The Value of Money

[Petek]

Hope I'm not threadjacking Chaos Theory's idea, but perhaps we need to create a different model for the INTEREST bonus to work properly. How about something like this: To accrue interest, you'd have to place a specific number of credits in a "savings account" and commit to leaving it there for a certain minimum number of turns. These credits wouldn't be available during that time (penalty for early withdrawal?). The longer the term, the higher the interest. This feature wouldn't be available until after some tech was researched and, perhaps, until after building a facility or even a SP. Another idea: If random events are in effect, any monies in a savings account wouldn't be affected by a global energy crash, or at least would be less affected.

Right now there's no downside to giving any faction the INTEREST bonus. This suggestion would balance the accrual of interest against not having the funds available for emergencies. Of course, the idea has disadvantages (how would the AI ever be taught how to employ this feature?).

Finally, this suggestion is for some future version of the game, not the current one.

[binTravkin]

how would the AI ever be taught how to employ this feature?

I think it's fairly easy to make AI stockpile energy.
It is already doing so.
If you add the 5% interest bonus to a normal AI Morgan, you'll probably see him having ~10000 by 2200 or so.

[GeoModder]

I bet we'll notice the wonderfull event of a crashed energy market on an AI faction then.

[Petek]

Originally posted by binTravkin
how would the AI ever be taught how to employ this feature?

I think it's fairly easy to make AI stockpile energy.
It is already doing so.
If you add the 5% interest bonus to a normal AI Morgan, you'll probably see him having ~10000 by 2200 or so.

In my original post, "this feature" referred to my suggestion about "fixed-term accounts", not the current INTEREST bonus feature. It would admittedly be simple to have the AI use INTEREST (practically automatic, actually), but I still think it would be more difficult to program the AI to make decisions such as how much to invest in an interest-bearing account and for how long.

[Chaos Theory]

Actually, those algorithms already exist. Putting money away for a while is similar to giving a loan. Based on the amounts the AI offers as repayment, it considers around 1-2% to be a fair amount, spread with the principal over 100 years and combined with the risk of nonpayment due to vendetta or sanctions. This is just another way in which the AI is stupid, of course.

[Commy]

Originally posted by Petek
Hope I'm not threadjacking Chaos Theory's idea, but perhaps we need to create a different model for the INTEREST bonus to work properly. How about something like this: To accrue interest, you'd have to place a specific number of credits in a "savings account" and commit to leaving it there for a certain minimum number of turns. These credits wouldn't be available during that time (penalty for early withdrawal?). The longer the term, the higher the interest. This feature wouldn't be available until after some tech was researched and, perhaps, until after building a facility or even a SP. Another idea: If random events are in effect, any monies in a savings account wouldn't be affected by a global energy crash, or at least would be less affected.

Perhaps your interests rates, as well as your abilities to invest in a savings account would depend on your economy rating...

For example, +1 economy allows you to have a savings accout at 1%, and each additional +1 economy adds 1% onto that, so that at +6 economy (which is only possible as Morgan and with Eudaimonia) you would have +5% interest as well as a savings account...

Perhaps the money is required to be there for 20 turn increments, and the principal would be in increments of 50...if you take out the money too early, you lose, say, 1/2 or 2/3 of the current balance, or perhaps a percentage based on how many turns its been in there...

The numbers above might need to be changed to balance this better, but I still think the idea would be nice all the same..

[Straybow]

In SMAC money has no time value. There is no inflation, no hinderance to the growth of an economy to any arbitrary extent.

For ECON rating you already get extra energy credits per base or per tile. I would assume that includes income from more advanced reserve banking techniques.

[Senethro]

Originally posted by Straybow
In SMAC money has no time value. There is no inflation, no hinderance to the growth of an economy to any arbitrary extent.

I disagree with that. If you don't hurry stuff and an opponent does, your position and chances of winning are slipping.

[Flubber]

Originally posted by Straybow
In SMAC money has no time value. There is no inflation, no hinderance to the growth of an economy to any arbitrary extent.

Bull. Tell you what. lets play a MP game and you lend me 20 ec a turn each and every turn for the first 50 years. I will pay you back 20 ec a turn for the next 50 turns. Deal ?


Money has time value even in the absence of inflation. Its because you can do things with it now that can add productive value to your economy

[Chaos Theory]

Originally posted by Straybow
For ECON rating you already get extra energy credits per base or per tile. I would assume that includes income from more advanced reserve banking techniques.

I don't understand what you mean by this. I'm not proposing that factions should receive interest on stored credits, just asking how much interest would normally be enough to deter spending. As far as inflation, you'd surely agree that a credit now is worth more than a credit later, right? Thus, even if you still have the entire credit later, it's worth less.

[Urban Ranger]

Originally posted by Chaos Theory
Yeah, one way to look at it is: would you rather spend 1000 ECs productively this turn, or would you rather spend 1000 + interest ECs productively next turn, for each amount of interest?

Yeah, but without an actual interest this question is moot isn't it?

Anyway, the answer to your question is to calculate the future value of said fix sum in n years vesus the total amount (principal + compound interest) you would get if you don't spend it.

[binTravkin]

I would look at it like:

I have a base which produces 10 energy in the econ field.

I can rush an EB for a cost of (8-1) * 10 * 2 = 140ECs in that base which would give me +5 - 1 = +4ECs per turn.

Interest of EB (assuming noone destroys it and other stupid things don't happen) therefore is:
4 / 140 = 0.0(285714) ~ 3%

If I have 4% interest of that deposit fund, I'd rather divert money to it.

Note that the estimate is very dependant on faction's industry value.

Spartans and Cult would most often save the money while Hive and Drones would spend all away assuming the percentage is balanced.

So the Industry penalty they both have would be offset by this bonus.

It would also make Sparta and Cult very powerful as they cash in big sums of money in early game if played properly - from pod popping and worm killing.

[Chaos Theory]

Originally posted by Urban Ranger
Yeah, but without an actual interest this question is moot isn't it?

Not at all! This poll is intended to establish a future value for current ECs. There *is* interest, but indirectly, through rushing facilities and units.

Anyway, the answer to your question is to calculate the future value of said fix sum in n years vesus the total amount (principal + compound interest) you would get if you don't spend it.

This calculation is nontrivial, as it depends on circumstances and probability. Polling the market seems like a much easier way to get an approximate answer.

[Chaos Theory]

Originally posted by binTravkin
I would look at it like:

I have a base which produces 10 energy in the econ field.

I can rush an EB for a cost of (8-1) * 10 * 2 = 140ECs in that base which would give me +5 - 1 = +4ECs per turn.

Interest of EB (assuming noone destroys it and other stupid things don't happen) therefore is:
4 / 140 = 0.0(285714) ~ 3%

If I have 4% interest of that deposit fund, I'd rather divert money to it.

Note that this analysis can be used to determine whether to rush the Energy Bank without explicit interest. If the consensus interest rate for ECs is 5%, and your EB only gives 3%, look for better places to spend your ECs. Of course, the calculation is more complex than this:

Cost of Energy Bank = 140 ECs now, plus 1/turn
Return on Energy Bank = 5 ECs/turn (perhaps more in the future), plus 40 ECs if scrapped

To break even, the EB needs to be around for 25 turns at its current rate of return. Your ECs are locked down for a long while before you can reap a profit.

It would also make Sparta and Cult very powerful as they cash in big sums of money in early game if played properly - from pod popping and worm killing.

I'm not proposing to hand out the INTEREST ability! Getting lots of ECs early is very good if you can spend them, since they'll effectively appreciate, but it's important to have somewhere to put them. The Spartans and Cult effectively receive lower returns on their ECs since they pay more for every build, which also blunts their early advantage.

[binTravkin]

Of course, the calculation is more complex than this:

Cost of Energy Bank = 140 ECs now, plus 1/turn
Return on Energy Bank = 5 ECs/turn (perhaps more in the future), plus 40 ECs if scrapped

You actually simplified my example which was perfect assuming no random events come in and energy input does not change.