, and sell to a large competitor. The end result is that you stop them trading directly, and hopefully take a cut of the profits in the meantime, leaving the smaller civ with less money than it would otherwise have got. The downside is that you now have two trade routes that can be broked to ruin your reputation, plus breaking one of them will leave you without a source of iron until the other deal expires.

BTW you can't trade away your only source of a resource if it is one you are importing. So you can't import spices, sell on to someone else, and then import a second load of spices.

[inca911]

Perhaps arbitrage isn't the accurate economics term to describe this opportunity. But you are definitely able to trade your one resource for their one resource + more. Whatever you want to call it, it's a good thing for both civs. The resource is more valuable to the AI civ due to size, marketplaces, existing number of resources (i.e., the increased bonuses for multiple resources), etc. Therefore they pay a premium.

I've also completely traded away an early sole resource when my civ isn't gaining enough benefit from it. Sometimes, your early civ is plenty happy with one resource (say Spice) and a little martial law so I toss out my only Silk resource to someone who will pay me something for it!

Dexters: As far as a description of the process, I'm not sure what you are asking.

I also was thinking a bit more about this. Can I trade to get multiples of a resource from other civs (e.g., two Iron)? If so, then I could use my contacts with other civs (that my Iron trading friend does not have) to play middle man. Has anyone been able to trade to obtain multiple Iron resources? It would also be great if you could obtain the excess Iron that is on the market to deny it to others.

BTW, thanks for the info on the patch. What does it "fix"?

[vulture]

I've never found a way to get hold of more than one imported resource. If you can only export resoucres found within your territory (or colonies). If you import iron, it never shows up at all on the trade screen, so you can't add it to any trades. If anyone has found a way of doing it, I'd love to know, 'cos you could get some use out of it early in the game fairly often.

[Arrian]

Can I trade to get multiples of a resource from other civs (e.g., two Iron)?

I don't think so, no.

On thing I always try to do when trading with other civs:

Let's say I want to do a luxury trade with Japan. Japan has 3 luxuries with excess supply. I know I can only wrangle 1 out of them using my own luxuries to trade. My choices are:

Silks (4)
Spices (4)
Dyes (1)

I'm gonna take the Dyes. That way, I've just reduced the types of luxuries Japan can trade by 1. Most of the time, this has little or no effect, since the AI is mad about trading luxuries with each other and it is likely that the reason Japan only had one excess supply of Dye is because they're trading. But I believe that occasionally this works to my advantage.

Likewise, I always trade/sell/gift whichever luxury(ies) I have lots of, so as not to be caught short if new trading opportunities present themselves.

-Arrian