EVE General Discussion

Probably. And consider, the "proof" of this is that the price started to rise before the announcement....but why? The story is somebody or somebodies were snapping up PLEX knowing the price would be permanently higher in the future. Lets run through this logic though....

1. Was there increased trading volume? No. Uh-oh. While this is not fatal to the Cornspiracy Theory™, it is a bit problematic. It is problematic in that there would need to be changes to both supply and demand so that the quantity traded does not change much. We would need demand for PLEX to decrease increase (i.e. the whole frigging demand curve to shift--i.e. demand is higher at all price levels). Further, we would need a supply decrease (i.e. a shift in the supply curve so that there is less PLEX supplied at all price levels). Is this possible? Theoretically sure, but while we understand the shift in demand based on the Cornspiracy Theory™ it leaves unexplained the shift in supply. Now somebody might argue, "Well after the change they are going to see the value of their PLEX increase, so they take them off the market." Okay, but now the Conrspiracy Theory™ just got bigger. Now it is people who supply PLEX and not just some opportunistic people entering the market. The bigger the Cornspiracy™ the more likely there is to be a leak. Further, the price increases are essentially double. That is, both movements in the supply and demand curves are reinforcing--i.e. they both push prices higher. Is only a 20% increase reasonable? IDK, seems pretty small beer for amount of ISK we are talking about. And before some numpty comes in and says, "But, but, but, they could buy up trillions of PLEX!!!!" Lets go back to volume traded mmmmkay? And what happens when the suppliers re-enter the market and put their PLEX back on the market? Hmmm...might have a problem with this "permanent price increase"....which bring us to 2.

2. The implicit assumption of the permanent price increase. Yes, there will be increased demand from PLEX since PLEX will continue to be used for its current purposes, but also take over for Aurum. Are we all agreed on this? Yes? Good. Won't there also be an increase in supply as Aurum is converted into PLEX? All Aurum. I linked back up stream another Dev Blog where CCP decided that ALL Aurum balances will be converted in two waves. First wave those Aurum balances over 1,000 and then later those under 1,000. Now in this case, the movement in supply will be towards a lower price. Supply will shift outwards. Further, suppose the Cabal did go out and buy up a bunch of PLEX. What happens when they try to capitalize on the increased price--i.e. what do they do and how will it affect the market. If they put a bunch of PLEX on the market what happens to the price? Sure they can try to sell them off slowly, but if there are several members to the Cabal then that brings in another problem: coordination. If I am a member of the Cabal and I have say, 10% of the PLEX we bought up, if I dump I'll likely decrease the paper gains the rest of the Cabal members have gotten. And since this is true of all Cabal members, there will be more pressure to unwind their respective PLEX investment than to hold them. They could try to trade them for valuable in game items, but then that same pressure applies to the new holder of the PLEX.

So really, all this looks like a giant pile of steaming post hoc ergo propter hoc reasoning to me--i.e. bullshit.

And for full disclosure, I do participate in the PLEX market, but as a consumer--i.e. I use them to extend my game time on some of my accounts. So, if anything I would be harmed by such market manipulation. I just don't see much indirect evidence of market manipulation. Why did PLEX start going up around March 8th? IDK. But just because IDK does not mean that some other theory must be true.

BTW, in looking at the volume traded we see what supply and demand analysis would tell us. When the PLEX prices hit 1.15 billion around March 16th (the day of the Dev Blog announcing this change) we saw a spike in volume traded. We see 3,541 on the 15th and 5,002 on the 16th. Now some might say, "Ah-ha! The Cabal at work!" Maybe. But how about this, the rise for the in-game price is a "shift parameter" for the out-of-game market. What does that mean?

Most people take an econ course, maybe in high school and maybe in college and a few both. You might take more than one. But in the end you'll come away with this:

Supply : S(P) = a +b*P
Demand: D(P) = c - d*P.

And you'll know:

S(P) = D(P) is your equilibrium condition. Set those two equations equal to each other and solve. Ta-da your equilibrium.

But, for those few masochists who went further you learn that this is the result of solving this problem:

max U[x(1),x(2),....x(n),]

subject to:

p(1)*x(1) + p(2)*x(2) +....+ p(n)*x(n) = M

That is you are maximizing your utility for 'n' goods and you only have M dollars to spend (we'll omit things like the labor-leisure trade off, and inter-temporal utility maximization as we really don't want to get into the vagaries of Bellman's equation).

What does all the nonsense dell use, that for a given good the demand is actually:

D[p(1),p(2),...p(n),M].

That is demand depends on not only the price but your income and all other prices. The reason for this is that other goods are, to varying degrees either substitutes or compliments to all the other goods. Price of beef goes up, the demand for chicken and pork shifts outwards because pork and chicken are substitutes for beef. Technically there are other parameters in the utility function as well. That is for 2 goods the utility function might look like,

U(x,y) = a*log(x) + (1-a)*log(y).

In this case the demand function would be,

D[p(x),p(y),M,a].

The parameter 'a' represents a taste parameter. Changes in 'a', will shift the standard demand graph around--i.e. it can lower (increase) demand for say x as 'a' decreases (increases). Note, 'a' satisfies 0 < a < 1.

What is the point? The point is that the price in game will influence the demand out of game. As the in-game price rises there will likely be more demand to buy a PLEX to sell in game. Hence the jump in volume on the 16th. Oh, and look, the price in game fell 17th, and it fell again on the 18th, and fell yet again on the 19th as the price drop bottomed out. And yes, people who had been holding PLEX might also have decided to "take some profits" too.

In other words, we can explain the in-game price movements around the 16th-19th with out having to resort to a conspiracy. You know Ockham's Razor, the principle of parsimony and all that silliness. Granted we shouldn't just go with the simplest explanation, but we should consider that there are more than 1 hypotheses in many instances. And if one hypothesis has just as much explanatory power as a more complicated hypothesis...why go for more complicated?

In short, be very careful when reasoning from a price change.

Bob: The price went up.
Mary: And?
Bob: Clearly demand increased?
Mary: Really, why couldn't supply have decreased?
Bob: Errrr....
Mary: Or maybe it was both?
Bob: Look, the economy is controlled by the Illuminati and the Trilateral Commission, it would suit their interest for there to be more demand! Make people dependent!
Mary: Where is the evidence for this?
Bob: The very lack of evidence is evidence of the far reaching control and power of the conspiracy, don't you see!?!?!?
Mary: [edging slowly away]....uuuhhhmm sure Bob, that sounds interesting and I'd love to stay and talk, but oh look at the time, I need to go home and paint my dog's nails. Bye!

Investigation complete. Spike was not due to insider info. Next topic.

How about 15 pages of analysis demonstrating that there is no logic or economic rationale for blaming the spike on insider trading? Have you even bothered to read even a portion of this thread or did you just skip to end?

Insider information would have resulted in a sell off of PLEX - not buying it up (logical argument). There was also no increase in trade volume that would have been necessary to move the market through insider trading (evidentiary argument). Can you refute any of that? Or is your argument simply "Price go up - bad man do it."?

What do you have in support of your theory? A simple causal explanation of any kind? Just connect the dots for me.

Really? I saw no such arguments.

Your theory is that there was a surge in buying--i.e. demand shift. What caused the shift in supply? Why was supply shifted at all price levels?

Oh, and you do understand you are making pretty much a knife's edge argument: That supply and demand shifted in such a way so as to pretty much exactly offset each other without an increase in volume. That is a pretty precise conspiracy!

So you got nothing then. Okay.

What would cause them to think that the announcement would cause a spike in PLEX prices?

You mean like this screed of yours?

Let me see you assume there is no other possible reason for the price increase. Just because you cannot see it or figure it out does not mean it does not exist. Markets are interesting in that while they aggregate information they do so via the price--i.e. markets do not tell you why the price moves, only that the price has moved. In other words, you are engaging in post hoc ergo propter hoc and circular reasoning, IMO.



And this condition is no longer true.

And CCP said the reason they were not initially going to convert lower Aurum amounts was to avoid adversely affecting the PLEX market--i.e. drive prices down. Now, it turns out those lower amounts WILL BE converted meaning the supply in the future will go up which will decrease the price all other factors held constant (yes a huge assumption).

And what do we see, now that the PLEX sale is over prices are going back up....so now that crap you wrote means we should not be seeing this.

Or this load of crap where you simply assume your knife's edge argument with line of Bravo Sierra,



Dingbat, there is no explanation there. None. It is a statement necessary to maintain your view that there was a leak. "There was a leak and because volume did not change both supply and demand had to change just so, so that there was no change in volume." That is the entirety of your argument.

Here is an idea...how often does CCP have sales for PLEX? I honestly don't know. Do they do it frequently? Could some people who play in the PLEX market as speculators be keeping track of that? I know some EVE players do some crazy **** when it comes to making ISK...maybe?

Naw, lets just full on bonkers with the conspriarcy.

CCP was very clear that this change won't take place for months. Why would people suddenly run out to beef up their AUR immediately following the announcement? Especially given that they'd be buying PLEX to get a lesser amount of PLEX? And again - there was no substantive increase in trade volume either before or after the announcement to support such a contention. People DID NOT run out to buy PLEX to beef up their AUR (primarily because that would be a stupid thing to do).

It's also far offset by the fact that CCP is going to dump all of that AUR back on the market as PLEX and virtually eliminate PvP PLEX losses due to the PLEX Locker. CCP's biggest problem is going to be preventing PLEX prices from falling too much after this change.

Are you telling me with a straight face that had you had advance notice of this announcement that you would have bought up a bunch of PLEX? It makes no sense.

The PLEX prices moved because economics. Prices move all the time for reasons that aren't simple and aren't obvious. Previous examples of this in the PLEX market have been well documented in this thread. You can't simply point to the spike as evidence of insider trading. You have to demonstrate that insiders had a reasonable belief that the price was going to go up following the announcement - and that's where your theory breaks down. Regardless of the reason for the spike, there was no rationale that predicted it in such a way that people would have bought it up with insider knowledge. They would have sold it.

I want to also point out that this conspiracy has lots of hidden assumptions:

1. That the conspirators went to both the buyers and the sellers.

2. That they convinced the buyers and the sellers to buy PLEX/remove PLEX so that that the market price goes up and yet the volume is largely unchanged. At least until people not in the conspiracy notice the price increase and enter the market having bought PLEX for RL money and start selling them, thus under-cutting the conspirators.

3. There is some sort of enforcement mechanism to keep the participants from both blabbing and not stabbing each other in the back (e.g. buying up a lot too early, or dumping PLEX stocks onto the market).

Basically this story has all the problems inherent in a cartel. How to keep the cartel members from “chiseling” on the cartel arrangement, especially when monitoring is quite hard/costly.