Insider Trading in Diablo 3?

General Discussion
I would like to start by saying I am huge Blizzard fan. I have played all the Warcraft, Starcraft and Diablo games and have loved them all. When Diablo 2 came out I couldn't stop playing. However, I grew up in a area where we didn't have any hi-speed internet available. Due to this, my Diablo 2 gaming was somewhat limited to the lag I was suffering in game. My love for the game quickly turned to the trading and economy aspect of the game. I became a penny pencher and traded items for slightly more than I knew I could get them back for. I ended being one of those players with 100 sojs with my highest level character at 40.

I since then became a financial advisor for a major firm. I wont lie that my love for trading in diablo had an impact on my love for the market. However it would be completely unethical to do the same type of trading as I did in Diablo. Make no mistake that Diablo 3 will have it's own economy with real life currency attached to it. My knowledge in the financial world has opened my eyes to a legitimate concern that I briefly addressed in another thread. Inflation and insider trading.

Inflation will exist in Diablo 3, especially in the beginning. The value of what you can get for your gold will be constantly changing. On top of that the demand for certain items will also be changing, thus changing the value of that item.

My real concern is on insider trading. Will there be a limit on Diablo developers and how much they can enjoy the rmah? If not,I can see some concerns on the knowledge of knowing a certain item will be buffed or have it's item drop rate reduced, creating a demand for them. What is going to stop someone from "investing" into these items before and official release of that information.

This will be a real money economy that will be completely be unregulated. I hope Blizzard is prepared for that.
I don't think it is like congress .. where you are able to buy up a bunch of a companies stock the day before you vote to approve the companies product and send the stock through the roof ..

i am pretty sure bliz employees won't be able to aquire lots of an item right before a code change increases the value of the item
11/21/2011 06:53 PMPosted by Dunkz
My real concern is on insider trading. Will there be a limit on Diablo developers and how much they can enjoy the rmah? If not,I can see some concerns on the knowledge of knowing a certain item will be buffed or have it's item drop rate reduced, creating a demand for them. What is going to stop someone from "investing" into these items before and official release of that information.
Because items dont have set stats like they do in wow, and all rare/legendary items have really low droprates to begin with (in the majority of cases at least), i dont think it will be a problem. If an item was buffed, it would be because other items of an equal lvl outclassed it in every respect, and it would only be brought up to par with other items. I also highly doubt the droprates would be decreased either unless there was a bug that caused it to drop far more frequently than intended. Both of these are also things that would happen very early in the games lifetime, well before the market becomes stabilized, and will have very little impact even if they do happen.

As for inflation, thats only a problem for people who join the game long after its release. Its also not something that can easily be avoided. Unless of course blizzard decided to take a chunk of every player's gold on a regular basis to prevent people from gathering millions down the line, but thatss a horrible thing to do in a game. Considering inflation will only affect gold, i dont think its a big enough problem to warrant addressing tbh.

EDIT: As toyodah said above me, blizz employees wont be able to just grab an item right before it becomes more popular. At best, they would know further in advance that it would become more valuable, doesnt mean they will be able to get it though.
11/21/2011 07:04 PMPosted by Toyodah
I don't think it is like congress .. where you are able to buy up a bunch of a companies stock the day before you vote to approve the companies product and send the stock through the roof ..<br /><br />i am pretty sure bliz employees won't be able to aquire lots of an item right before a code change increases the value of the item


Ya, but with if you knew your investment would increase in demand, making it more valuable before anyone else did.


11/21/2011 07:07 PMPosted by Dunkz
Ya, but with if you knew your investment would increase in demand, making it more valuable before anyone else did.


yeah but what if you had a super cool job at blizzard getting to play content of the game well before the masses.. would you risk getting fired making an extra 50 bucks on the rmah
11/21/2011 07:11 PMPosted by Toyodah
Ya, but with if you knew your investment would increase in demand, making it more valuable before anyone else did.
<br /><br />yeah but what if you had a super cool job at blizzard getting to play content of the game well before the masses.. would you risk getting fired making an extra 50 bucks on the rmah



That's what my question/concern is. I don't know if Blizzard is allowed/not allowed to play rmah.

For people who play a lot and take it seriously, it could be a lot more than 50$. I would look at it in terms of increasing the value of that one item. This kind of knowledge to a power seller or active trader could be very useful. Regardless, the argument that someone would only make X dollars off it and that's ok with me, doesn't really fly for me.

11/21/2011 07:11 PMPosted by Toyodah
yeah but what if you had a super cool job at blizzard getting to play content of the game well before the masses.. would you risk getting fired making an extra 50 bucks on the rmah


This is what I think it really comes down to. I don't doubt that there COULD at times be information someone working at Blizzard would have that could make them a tidy personal profit (Though I don't think there will really be that many times, as there wont often be need for nerfing/buffing of an item or changing drop rates too drastically), BUT the question is who would really risk their whole job to do so.

I don't doubt that Blizzard knows the trouble they could get into if their employees were found to be doing such things, so I also don't doubt they would/have made it blatantly obvious the punishment for being caught. With so few people having such insider information, it wouldn't be very difficult to notice that Bob in Item Design started buying up 50 Windforces.
Inflation following content progress exists in almost every single game, as long as there are valid gold sinks this won't be a problem.

Insider trading is possibly a threat, for example if they were going to buff a type of rune for a certain skill then I could see strong potential for insider trading profit. However, ruining D3 in such a way is not in the best interest of Blizzard and their developers, they would probably find a way, if they haven't already, to prevent this.

Actually, an economy with two inter-convertible currencies makes market manipulation much harder, this is something they don't teach in financial school and quite hard to explain clearly.
11/21/2011 07:25 PMPosted by Nova
Inflation following content progress exists in almost every single game, as long as there are valid gold sinks this won't be a problem. <br /><br />Insider trading is possibly a threat, for example if they were going to buff a type of rune for a certain skill then I could see strong potential for insider trading profit. However, ruining D3 in such a way is not in the best interest of Blizzard and their developers, they would probably find a way, if they haven't already, to prevent this. <br /><br />Actually, an economy with two inter-convertible currencies makes market manipulation much harder, this is something they don't teach in financial school and quite hard to explain clearly.


You mean like Gold and USD?
11/21/2011 06:53 PMPosted by Dunkz
I would like to start by saying I am huge Blizzard fan. I have played all the Warcraft, Starcraft and Diablo games and have loved them all. When Diablo 2 came out I couldn't stop playing. However, I grew up in a area where we didn't have any hi-speed internet available. Due to this, my Diablo 2 gaming was somewhat limited to the lag I was suffering in game. My love for the game quickly turned to the trading and economy aspect of the game. I became a penny pencher and traded items for slightly more than I knew I could get them back for. I ended being one of those players with 100 sojs with my highest level character at 40.<br /><br />I since then became a financial advisor for a major firm. I wont lie that my love for trading in diablo had an impact on my love for the market. However it would be completely unethical to do the same type of trading as I did in Diablo. Make no mistake that Diablo 3 will have it's own economy with real life currency attached to it. My knowledge in the financial world has opened my eyes to a legitimate concern that I briefly addressed in another thread. Inflation and insider trading.<br /><br />Inflation will exist in Diablo 3, especially in the beginning. The value of what you can get for your gold will be constantly changing. On top of that the demand for certain items will also be changing, thus changing the value of that item.<br /><br />My real concern is on insider trading. Will there be a limit on Diablo developers and how much they can enjoy the rmah? If not,I can see some concerns on the knowledge of knowing a certain item will be buffed or have it's item drop rate reduced, creating a demand for them. What is going to stop someone from "investing" into these items before and official release of that information.<br /><br />This will be a real money economy that will be completely be unregulated. I hope Blizzard is prepared for that.


This is a really great and legitimate inquiry, though it just makes me want to say, like I've said before-- Blizzard is a very smart and successful company. I'm very confident that they know what they're doing, are prepared for this, and are already taking the necessary steps to avoid issues with this. They're always on top of things, they'll find ways to regulate the economy; add gold sinks; etc.

Plus, even if gold inflation were to occur, it would still have its value as long as there's no gold cap. It's a video game, not real life. Even though there's a RMAH, it's a manageable situation.

As far as the insider trading goes, I believe this is the real issue; however, I would suspect that Blizzard employees would be warned and almost possibly fired if they even THOUGHT about abusing the system. Blizzard is more hush hush and watchful than Area 51. I don't think it's likely anyone will risk their livelihood for a possibly slight advantage on the RMAH.
Inflation following content progress exists in almost every single game, as long as there are valid gold sinks this won't be a problem. <br /><br />Insider trading is possibly a threat, for example if they were going to buff a type of rune for a certain skill then I could see strong potential for insider trading profit. However, ruining D3 in such a way is not in the best interest of Blizzard and their developers, they would probably find a way, if they haven't already, to prevent this. <br /><br />Actually, an economy with two inter-convertible currencies makes market manipulation much harder, this is something they don't teach in financial school and quite hard to explain clearly.
<br /><br />You mean like Gold and USD?

In this case yes, but this has been true with all similar systems, mostly involving some form of Asian currency.
Manipulating the market is about interfering with people's ability to get what they want, make them gain less and pay more than necessary. With two currencies it is much easier to find a "path of least resistance", with makes manipulating the market much harder. It is doable with enough capital, so IMO there is a need to implement a limit on how much you can deposit each month.
I'll just wait and see what Blizz does.
What you speak of is not insider trading.

If a developer manipulates an item to drop for him this is an entirely different crime altogether.
11/21/2011 09:09 PMPosted by Boneitis
What you speak of is not insider trading.<br /><br />If a developer manipulates an item to drop for him this is an entirely different crime altogether.


With all due respect, I do not believe you've read the OP's query carefully.
Edited for spam.
How frequently were items actually changed in Diablo 2?

If it wasn't that often, then I can't see this being any sort of issue, as the actual dollar amount change due to the demand increase will already be low as it is.
Ok here is the summary up top so you don’t have to read my book.:
1. I 100% don't agree that two inter-convertible currencies make market manipulation harder.
2. I do agree that initially if blizzard caps $ it can deter mkt manipulation. Although mkt mani. is diff. than insider trading.
3. Long term bliz should plan for items to fluctuate less than Blizzard’s take on each trade thus deterring insiders
4. Does Blizzard want to stop this though? More trades = more $ for blizzard.

I 100% don't agree that two inter-convertible currencies make market manipulation harder. Demand outpacing supply is going to cause prices to rise in both currencies and if an insider knows the price is going up then they can make money….. Theoretically, don’t hold me to that because underneath I show that you could still lose your pants.

I do agree that initially if blizzard caps on how much $ a person can put in each month or move around each month can limit market manipulation simply because one person does not have enough capital to affect the market. However overtime that’s not going to matter and someone can just buy multiple accounts to increase their capital.

Other long-term deterrent though:
Blizzard can Plan that Items aren't going to fluctuate more than Bliz's take (rake) on each trade. I hear different things about prices. Forums are talking 50 -100s of dollars for items and then the ever hansom jay (yes I will pander, cause I’m a panda bear!) says 5-6 dollars for items and I don't know what to believe. Either way as long as a patch only increases an item's price by less than Blizzard's rake it shouldn't cause insiders to jump on the trading bandwagon because they would still lose money on each trade.

Mostly Bliz can only deter insiders. As we see in real life there are always ways around it. My question though is: does Blizzard want to stop insider trading? More trades = more money for blizzard. I would never call Bliz greedy. They deserve every dime they can squeeze out of their fantastic games and quite frankly compared to the financial advisor industry can you really call Blizzard greedy?
This is a hilarious thread.

Why don't we just apply all real-finance and real-world related to a damn GAME? Hm, how about I start trading currencies and use triangular-arbitrage?

Why don't we start to create some derivative point-system and hedge against future price movements in ANOTHER game's currency?

I work in high finance. You're a FA? good for you. Be a good one and you can make $500k-$1mm/yr. How about you stop worrying about the few hundreds of dollars that that someone may "POTENTIALLY" make?

Buffing a rune is NOT the equivalent of J&J coming out with a miracle drug. It isn't the same as breaking the "Chinese wall barrier" in the IBD. You're in finance, and you speak as if this is high-frequency trading or merger arbitrage, or some M&A event driven hedge fund.

Diablo inspired "market-maker?" What's your P&L? Track record? Lots of people on this forum pretend to know about financial markets and that is stunningly comical.

Go back to cold-calling.

Join the Conversation

Return to Forum