It seems that in many groups there's a general consensus that BoE items should be needed by those who can use them first, and greeded by others. Also, many would even argue that a BoE should be needed by an offspec while others pass if there is no one present who needs it for a main spec. I would argue, that from a maximum utility perspective, this is extremely inefficient use of a scarce resource (yay economics).

First, I'd note Need/Greed are just levels of desire. What it really amounts to is "could someone potentially desire this more." If the answer is no, then you should be needing. The standard that many groups have whereby items are greeded if they won't be equipped is silly, as it simply opens the door to loot ninjas when there is no need to put items at risk.

I'd like to dispel the notion that the item is of greater value to people who would use it. It has the exact same value to everyone in the group. Anyone who argues otherwise is overlooking the element of opportunity cost. Suppose an epic healing cloak drops. Said cloak has a market value of 1000g if sold. Then it is worth 1000g to everyone in the group. If the healer wants to equip it, then they are choosing to 'purchase' the cloak, since the next best alternative (i.e. opportunity cost) is 1000g. A caster DPS class would derive the same value from the cloak. They simply would sell the cloak for 1000g, and then use the 1000g to purchase a caster dps cloak. Hence, the caster dps class gains just as much of an upgrade from the healing cloak as the healer does.

You might argue that luck of the draw dictates the healer should get the healing cloak, chance has already decided that (s)he get the upgrade. This will result in poor use of the upgrade though, since it forces the healer to upgrade that slot specifically (i.e. rather than apply the upgrade 'gold' where it's most needed, the item dropped potentially forces you to 'waste' gold by upgrading a slot where the upgrade is marginal). Consider the following example:

Every item slot has an item, whose value is measured on a scale from 1 star to 5 stars.
A healing cloak drops of item value 5 stars.
The healer currently has a cloak of item value 4 stars.
The healer, and all other group members, have items of item value 1 in every single other slot.

There are 3 possible options for what can happen here:
1. The healer takes the cloak for a marginal upgrade, resulting in a 1-star upgrade.
2. The healer recognizes the upgrade as marginal and passes it to someone for an off-spec. That person gets a 4-star upgrade to an offspec set that they use 10% of the time.
3. Everyone in the group rolls need on the healing cloak. Regardless of who wins it, the cloak is sold, and the gold is used to purchase a 5-star item for a different slot. Now, regardless of who wins the cloak, the item has resulted in a main-spec 4-star upgrade for the winner of the need roll.

The point is, maximum utility is achieved by letting the marketplace decide where the upgrades go. In so doing, everyone benefits more, since the average upgrade significance will increase. This benefits the groups involved, and the server as a whole. The logic of needing only if you can equip it then and there parallels the inability of many individuals to forsake short-term gains in favour of greater long-term gains. I for one refuse to fall into that trap.

I'm open to logical discussion about this, and so would appreciate feedback. There are three counter-arguments to the above as I see it:
1. I have assigned 0 value to timing of the upgrade. If a BoE is needed and then used immediately, then presumably (on average) said BoE will get more use than if it is to be sold/traded for an upgrade. Thus, one might argue that it does indeed have slightly higher value to the person who could equip it right away. However, I consider this time effect to be insignificant.
2. The marketplace in WoW is not perfect, and more importantly we're often forced to sell through the AH in order to find a buyer. When we do so, not only could there be a theoretical cost associated with the time to upgrade, but also there is the issue of AH commissions. However, a 5% commission is marginal and I subjectively believe the added utility gained from optimally distributing upgrades (via the free market mechanisms) will outweigh this commissions cost. Further, there is always the option to use the /2 Trade channel, which potentially increases time to sale but removes the AH commissions element.
3. There are some items, namely greens, where the effort required to make a sale is often not worth it (in the eyes of some players). If a player's intent is to 'vendor' an item, then he has placed a higher value on the time element noted above than on the utility gained from optimal upgrade distribution (of that item). Hence, if the intent is to vendor an item, then it should be passed to the individual that would otherwise equip it.


I would also point out, in reference to points 1 & 2 above, that other non-binding items are accepted as equal opportunity. Consider a Star of Elune drop. Very few caster dps classes would actually use this gem in their set. However, many tanks in early raiding would turn it into a Solid Star of Elune and then put it in their gear. Thus, to maintain consistency, if you need for main-spec first on gear you should also do so on gems. I have yet to see a group do so.

I remember raising this argument a couple years ago when I was new to the game on the WoW LJ community and catching complete hell over it:

"So you'd let someone sell an item over someone who NEEDS it?"
"Sure, don't we all NEED gold for something?"
"No, that's GREED!!! NEED > GREED!"

Of course, I'm an economist, yea, it made rather good sense that markets (even in WoW) being competitive, BoE should be Need rolled. My subsequent experiences just confirmed this fact.

You're right with point (3), though. I imagine that most people don't put greens on the market, and when this is the case the rationale for Needing BoEs becomes significantly weaker.

One problem with your theory. There is not much good BoE loot. Sure if everything was BoE and you got upgrades from buying your way to the top I would agree with you. If I won the cloak and sold for 1000g, I wouldn't be able to go around and spend that 1000g on a different gear upgrade. Almost all gear is obtained with time spent on content, not with gold.

So, what would the person selling the cloak use with the money? Normally enchants, consumable or something similar. Stuff that is worth much less then a gear upgrade.

The main problem with this whole line of discussion is it is such a wildly varying thing (Group Loot Policies). On Manno, its Greed the Boe greens, Need the Boe blue / epics. Other servers have as the OP described, where anyone who the item would be an upgrade for needs, others greed. Some even crazier ones have had schemes where everyone passes, then they talk about the item and let whoever the group decides to have the item loot the corpse.

As the poster above me states though, it is common that the blues just get sharded, and as such, everyone treats them as a shard, and not a piece of gear that they would actually consider using.

In the end, I think this is going to boil down into less of a discussion of the economics of the usage of an item and more into the same sort of banal dialogue that "Enchanters should shard un-wanted gear" and "Rogues Should get all the items in the chest" threads go towards.

Actually, 1000g worth of enchants, consumables, etc. is worth exactly the same as a 1000g BoE cloak. That's exactly how a market works. If the cloak were worth more, it would sell for more. Unless of course you're arguing that it's an imperfect market, and the demand for rare goods is thus more volatile. But then, given enough time, the sampling becomes large enough to overcome this so the argument still holds as long as you consider the cost of time to be insignificant in the scheme of things.

Maybe it's just the servers I've played on, but I've never had a group push to shard a BoE. Besides, if the individual who wins it feels it has more value sharded, then they're welcome to have an enchanter do so. We're not talking about BoPs here where the value of the item changes immediately depending on who receives it. Anything that is BoE has a market value. If it can be sharded, and in it's present state it is worth less than the shard(s) it will produce, then it's market value is dependent upon the shards it can be turned in to.

Did I fall into a timewarp and come out in 2005?