#6876235, By intpleeus The Economics of the Game of the Year Edition

  • intpleeus 7 Jan 2011 17:26:10 28 posts
    Seen 5 months ago
    Registered 5 years ago
    NOTE: This post was originally a little too long and convoluted. I was trying to say too much and didn't do it very well. Here is a more succinct version put together from a couple of responses:

    A lot of people feel as though they made a mistake when the GotY edition of their favourite game is released. If only they had waited, then they could have purchased the original game plus all DLC for about half the price. But these feelings are often misplaced, because they ignore a very important factor in economic decisions: time.

    Pick whatever upcoming release you are most excited by, and ask yourself how much you would be willing to pay to get it today. Presumably, your answer would differ according to the expected release date. If the game is going to be released in one month, then you might only pay 10 percent more to get it today, while if the game is not coming out for another year, then you might be willing to pay 50 percent more to get it today. Why the difference? Because waiting is costly. All else being equal, people like goods and services sooner rather than later. (We are charged a premium for consuming goods sooner and enjoy a discount for consuming goods later: this is where interest rates come from.)

    The person who pays $100 for the original release and DLC and the person who pays $50 in one year for both may actually incur about the same economic cost. For example, if the cost of waiting one year is, to you, $48, this it follows that you should wait one year for the GotY edition. But, while you save $50 of money, the real cost is $98 (the price plus the cost of waiting). However, if the cost of waiting one year is instead, to you, $52, then it follows that you should not wait for the GotY edition, because it will cost $102.

    A lot of people look at the GotY edition and feel as though they made a mistake, and sometimes that is no doubt true. However, it is not categorically the case, but rather relative to each individual and according to their specific preferences.
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