The Prisoner’s Dilemma: Why Undercut Wars Destroy Your Gold
The Prisoner’s Dilemma: Why Undercut Wars Destroy Your Gold You just crafted a high-end Flask. The market price is 2,000g . You post yours. Five minutes later, you check the Auction House, and someone has listed the same Flask for 1,500g . You panic, cancel your auction, and repost it for 1,200g just to sell it fast. Congratulations! You’ve just entered the Race to the Bottom . In economics and game theory, this trap is known as the Prisoner’s Dilemma . Today, we’ll break down why “Undercut Wars” are usually irrational and why discipline (even when it feels slow) makes everyone richer, especially you. The Theory: Two Goblins in a Cell Imagine two sellers: you and a competitor. You’re the only two people selling a specific transmog item or rare material. The item’s true value is 1,000g . Your choices: Cooperate (Price Stability): List at 1,000g Betray (Deep Undercut): Drop hard to steal the quick sale Here’s what happens: Competitor Cooperates (1,000g) Competitor Bet...