The most obvious volatility reduction strategy, to me, is to only adjust posting fees by a fraction of what is recommended by your formula. Basically, dampen the system.
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I was thinking as simply as possible. Whatever your current price formula spits out for August, call it X, make the actual August price = (X + 187)/2.
You should still converge to the same place, but with less volatility and probably a little slower.
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Adjust the post costs with minimum amounts. Don't go straight away cut the posting fees in half. Just change in single digit percentages.
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