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[Proposal] Remind CCP About Value

Author
Darth Gustav
Sith Interstellar Tech Harvesting
#1 - 2012-10-12 05:25:59 UTC  |  Edited by: Darth Gustav
CSM Representatives, please consider directly asking CCP to have a moment's thought about value:

Value is not some philosophical ideal. At its core, value is a simple function of mathematics. It can be reduced to a very simple equation:

Value = Demand / Supply.

Observe that with this model, if supply is constant and demand increases, value increases. Likewise, if supply is constant and demand decreases, value decreases.

On the other side of the coin, if demand is constant and supply increases, value decreases. Likewise, if demand is constant and supply decreases, value increases.

More advanced manipulations, where delta values of supply and demand are compared, are possible with only slightly more mathematical ability. The model will remain consistent regardless, and reliably accurate in a predictive sense.

Where these principles apply directly to goods, they also apply to the professions surrounding the harvest or manufacture of those goods. This is not just a problem that can be resolved by hoping for equilibrium. New players rely on a vibrant economy when they select a career path. New miners in-particular probably don't want to hear that nobody's mining anything right now because there is a supply glut. I feel comfortable in asserting that this is an intuitive glimpse into the new player's psyche.

Lately, it seems that certain design elements might be losing sight of this fundamental principle. Supply seems to have less and less barriers to successful acquisition on many, many fronts. Nowhere can this be argued moreso, however, than in high-security space.

On behalf of Eve players and independent of partisan bias, I wish to invite the CSM and ultimately CCP to run the thought experiments using the model above. I believe that given the chance, anyone will find this equation's predictive value to be highly accurate. Beyond that, I think these principles should serve as a guide for future development. The devaluation of entire professions is a serious matter and should be taken as such by every player in Eve if we want to keep this game's economy (both virtual and real) healthy for the long haul.

Should CCP inquire as to methods of modulating supply and demand, I believe risk to be one of the best methods imaginable. Hopefully the CSM does, too.

Thank you for your consideration.

He who trolls trolls best when he who is trolled trolls the troller. -Darth Gustav's Axiom

ShahFluffers
Ice Fire Warriors
#2 - 2012-10-12 09:49:59 UTC
Sorry bud... but unless you are an economist (or someone who dabbles in the subject at least) no one is going to find your main point in all that.

Use laymen's terms and include a tl;dr.


That said... you present a problem yet offer no clear solution. More than that... ways to help new players contribute to the general in-game economy while remaining insulated from the more "wicked" aspects of the market has the potential to open up doorways that can be manipulated and exploited by people FAR smarter and with more capital to throw around.
Classic case of Malcanis' Law if you ask me.
Darth Gustav
Sith Interstellar Tech Harvesting
#3 - 2012-10-12 09:52:08 UTC
ShahFluffers wrote:
Sorry bud... but unless you are an economist (or someone who dabbles in the subject at least) no one is going to find your main point in all that.

Use laymen's terms and include a tl;dr.


That said... you present a problem yet offer no clear solution. More than that... ways to help new players contribute to the general in-game economy while remaining insulated from the more "wicked" aspects of the market has the potential to open up doorways that can be manipulated and exploited by people FAR smarter and with more capital to throw around.
Classic case of Malcanis' Law if you ask me.


TL;DR: Risk is good for business.

He who trolls trolls best when he who is trolled trolls the troller. -Darth Gustav's Axiom

ShahFluffers
Ice Fire Warriors
#4 - 2012-10-12 09:58:54 UTC
Darth Gustav
Sith Interstellar Tech Harvesting
#5 - 2012-10-12 10:03:28 UTC  |  Edited by: Darth Gustav
ShahFluffers wrote:
Elaborate. Smile

When there is risk impeding the collection of resources, supply uptake is naturally inhibited. This ensures higher prices, meaning higher value. It also ensures that successful miners are more highly valued by association. Because the ore they mine and the ice they harvest is more valuable, so is their profession as a whole. Its contribution grows due to the dynamics risk invokes on supply and demand. When risk is high, supply goes down and demand goes up. That's good for business, unless you fail. Obviously if you fail, though, you're contibuting to the health of the economy by helping to keep prices high until you manage to succeed.

Or so the equation says.

I've +1'd both of your comments. Thanks for the feedback and the questions.

He who trolls trolls best when he who is trolled trolls the troller. -Darth Gustav's Axiom

Gizznitt Malikite
Agony Unleashed
Agony Empire
#6 - 2012-10-12 18:24:00 UTC

Value does roughly equal Demand / Supply... but its modified by inflation...

As in some of these other threads, one of the major reasons for the changes in Ore Prices over the last several years is because the value of an ISK is diminishing, and not necessarily because of changes in Supply and Demand.

Darth Gustav
Sith Interstellar Tech Harvesting
#7 - 2012-10-12 18:45:28 UTC
Gizznitt Malikite wrote:

Value does roughly equal Demand / Supply... but its modified by inflation...

As in some of these other threads, one of the major reasons for the changes in Ore Prices over the last several years is because the value of an ISK is diminishing, and not necessarily because of changes in Supply and Demand.


Please explain the mechanism which is devaluing ISK if it is neither supply nor demand related.

Thanks.

He who trolls trolls best when he who is trolled trolls the troller. -Darth Gustav's Axiom

CaleAdaire
Deep Core Mining Inc.
#8 - 2012-10-12 18:52:03 UTC
Darth Gustav wrote:
Gizznitt Malikite wrote:

Value does roughly equal Demand / Supply... but its modified by inflation...

As in some of these other threads, one of the major reasons for the changes in Ore Prices over the last several years is because the value of an ISK is diminishing, and not necessarily because of changes in Supply and Demand.


Please explain the mechanism which is devaluing ISK if it is neither supply nor demand related.

Thanks.


Basically there are too many ISK faucets in EVE. As it stands, every day that goes by, it gets easier and easier to make ISK. think of your first day in game. 100 ISK seemed like a lot, now it's laughable. We have reached a point where more ISK flows in than is consumed by ISK sinks.

Trust in God, Have Faith in Fusion.

Darth Gustav
Sith Interstellar Tech Harvesting
#9 - 2012-10-12 18:53:35 UTC
CaleAdaire wrote:
Darth Gustav wrote:
Gizznitt Malikite wrote:

Value does roughly equal Demand / Supply... but its modified by inflation...

As in some of these other threads, one of the major reasons for the changes in Ore Prices over the last several years is because the value of an ISK is diminishing, and not necessarily because of changes in Supply and Demand.


Please explain the mechanism which is devaluing ISK if it is neither supply nor demand related.

Thanks.


Basically there are too many ISK faucets in EVE. As it stands, every day that goes by, it gets easier and easier to make ISK. think of your first day in game. 100 ISK seemed like a lot, now it's laughable. We have reached a point where more ISK flows in than is consumed by ISK sinks.

You seem to describe a situation where the supply of ISK is on a runaway trajectory.

Even ISK is subject to the foibles of supply and demand, however. That means it, too, has value.

As your inflationary picture proves.

He who trolls trolls best when he who is trolled trolls the troller. -Darth Gustav's Axiom

Hecate Shaw
United Freemerchants Society
#10 - 2012-10-15 02:41:23 UTC
Gizznitt Malikite wrote:

Value does roughly equal Demand / Supply... but its modified by inflation...

As in some of these other threads, one of the major reasons for the changes in Ore Prices over the last several years is because the value of an ISK is diminishing, and not necessarily because of changes in Supply and Demand.

If that were the case, Darth's complaint wouldn't be made, because prices would look sky-high (due to inflation), not responding to normal market pressures as they are.

CaleAdaire wrote:
Basically there are too many ISK faucets in EVE. As it stands, every day that goes by, it gets easier and easier to make ISK. think of your first day in game. 100 ISK seemed like a lot, now it's laughable. We have reached a point where more ISK flows in than is consumed by ISK sinks.
ISK faucets have ALWAYS outnumbered the sinks, and I hate to tell you that 100 ISK was NEVER that much - I started in 2007 and easily made my first million inside of 8 hours despite (and actually aided by) doing the tutorials of the time. Even then, a million didn't amount to much; inflation hasn't meant much to ship and module prices, to be honest. They go up as they become flavor of the month, then go down on the next nerf only to rise again when some new change is made. The economy fluxes all the time, but actual inflation is pretty slight for the most part. (Bolded that last part to avoid a future conversational trap - there are areas that have hit inflation, but not many and not major.)

As to the OP...Darth, once again, risk is not the only way to lower supply, and increasing demand would work just as well. Crimewatch 2 might help with that (or might not, hard to say), and if CCP could help break up the power blocks out in null demand might rise as well. Even on the supply side, making mining more interactive and thus thinning the herd of bots and AFK miners would do more (in my opinion) than any little bit of extra risk. Especially not by the methods of adding risk most people usually think of. I would also add that new players are more than capable of coming up through mining; the so-called market glut (which I personally have seen no sign of at all except in a fairly minor drop in ice prices) still leaves plenty of profit for the new miner, even if they don't venture beyond veld. Seriously - there have been times in the past (like when I tried to start mining) when trit prices dropped under 3 ISK, and new miners were doing fine then...and that was long before the "suicide ganking nerfs" hit. I guess the only possible reason many of us can see for people wanting to add "risk" to mining is that it is no longer easy to suicide gank miners (and at that I saw at least three mackinaws ganked in one single ice belt in the last two days).


Hecate Shaw
United Freemerchants Society
#11 - 2012-10-15 02:55:24 UTC
Darth Gustav wrote:
CaleAdaire wrote:
Darth Gustav wrote:
Gizznitt Malikite wrote:

Value does roughly equal Demand / Supply... but its modified by inflation...

As in some of these other threads, one of the major reasons for the changes in Ore Prices over the last several years is because the value of an ISK is diminishing, and not necessarily because of changes in Supply and Demand.


Please explain the mechanism which is devaluing ISK if it is neither supply nor demand related.

Thanks.


Basically there are too many ISK faucets in EVE. As it stands, every day that goes by, it gets easier and easier to make ISK. think of your first day in game. 100 ISK seemed like a lot, now it's laughable. We have reached a point where more ISK flows in than is consumed by ISK sinks.

You seem to describe a situation where the supply of ISK is on a runaway trajectory.

Even ISK is subject to the foibles of supply and demand, however. That means it, too, has value.

As your inflationary picture proves.
You wield that equation of yours like a bludgeon, but I think your grip on it is faulty. You are simultaneously arguing that inflation is running wild while arguing that the value of minerals is dropping so far that new miners can't make a living at mining. The markets don't support you.
Darth Gustav
Sith Interstellar Tech Harvesting
#12 - 2012-10-15 03:07:21 UTC  |  Edited by: Darth Gustav
Hecate Shaw wrote:
Darth Gustav wrote:
CaleAdaire wrote:
Darth Gustav wrote:
Gizznitt Malikite wrote:

Value does roughly equal Demand / Supply... but its modified by inflation...

As in some of these other threads, one of the major reasons for the changes in Ore Prices over the last several years is because the value of an ISK is diminishing, and not necessarily because of changes in Supply and Demand.


Please explain the mechanism which is devaluing ISK if it is neither supply nor demand related.

Thanks.


Basically there are too many ISK faucets in EVE. As it stands, every day that goes by, it gets easier and easier to make ISK. think of your first day in game. 100 ISK seemed like a lot, now it's laughable. We have reached a point where more ISK flows in than is consumed by ISK sinks.

You seem to describe a situation where the supply of ISK is on a runaway trajectory.

Even ISK is subject to the foibles of supply and demand, however. That means it, too, has value.

As your inflationary picture proves.
You wield that equation of yours like a bludgeon, but I think your grip on it is faulty. You are simultaneously arguing that inflation is running wild while arguing that the value of minerals is dropping so far that new miners can't make a living at mining. The markets don't support you.

Tell that to the poor ice miners.

[edit]

I gave this some more thought in context of what the markets are doing.

If ISK faucets exist, they are by their nature an inflationary mechanism. I concede this, as it is actually fundamental to my point.

Further, we can acknowledge, I believe, that material faucets are deflationary mechanisms. It seems self-evident, anyway.

So if the value of ISK is going down, requiring more to purchase anything of value but the price of materials (specifically high-sec ice) stays constant, it's actually lost value. If the price goes down, it's lost a ton of value.

Looking at the market, I fail to see how the data don't clearly elucidate that point.

[/edit]

He who trolls trolls best when he who is trolled trolls the troller. -Darth Gustav's Axiom

Hecate Shaw
United Freemerchants Society
#13 - 2012-10-15 05:44:31 UTC
Darth Gustav wrote:
Hecate Shaw wrote:
Darth Gustav wrote:
CaleAdaire wrote:

Basically there are too many ISK faucets in EVE. As it stands, every day that goes by, it gets easier and easier to make ISK. think of your first day in game. 100 ISK seemed like a lot, now it's laughable. We have reached a point where more ISK flows in than is consumed by ISK sinks.

You seem to describe a situation where the supply of ISK is on a runaway trajectory.

Even ISK is subject to the foibles of supply and demand, however. That means it, too, has value.

As your inflationary picture proves.
You wield that equation of yours like a bludgeon, but I think your grip on it is faulty. You are simultaneously arguing that inflation is running wild while arguing that the value of minerals is dropping so far that new miners can't make a living at mining. The markets don't support you.

Tell that to the poor ice miners.

[edit]

I gave this some more thought in context of what the markets are doing.

If ISK faucets exist, they are by their nature an inflationary mechanism. I concede this, as it is actually fundamental to my point.

Further, we can acknowledge, I believe, that material faucets are deflationary mechanisms. It seems self-evident, anyway.

So if the value of ISK is going down, requiring more to purchase anything of value but the price of materials (specifically high-sec ice) stays constant, it's actually lost value. If the price goes down, it's lost a ton of value.

Looking at the market, I fail to see how the data don't clearly elucidate that point.

[/edit]

However...in order for your argument to be valid, there must be abundant evidence of out-of-control inflation. Or even significant inflation. However, there is no such evidence; the price of T1 ships has barely budged since I started playing, and even the price of T2 has gone up by much less than 100% in five years. There is nothing to support a significant devaluation of ISK, or a market glut of minerals.

Darth Gustav
Sith Interstellar Tech Harvesting
#14 - 2012-10-15 09:26:20 UTC  |  Edited by: Darth Gustav
Hecate Shaw wrote:
Darth Gustav wrote:
Hecate Shaw wrote:
Darth Gustav wrote:
CaleAdaire wrote:

Basically there are too many ISK faucets in EVE. As it stands, every day that goes by, it gets easier and easier to make ISK. think of your first day in game. 100 ISK seemed like a lot, now it's laughable. We have reached a point where more ISK flows in than is consumed by ISK sinks.

You seem to describe a situation where the supply of ISK is on a runaway trajectory.

Even ISK is subject to the foibles of supply and demand, however. That means it, too, has value.

As your inflationary picture proves.
You wield that equation of yours like a bludgeon, but I think your grip on it is faulty. You are simultaneously arguing that inflation is running wild while arguing that the value of minerals is dropping so far that new miners can't make a living at mining. The markets don't support you.

Tell that to the poor ice miners.

[edit]

I gave this some more thought in context of what the markets are doing.

If ISK faucets exist, they are by their nature an inflationary mechanism. I concede this, as it is actually fundamental to my point.

Further, we can acknowledge, I believe, that material faucets are deflationary mechanisms. It seems self-evident, anyway.

So if the value of ISK is going down, requiring more to purchase anything of value but the price of materials (specifically high-sec ice) stays constant, it's actually lost value. If the price goes down, it's lost a ton of value.

Looking at the market, I fail to see how the data don't clearly elucidate that point.

[/edit]

However...in order for your argument to be valid, there must be abundant evidence of out-of-control inflation. Or even significant inflation. However, there is no such evidence; the price of T1 ships has barely budged since I started playing, and even the price of T2 has gone up by much less than 100% in five years. There is nothing to support a significant devaluation of ISK, or a market glut of minerals.


A year ago I could buy a Dominix hull for 53M ISK. I know, because I bought a lot of them.

Now, they go for around 88 or 89M apiece, ever though the price of high-send minerals have actually gone down.

If there isn't inflation, where did the extra ~60% "value" come from?

Other things, though, have come down drastically.

Does anybody remember how much Cap Recharger II's used to go for before Invention?

One thing about the Eve market that does differentiate it from the real economy is that it can be atbitrarily redefined by CCP.

See also: NPC shuttle sell orders and the Drone Regions.

Anyway, I think we're beating a dead horse here in sincerity. My opinion is that risk and reward are out of balance and clear roles were not adequately defined for the exhumers.

If yours is different I can respect that.

There's really no way we can know for absolute certainty precisely what's going on with Eve's markets, though, because players and CCP alike can change it tomorrow, if they choose.

He who trolls trolls best when he who is trolled trolls the troller. -Darth Gustav's Axiom

Cyprus Black
KarmaFleet
Goonswarm Federation
#15 - 2012-10-16 13:18:59 UTC  |  Edited by: Cyprus Black
Where did the OP copy/paste this from?

It's said that if you truly understand a subject, you would be able to explain it in the most simplest terms so anyone can understand. The fact that the OP can't do that heavily implies that he himself doesn't truly understand what he's talking about.

Which leads to the obvious conclusion that he must have copied it from somewhere and pasted it here in a thread. So OP, where did you copy/paste this from?

Summary of EvEs last four expansions: http://imgur.com/ZL5SM33

Darth Gustav
Sith Interstellar Tech Harvesting
#16 - 2012-10-16 19:19:14 UTC  |  Edited by: Darth Gustav
Cyprus Black wrote:
Where did the OP copy/paste this from?

It's said that if you truly understand a subject, you would be able to explain it in the most simplest terms so anyone can understand. The fact that the OP can't do that heavily implies that he himself doesn't truly understand what he's talking about.

Which leads to the obvious conclusion that he must have copied it from somewhere and pasted it here in a thread. So OP, where did you copy/paste this from?

I authored everything in it myself.

What would you like me to explain to you better?

When supply is low and demand is constant value is high. That's pretty basic. There are only three variables, and we know two of them.

How about I put it another way:

Gold is more rare than sand, so it's more valuable too.

Angora rabbits are more valuable than cottontails for the same reason.

In Eve Online, the game we play, less ore on the market means its value is higher.

That makes the profession of mining more valuable, too!

So CCP need to do things to make obtaining ore harder to buff mining as a profession, not make it easier and more readily automated (that means botting).

Are you keeping up now? Roll

He who trolls trolls best when he who is trolled trolls the troller. -Darth Gustav's Axiom

Gizznitt Malikite
Agony Unleashed
Agony Empire
#17 - 2012-10-16 19:49:53 UTC
CaleAdaire wrote:
Darth Gustav wrote:
Gizznitt Malikite wrote:

Value does roughly equal Demand / Supply... but its modified by inflation...

As in some of these other threads, one of the major reasons for the changes in Ore Prices over the last several years is because the value of an ISK is diminishing, and not necessarily because of changes in Supply and Demand.


Please explain the mechanism which is devaluing ISK if it is neither supply nor demand related.

Thanks.


Basically there are too many ISK faucets in EVE. As it stands, every day that goes by, it gets easier and easier to make ISK. think of your first day in game. 100 ISK seemed like a lot, now it's laughable. We have reached a point where more ISK flows in than is consumed by ISK sinks.


There is a Net gain of 25 trillion isk into the economy every month.....
There is also a major influx of raw materials (from moon mining, belt mining, NPC markets, and mission loot).
There is also a major outflux of raw materials (destroyed ships primarily).

If there is a net influx of isk into the economy while the raw materials balance out (i.e. influx = outflux), then the value of isk decreases, and the isk-value of raw materials increases.... Since nearly all goods are constructed from raw materials, they then have an isk-value change even if supply and demand remain the same.

In other words, the eve economy is far more complex than you make it sound...
Dersen Lowery
The Scope
#18 - 2012-10-16 21:50:01 UTC  |  Edited by: Dersen Lowery
Mineral faucets are not ISK faucets, and mineral sinks are not ISK sinks. When a miner sells his haul in a market, no new ISK is created. It just changes hands.

If you're concerned about inflation of ISK, look to explicit ISK faucets. The only ISK faucet from mining is the trickle of bounties paid from killing belt rats.

If miners reduce yield on their barges (or just lose more ships to ganking--it works out the same in the end), the price of minerals go up, but that doesn't necessarily gain the miners anything. It certainly won't make your Dominix cheaper. One number got bigger and the other smaller; the product of the two numbers will only shift for the amount of time it takes the market to correct the imbalance. The people who benefit are speculators sitting on mountains of minerals, who buy cheap, announce an interdiction, and then sell dear. But that doesn't affect the value of ISK either, except to the degree that it pulls ISK out of active circulation and concentrates it in the hands of the speculators.

Proud founder and member of the Belligerent Desirables.

I voted in CSM X!

Darth Gustav
Sith Interstellar Tech Harvesting
#19 - 2012-10-17 00:54:53 UTC  |  Edited by: Darth Gustav
Dersen Lowery wrote:
Mineral faucets are not ISK faucets, and mineral sinks are not ISK sinks. When a miner sells his haul in a market, no new ISK is created. It just changes hands.

If you're concerned about inflation of ISK, look to explicit ISK faucets. The only ISK faucet from mining is the trickle of bounties paid from killing belt rats.

If miners reduce yield on their barges (or just lose more ships to ganking--it works out the same in the end), the price of minerals go up, but that doesn't necessarily gain the miners anything. It certainly won't make your Dominix cheaper. One number got bigger and the other smaller; the product of the two numbers will only shift for the amount of time it takes the market to correct the imbalance. The people who benefit are speculators sitting on mountains of minerals, who buy cheap, announce an interdiction, and then sell dear. But that doesn't affect the value of ISK either, except to the degree that it pulls ISK out of active circulation and concentrates it in the hands of the speculators.

Nobody said I wanted my Dominix to be cheaper.

In fact, I'd like to see mining be such a valued profession that it were worth doing it at your keyboard paying attention in an effort to not fail, thereby reaping great reward.

You know, the way it should be. Instead of Default Easy Mode.

Default Easy Mode will create a supply glut, regardless of whether ISK devalues or not.

That's a recipe for economic disaster...

He who trolls trolls best when he who is trolled trolls the troller. -Darth Gustav's Axiom

Dersen Lowery
The Scope
#20 - 2012-10-17 01:10:10 UTC  |  Edited by: Dersen Lowery
You don't have to convince me that mining is dull. I hardly ever do it outside of corp ops; at least then I have people to talk to. Nor do you have to convince me that more exciting mining would be more exciting, and should be more rewarding. My point is that your attempt to argue the problem from an economic perspective isn't working.

Darth Gustav wrote:
Default Easy Mode will create a supply glut, regardless of whether ISK devalues or not.

That's a recipe for economic disaster...



Will? Mining has been in EVE for how long, unchanged? Any supply glut would have shown itself long since. The recent buff just moved the solo miners from cargo-expanded, max yield hulks to Mackinaws--a trade of convenience over yield.

If a mineral becomes too devalued, people either stop mining or buy a ton of it cheap and sit on it until scarcity, planned or otherwise, raises the price.

If I were to point out any problems with the current resource system, I would point to insane mineral compression in the form of certain modules (and drops--metal scraps? really, CCP?). But that still has nothing whatsoever to do with the value of ISK.

Proud founder and member of the Belligerent Desirables.

I voted in CSM X!

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