EVE General Discussion

Increasing money supply and a drop in the general price level. Sure.

BTW, where is your index of prices? Got one? Admittedly I don't, but I'm guessing you don't either and you are basing your claims on anecdotes.

We need more players. Not less. Stop telling people this game sucks.
CCP, make this game suck less.

i think that would just break the game

I love the current prices.

I'm cash rich but time poor. The high prices are letting me get through my steam library.

Fingers crossed for more inflation.

It's not that it plays no role — it's that the role it plays is for the most part unknowable. It doesn't behave the way a market normally does, and we have no data for it. We can guesstimate something about demand and quantity as a reflection of in-game data, but we can't actually determine it.

In altering what I said, you skipped over a very important part: it's not supply = demand → price/quantity. It's supply = demand = quantity, at a fixed price, at every point. In other words, there are no distinct equilibria because this holds true everywhere. The entire demand curve is just a long smeared-out equilibrium because it always intersected by an inherently matching supply. The supply side is not a market force in the regular sense. And we don't find what you'd see as a regular price quantity pair, but rather a wide smear of quantities that always matches the fixed price. So how do you do a worth-while supply-demand analysis on this?

A market equilibrium is essentially a fixed point to the supply/demand function; the function will converge towards this point with each iteration. The problem with the RL PLEX market is that it has infinite fixed points. Everywhere and anywhere on the graph, we have an equilibrium. This makes it utterly useless for the purpose of telling us how… well, anything, really fits together — any suggestion or hypothetical value or shift we throw in will be an equilibrium.

Yes. For the in-game market. We can't do it for the OOG “market” because it doesn't behave like a market and because we have no data. That's why I question the value of including it at all. It can be collapsed into a single parameter — quantity — which is then used in the IG market analysis, with some caveat that not all bought PLEX end up on the IG market, which is fine since the data we have from the IG market has already filtered those out.

Poor or scrooge, maybe both. Thing is, I can easily make extra cash in game to afford a PLEX, even if the price doubles, can't do that in real life...Maybe find a better job, but in some countries thats easier said than done.

And why is that important?

I numbered your comments so as to leave them there and avoid the quote limits.

[1] Quantitatively, yeah we don’t know what’s what. Qualitatively we can still use a supply and demand analysis to get some idea of why prices are changing.

[2] Wow where to start. When you say supply = demand are you implying they are one and the same? That is just flat out wrong. Supply is typically, the marginal cost for the firm. Demand is derived from the consumer’s utility (welfare) function. They are very different things. Here things are a bit different in that CCP has a very, very low marginal cost associated with PLEX. However, that does not mean that the supply is the demand function. It means the supply is essentially perfectly elastic or damn close to it.

[3] As for fixed points….No. Fixed points are used in economics, or more accurately fixed point theorems. However, they are used to prove the existence of equilibria in general equilibrium models, not for a partial equilibrium analysis such as I used here and which we are discussing. Maybe you could use a fixed point theorem, but it is like using a sledge hammer to try and open a can beer. Further, there are not infinitely many fixed points. A fixed point for a function f, is a point c such that f(c) = c. An example of a function with infinitely many fixed points is the 45 degree line f(x) = x. So in my graph, there are not infinitely many fixed points for supply, there is one where the quantity of PLEX supplied is 19.95 (which is of course nonsense as nobody is going buy 095 PLEX).

[4] The RL market behaves just like a market. People buy and sell stuff in a market and people buy PLEX and CCP sells them. If CCP set the price at $100 would they sell as many? No. Why? Demand is downward sloping with respect to price (or more formally, demand is decreasing as price increases).

What? I never wrote not implied that there is not more ISK entering the game than is going out.

Looking up price behavior is not going to tell you if there is deflation. This is why there are various price indices out there, and yes, I'm too lazy to go out get the data and construct a geometric mean price index. For example, some HACs have seen price decrease, some have seen price increases. So, is that deflation, inflation, neither? You'd need an index. Preferably one that treats price increase and decrease symmetrically that lets out the Laspeyres and Paasche indices and the former overstates inflation, while the latter understates it. So you'd have to use a superlative index such as the Fisher or Tornqvist indices.

Oh...yeah, and price...not enough. You need quantity too.

Now, if somebody wants to pay me to do this...fine. Shoot me an in-game e-mail.

The RL market isn't telling us anything that we can't get by ignoring the RL market and just look at the IG market. In fact, anything we'd like to say about the RL market has to be back-ported via guestimates based on what we see on the IG market. So it's not a contradiction: it's saying the same thing from two perspectives.

We can analyse the IG market because we have the data and we have a sensible model for it — combined, we can reach the same conclusions we can always reach. We can't really analyse the RL market we have no data and we have no sensible model for it since it behaves so differently — no valid conclusions can be reached.

…except that we don't even know what is going on. There is nothing to understand.

So why even bother with the RL “market” at all? Until we can make more than (largely baseless) assumptions about the demand function, it is just a red herring. It's just a black box we attached to the input node of our IG supply function.