EVE General Discussion

That is what I got on about lots. Isk should be cyclical. It isnt small ships, but large losses to make a gain should be a norm so over time, if a warmonger, your wins can come at a cost which over time can fall apart, like the empires of old. The isk in system will stay there unless a player goes. Plexes should be just a side benefit to skilled play, not an expectation of play. If we fix play, plex prices will find a nice medium determined by the value sellers put on isk to dollars.

Prices decreasing is not deflation. Deflation is a decrease in the general price level. Typically this can be due to a decrease in the money supply or the velocity of money. Another reason could be excessive risk that leads people to hold cash vs. investing it. Noting some prices have dropped is not really sufficient. It would be like somebody noting that the relative price of computers has been dropping like a rock…so therefore deflation.

Well said.

The mixing I'm talking about is the quantity, that has no sensible meaning in the RL market. It only means something on the in-game market, where it may start affecting (or effecting) the kind of interplay we expect between supply and demand.

I'm calling it a non-market because there is no supply-demand relationship; no way of establishing price or quantity as a function of either, or vice versa. The forces that are supposed to determine all of this don't exist — it's a single source with an infinite supply at a fixed price, and there is no opposition, reinforcement, or push-back to any of this within this exchange. Almost all market dynamics are disabled. We can assume that price will change the quantity, but we cannot predict how (or even if it will at all) since we don't have the relevant opposing market forces that are supposed to intercept each other at a specific point.

I'm saying that demand is not contingent on anything else that appears in this “market”, and that quantity holds no useful meaning. They do have meaning once we move to the in-game market, and this may carry back to the OOG “market”, but that doesn't help much since, again, the OOG “market” is almost static.

And the point is twofold: one is that you have to start in-game to determine the OOG demand and quantity — we can't find them by looking at the OOG model. Yes, there are feedbacks between the two, but all that can happen on the OOG side is that quantity and demand changes (since everything else is static)…

And the other point is that those two parameters are already fully contained by the in-game model. So what does looking at the OOG model even give us? We can't use supply-demand analysis on the RL market because the price is fixed and supply always matches demand. We have completely arbitrary or completely tautological intercepts that tell us nothing new. We have no way of telling how OOG pricing will affect quantity because there is no variance to analyse and no intercepts (or infinite intercepts) to track. We cannot decouple IG from the OOG demands in a way that lets us say anything about how the OOG “market” would respond to OOG change.

Again, I'm not disagreeing with your conclusions about the price increases — just questioning what the OOG part is good for and how it is represented. At most, we could take the IG supply; try to translate backwards it into OOG demand; and then speculate about what a RL price change would do to the quantity (and consequently on the IG supply-demand-price relationship) but we'd still miss any kind of empirical data to actually prove these assumptions. It's still just the same assumption and any “conclusion” is effectively begging the question.

Sure the quantity in the RL market has a sensible meaning. It is the number of PLEX CCP sold and it means something to CCP because they get money for such transactions and can have an effect in game as well. It also means something for the people who bought them, either additional game time or additional items in game.

And yes, it is a market and there is a supply/demand relationship. Say what you will, but it just sounds like metaphysical hogwash to me.

As for the rest of you post, it sounds like hogwash to me. For example, taking in game supply and translating it back to OOG demand. Bunk. People do hold PLEX on their accounts so at any given time the amount of PLEX in game probably exceeds the number of PLEX bought. It just looks like a whole lot of hand waving to me.

Ok, yes, fine. The quantity holds no meaning in the context of determining how supply, demand, and price relate to each other in the OOG “market”.

Only in the useless sense that supply = demand = quantity @ fixed price at any and all points. It tells us nothing.

Yes. That's kind of the point. We can try. We can speculate. We can't actually conclude anything because any such conclusion is effectively just restating the initial assumption, meaning we're begging the question. We can't actually determine what would happen on the OOG side due to the aforementioned tautological relationship on that “market”.

We can analyse the in-game market, and that's well and fine. If we try to conclude anything about the out-of-game (non)market based on this, we're instantly just speculating.

The SOE LP hit may be a localised phenonema related to burners.

However as a case in point it seems to me the volume of PI being traded this month is around half what was being traded in the same period last year though I have limited access to accurate figures.

You are correct, LP values are just a localized part of the economy. But it was just one of the examples for how asset deflation is taking hold in a shrinking game economy.

That is exactly what I said. But for some reason you are trying to make a point about monetary inflation that simply is having no effect on asset prices.

Monetary inflation effecting Plex? Yes
Asset deflation effecting Plex? Yes
Monetary inflation causing asset deflation... lol no

You overstate your case with regards to the RL market, IMO. Yes the supply IG is larger, but that does not mean that the RL market plays no role. My view is that the IG market is a function of what people are buying to sell and what people sell from their existing stock. For example, Kaarous Aldurald has noted he planned on cashing out at a certain price. That is why I had the IG supply curve with a positive slope--not perfectly elastic--unlike the RL market.

As for supply = demand => a price/quantity pair...yeah...useless. Never mind it is the very definition of market equilibrium.

And I'm not trying to predict anything here. IMO, economics is generally rubbish at predicting things like market up turns, down turns, etc. (and I am an economist if it wasn't obvious). I was merely trying to point out that people posting that there is some sort of manipulation or some other nefarious reason for high PLEX price is not needed. We can look at simply supply and demand analysis and see why the price has gone up.

And while I haven't made the point here, I am probably the last person on these forums who will see market speculation as a bad thing. In fact, I'll say it outright, I think speculation can often be a good thing. It helps ensure that market prices are correct and signalling the appropriate information. Higher prices usually means "we need more resources here now". In regards to PLEX the higher price translates, roughly, into buy more PLEX and sell them in game and fatten up your wallet if you are too lazy or cannot take the time to fatten it up in game.

And we can make some pretty good educated guesses about the RL market too. For example, the RL demand is a function of the number of players. The higher the number of players, the higher the number of PLEX that are being bought. We could probably even restrict that to the number of players logging in. Currently that is down...so players on the RL market buying PLEX is also probably down. Do I know this for a fact? No. But it seems a reasonable guess.

The current situation regarding PLEX price can be summarized thusly:

1. Fewer players buying PLEX on the RL market.
2. That leads to a reduction in supply in game.
3. 1 & 2 translate into higher in game prices for PLEX.
4. Add on the NEX store items and skins which may increase the in game demand for PLEX and we get....
5. An additional increase in PLEX prices.

Some people have brought up the ban on multiplexing and how that should have reduced the price...yeah, maybe. The price did stabilize for quite some time after that...again this fits with a supply and demand analysis. The ban on multiplexing/broadcasting with things like ISBoxer probably reduced the in-game demand...lowering the price or slowing/stopping the rise in prices we have seen in the long term in the time series.

These are reasonable and simple explanations. No need for any sort of complicated theories or explanations. Supply and demand is an amazingly powerful model when used by somebody who knows how to use them.