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Kaiserf
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Posted - 2009.05.21 18:54:00 -
[1]
Disclaimer: I don't have any experience in playing the market in EvE nor do I intend to get into it. If you are the type of person that is going to respond to this thread I'm sure you have much more in-game and real life economic knowledge than I do, so please feel free to criticize my points - the whole point of this thread is for me to try to learn something.
I was reading 720s scam thread last night and I have to say that it was one of the most thought provoking and interesting things I've read in EvE and I was very impressed with the quality of the posts.
I thought one of the more interesting things 720 mentioned (at least I think it was him) was that the amount of capital sloshing around was much greater than the current investment vehicles could accomodate. I also found the comments regarding the state auditing very insightful.
I was thinking about the investment situation and my thoughts on it led me to wonder why people even bother with it? This isn't meant as a flame to MD people or those who have chosen to make their EvE career revolve around the investment market - in fact I think it is great that people are doing this as it adds a lot of flavor to the game. I just have some genuine curiosity about why people choose to spend their time with these activities.
On one hand, I think everyone can understand the allure of 'making their money work' for them. If you have more ISK sitting around than you know what to do with it makes sense to allocate it to a third party who has the time and desire to grow it. So the demand for investment vehicles makes a lot of sense to me. Who wants to grind lvl 4s or rat or mine moons all the time when you can simply farm these tasks out to other players.
However, to me it seems like there a couple of major hurdles to a thriving investment market in EvE.
The first is the (apparent) ability of players to 'boot-strap' themselves into the trading market. Missioning, ratting, mining, trading and even scientific and industrial careers in EvE seem to have a relatively low barrier to entry. This is after all a game, and limiting these careers soley to players who have spent years in the game and accumulated billions upon billions of ISK doesn't make much sense to me from the perspective of a player trying to have fun. I get the impression from the posts of traders and industrialists I see they are making relatively large amounts of ISK in a short time once they have accumulated enough capital to finance their operations.
To me, this says that the type of people you would want to be in control of your investments (those with the capacity to make money) are quite capable of raising the required funds without paying financing costs. I don't understand the motivation to take on these costs when you don't have to. Perhaps some of the more experienced and market oriented players can point out a situation where such large amounts of capital are required that taking on financing costs makes sense?
The second problem from my perspective is the lack of regulatory control exerted on the markets and would be scammers. With the alt-heavy/meta-gamed nature of EvE I don't see how you could ever have any significant amount of trust in another player even with extensive auditing.
The incentive to steal when there are no serious penalties for it far outweigh the incentive to graft for a few extra % points of profit. I suppose I could see trusting some of the regular characters on MD who stand to lose their reputation, however as many pointed out in 720s thread this is a very small number of players relative to the amount of capital that wants to go somewhere. Having to bury an alt that you've worked for a little while to the tune of many billions of ISK is not really a penalty worth mentioning. In addition there is further incentive to steal because from what I can see many of the scammers enjoy the 'gotcha nubs' nature of running scams even if they are for a relatively small amount of ISK.
Given these factors it is hard for me to see investments every being a succesful mechanism in EvE. It just seems like it will be an endless stream of naive people chasing pie in the sky-money for nothing. I was wondering what the rebuttals from the more experienced and market oriented players in EvE are?
I know some funds and individuals have been doing it succesfully but from what I can see they are very rare exceptions and once the total amount of assets gets high enough they are just as vulnerable to theft and fraud as any other investment. Are people just charging insane risk premiums on their funds and hoping to slog through the inevitable scams?
I apologize if I'm rehashing very basic concerns and questions on these issues. I've reviewd the resources and noob threads and while there were some interesting things there I couldn't find anything that answers my question directly.
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skeljita
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Posted - 2009.05.21 19:26:00 -
[2]
wall of text crits you for 800 points of damage
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Sir Elliot
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Posted - 2009.05.21 19:27:00 -
[3]
I just got gate ganked by a wall of text.
Ransom in exchange for a tl;dr version?
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James Tundra
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Posted - 2009.05.21 19:35:00 -
[4]
Quote: Why do people put their money into investments, when there are no repercussions for scams and theft?
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Lecherito
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Posted - 2009.05.21 19:39:00 -
[5]
Edited by: Lecherito on 21/05/2009 19:39:46 Well written post mate.
Apologies on my behalf for the above posters. Contrary to what you might think, the MD forum houses some of the more ADD/socially ******ed players of the game. Ironically, people with billions of isk can't be asked to read a few paragraphs of critical, thought provoking reading. How they came about their isk, I'm not sure, but it screams plex.
To answer your post, I think there are a number of different reasons. Firstly, any operation will eventually reach it's "cap," meaning that additional isk/resources won't necessarily yield more money. For example, my current operation capped at about 20 billion isk. I haven't the time nor the will for more orders to invest and manage additional capital. So I end up stashing the extra isk on an alt. Ideally, this isk, obviously not in use, could very well be invested the secondary markets, bringing back a small percentage profit, but still profit nevertheless.
Second, I think a lot of us got into trading because we enjoy business. We enjoy the idea of buying low, selling high, making deals and breaking them, "under the table pvp," if you will. Like you admitted in your post, the very presence of a secondary market gives some much needed depth to what would otherwise be the prolonged managing of buy and sell orders. We want to believe in a secondary market, we want to believe that it could someday be possible. So we continue to throw away billions on the CTs and LRNs of the galaxy. Maybe someday our time will come. Not yet, it seems.
-L
ps started this response before JT had posted, fyi
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Companion Qube
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Posted - 2009.05.21 19:51:00 -
[6]
1: no.
2: the overwhelming urge to gamble.
hth
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Dzil
Caldari Second Quadrant Ice Division
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Posted - 2009.05.21 19:59:00 -
[7]
Originally by: Sir Elliot I just got gate ganked by a wall of text.
Ransom in exchange for a tl;dr version?
Please wire 20 mil to me before reading the below:
Summary:
In this thread, a poster challenges the feasibility of investment being a core mechanic of EVE.
By the time you prove you aren't going to steal the money, you've already got so much there's no point in borrowing. ------------------------------ In EVE, when someone undercuts you, they're a lemming.
When you undercut someone else, it's skill/effort/manipulation.
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Brock Nelson
Caldari Flux Technologies Inc
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Posted - 2009.05.21 20:01:00 -
[8]
Edited by: Brock Nelson on 21/05/2009 20:03:54
Originally by: Kaiserf
The second problem from my perspective is the lack of regulatory control exerted on the markets and would be scammers. With the alt-heavy/meta-gamed nature of EvE I don't see how you could ever have any significant amount of trust in another player even with extensive auditing
The biggest problem with regulatory control is the inability for other players to follow it. Prior experience with successful IPO/Bond as well failed and scammed has allowed MD to evolve in creating a set of standards for other players to follow when it comes to investing. Ultimately, no one can force investors and fund managers to follow the standards. With the 720 scam, a lot of regulars pointed out several red flags that went against the established standards, but investors chose to ignore them in due to their greed.
Edit: Auditing anybody isn't 100%. The game is limiting for auditors in a way that we cannot verify everything. I won't get into much details about it as any dumb scammer that would know can exploit this flaw.
Blueprint Store |
Kazzac Elentria
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Posted - 2009.05.21 20:08:00 -
[9]
Because we enjoy roleplaying internet spaceship tycoons
/i'm feeling snarky today, forgive me in advance. programming a 13 location point to point T1 can do that to a person. |
Potsnack
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Posted - 2009.05.21 20:12:00 -
[10]
Kaiserf - it was a wall of text, but well worth reading IMO. Troll or not, you raise some valid points.
18-months ago the secondary market was in a different place to what it is now.
I've been back in Eve a few months and it is now apparent to me that the MD forum has become just a propagnator for scammers and bottom feeders. It really is a shame, because the secondary market used to be fun, and even occasionaly profitable, but no more.
Even losing billions to Iona was a drama I wouldn't have missed - and well worth the isk now I reflect on it. Monthly returns back then made the risk worthwhile, they encouraged you to take a punt, and sometimes they paid off, sometimes they didn't, but now with the accepted 3%-4% monthly returns, I can't imagine ever investing again.
I mean, why would I? I can buy and and put a few high value "items" on market/contract and make 10-30% return overnight - who on earth would wait a month for a 3% return unless they were out of game and unable to update their orders.
It's a huge shame.
It is true that you do get to a point where you have so much ISK that you can't work it all on your own to maximise profitability, but then, safer in my wallet than with any of the recent offerings for sure.
I've attacked some of the MD veterans comments recently - I'm starting to realise that it was I who was wrong. Although, I will never tolerate the "better than thou" attitide exhibited by some of our vets.
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Kwint Sommer
Caldari XERCORE Cult of War
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Posted - 2009.05.21 20:16:00 -
[11]
Originally by: Kaiserf Given these factors it is hard for me to see investments every being a succesful mechanism in EvE. It just seems like it will be an endless stream of naive people chasing pie in the sky-money for nothing. I was wondering what the rebuttals from the more experienced and market oriented players in EvE are?
Essentially there are three types of people that attempt to conduct business here. The so called "regulars," the scammers and the third class that you describe pretty well.
The regulars as a loosely defined class have made profits far exceeding losses on their investments and have made even more running enterprises using others money. They, as a class, built the secondary market up from nothing and while many have continued their work simply because they enjoy, the market has always grown around profit. For instance a futures exchange was built but their simply aren't enough profits in futures contracts so it withered and died. It's a really cool thing that many of the regulars had longed for but their wasn't profit in it and it withered and died. Much like that futures exchange, the secondary market wouldn't be here today if it weren't profitable to those building it.
The scammers need no explanation.
It is the third class that is indeed so perplexing and has become such a problem as of late. Once upon a time investments were carefully examined before any money was even discussed. One was expected to present a well thought out business plan and credentials as to their ability to carry it out. Even with a prior history of investment each offering was weighed and discussed. But this third class started pouring into the forum and then we saw not just terrible offers but worse investor practices like the Ricidic Lemming Affect or worse yet the "reserved pending a regular investing" affect. First they were content to blindly follow the more notable regulars. Then they started making reservations they would only honor if a regular invested. Finally we seem to be reaching the point where people simply make reservations and send their ISK if no one else can prove its a scam. God forbid at any point along the way the read the bloody offering and do research for themselves. These are the people that will ultimately lose more than they make but the really sad irony is even this is sustainable, after all, there's a new fool born everyday. One may get burned and finally decide that no matter how "cool" investing is they don't have the ISK to lose but there's always another one headed over from General Discussion to take his place.
For those taking offense at my divisions of the population, I'm using a very broad definition of "regulars," not just the few big names that that title generally invokes but rather a broad definition that once included virtually all of the denizens on MD with more than 5 posts. But don't let that stop you from calling me an elitists and completely missing the point of my post.
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Claire Voyant
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Posted - 2009.05.21 20:18:00 -
[12]
IMHO my two experiences most likely to make this game "not fun" were borrowing isk and lending isk. Why anyone would seek out either and try to make them into a business is beyond me. When I borrowed money I felt like I was playing the game for someone else and I worked my butt off so I could pay off the loan ASAP. I have also loaned spare isk to friends (I offered, they didn't ask) but I felt like it turned our friendship into a business relationship.
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Mme Pinkerton
Caldari
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Posted - 2009.05.21 20:39:00 -
[13]
Originally by: Kwint Sommer
EDIT: The point here is that your analysis is based on a highly skewed view of MD and your conclusion, based in theory, is refuted by reality. The secondary market wouldn't exist if it weren't profitable for those who built it and continue to run it. It does however fit your model when we look at the third class in exclusion of the first but that does not reflect the reality of the situation.
One could argue that not profitability but utility is the determining factor in the adoption of the secondary market. And I think it is rather safe to assume that there is an inherent (role-playing) value to (a) investing and (b) managing other people's money. The emphasis of the RP value of (b) pops up quite regularly in IPO threads when ppl try to raise public funding despite being able to finance the operation in question by themselves - they feel important when managing other people's money, they have power. OTOH investors enjoy the benefit of showing off when doing "big time" investments.
It's not always about the moneyz.
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Potsnack
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Posted - 2009.05.21 20:40:00 -
[14]
My goodness me Kwint - you decided to pull your head out of your a$%^ and make a sensible post. You see, you reminded me of why I invested in you when you first started. Having now given all your shares away, I feel better now for my initial impression, although less wealthy now I hold no shares :(
Anyways. Let's hope the new Kwint continues, becuase it makes a better MD forum for everyone ;-)
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Kaiserf
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Posted - 2009.05.21 20:45:00 -
[15]
Yeah, I apologize for the wall of text - I tried to be as succinct as possible while still giving the reasoning behind my questions. I was actually concerned because I put in some paragraph breaks that didn't make a whole lot of sense just to break it up a bit.
In any case, thanks for the replies and keep them coming. I've got some follow up questions but I want to spend a bit more time digesting what people have posted.
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Sir Elliot
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Posted - 2009.05.21 22:04:00 -
[16]
Originally by: Dzil
Originally by: Sir Elliot I just got gate ganked by a wall of text.
Ransom in exchange for a tl;dr version?
Please wire 20 mil to me before reading the below:
Summary:
In this thread, a poster challenges the feasibility of investment being a core mechanic of EVE.
By the time you prove you aren't going to steal the money, you've already got so much there's no point in borrowing.
Sending 20mil when I log in.
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Sir Elliot
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Posted - 2009.05.21 22:12:00 -
[17]
The Tl;Dr justified reading the whole OP.
I invest primarily because I want to support a robust secondary market.
I don't invest large amounts because I get better returns in other areas. But I feel it's important to provide a show of financial support to those ventures that I think are worth being undertaken.
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Pang Grohl
Gallente Sudo Corp
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Posted - 2009.05.21 22:38:00 -
[18]
Originally by: Kazzac Elentria Because we enjoy roleplaying internet spaceship tycoons
/i'm feeling snarky today, forgive me in advance. programming a 13 location point to point T1 can do that to a person.
This. And the fact that it works. It may be even more viable with the change to the way new characters accrue skill points possibly allowing someone to become technically able to do something long before they are financially able to.
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Professor Leech
Transmetropolitan
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Posted - 2009.05.21 23:37:00 -
[19]
Originally by: Potsnack
My goodness me Kwint - you decided to pull your head out of your a$%^ and make a sensible post. You see, you reminded me of why I invested in you when you first started. Having now given all your shares away, I feel better now for my initial impression, although less wealthy now I hold no shares :(
Anyways. Let's hope the new Kwint continues, becuase it makes a better MD forum for everyone ;-)
I am concentrating my investments in dramas lately. You are inspiring me to invest in Kwint.
Originally by: Crawe DeRaven this thread is obviously going places
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Teras Menac
Gallente Action Inc. Blue Sun Trust
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Posted - 2009.05.22 00:32:00 -
[20]
Originally by: Claire Voyant IMHO my two experiences most likely to make this game "not fun" were borrowing isk and lending isk. Why anyone would seek out either and try to make them into a business is beyond me. When I borrowed money I felt like I was playing the game for someone else and I worked my butt off so I could pay off the loan ASAP. I have also loaned spare isk to friends (I offered, they didn't ask) but I felt like it turned our friendship into a business relationship.
Kazzac hit the nail on the head. The business relationship IS the game for me, and I assume a lot of others. I borrow money from friends and I offer really high returns, but not so outrageous that I don't think I can follow through. I got 500m from a friend and told him I'd give him 600m in two weeks, that's 20% right there, but I think I can do it because really, by the time I have invested his money one time I'll have made a 10% profit off of it, and by the time I have invested it twice it'll be up to 20%. I can invest his money 4 times or more. Definitely worth it, and I am doing what I'd be doing anyway just in much larger volumes. It actually becomes easier and less stressful to trade the more money you have in the market. I came in today with 300m in my wallet bought 127.5m worth of product and clocked 100m in sales while I was sitting here for an hour. The market is really easy for those who are into it and hard for those who are not. When I get up to more money than I can invest I'll put some into those 3-4% instruments because that's just extra money. Of course I have a hard time imagining having more money than I can invest to be honest.
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Kazzac Elentria
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Posted - 2009.05.22 03:11:00 -
[21]
Originally by: Potsnack
My goodness me Kwint - you decided to pull your head out of your a$%^ and make a sensible post. You see, you reminded me of why I invested in you when you first started. Having now given all your shares away, I feel better now for my initial impression, although less wealthy now I hold no shares :(
Anyways. Let's hope the new Kwint continues, becuase it makes a better MD forum for everyone ;-)
Its like that freaky friday movie, except Kwint is Jamie Curtis and I get to be Lindsay Lohan.
We've fixed things now though and he'll return to his regular self tomorrow. |
Block Ukx
Forge Laboratories
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Posted - 2009.05.22 11:59:00 -
[22]
Kaiserf, You are not the first one to question the secondary market and it is viability. Some people believe IPOs are just scams waiting to happen, while others view it as a rare and novel economic feature in an online game.
Ccp stand is very clear in this matter; scams are allowed in the game. They have boosted every major scam and heavily publicized them. From their point of view, scams are probably a great advertisement tool. Can you imagine the headline an EBANK scam would create? I wouldnĘt be surprise if it makes it to several major newspapers.
So, with such a large scam risk, why in the world would anyone invest in the secondary market? Investment motivations are unique to each investor. Some want to see the secondary market flourish. Others investors are motivated by friendship, gambling, free play, profits, roi, retirement, time constraints, and many others.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Ms Sade
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Posted - 2009.05.22 12:18:00 -
[23]
From my point of view, I have invested in the secondary market (I invested in the first 720 offering) just because it felt good to give someone a hand up in the game.
The money I put in was the isk equivalent of a pvp ship, once I'd invested I considered it lost.
I would guess I am not the only person who would make investments for similar reasons.
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Saehta
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Posted - 2009.05.22 12:58:00 -
[24]
Gambling addiction coupled with a desire to actually see people succeed
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Dzil
Caldari Second Quadrant Ice Division
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Posted - 2009.05.22 18:55:00 -
[25]
Originally by: Sir Elliot
Originally by: Dzil
Originally by: Sir Elliot I just got gate ganked by a wall of text.
Ransom in exchange for a tl;dr version?
Please wire 20 mil to me before reading the below:
Summary:
In this thread, a poster challenges the feasibility of investment being a core mechanic of EVE.
By the time you prove you aren't going to steal the money, you've already got so much there's no point in borrowing.
Sending 20mil when I log in.
Confirming receipt of 20m... you didn't really need to do that:P ------------------------------ In EVE, when someone undercuts you, they're a lemming.
When you undercut someone else, it's skill/effort/manipulation.
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Kaiserf
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Posted - 2009.05.23 06:32:00 -
[26]
(Disclaimer tags: tl;dr, intellectual ************, n00b, not l33t, wall of text)
Interesting stuff folks and very educational. I'm still working up a follow up post to address some of the points made by individual posters in more depth, but as someone who doesn't fool around with the secondary market I'd like to solicit a few more thoughts so I can contruct something worthwhile. (hey, I just like to see stuff blow up)
It seems to me that there are two predominant schools of thought emerging:
#1. The secondary market exists because it has utility in the sense that people are making more money than they could without it. The secondary market works. Human beings are rational and would not pursue these ventures if there were not money to be made. I think the leading proponent of this school of thought so far has been Kwint.
as opposed to
#2. The utility of the secondary market stems from its gameplay value. I like the roleplaying elements of being an armchair investor. Profit or loss, it is fun to be a part of a community that is attempting to foster a new gameplay element. A lot of people have contributed along these lines.
I'll come right out and say my inclination is to think that school of thought #2 is probably fostering a lot more of the activity in the secondary market than school #1. Of course, I don't think there is any way to demonstrate this conclusively (or even inconclusively) because that would require an impossibly comprehensive set of statistics that would somehow measure the amount of value created by the secondary market against the value that has been siphoned off or destroyed by both poor mangement and the outright dishonesty of players. I guess I should also mention that I'm not trying to draw a false dichotomy here - I know the two motivations don't have to be mutually exclusive. In fact I think a lot of my questions center around how much the market behavior of particular individuals is driven by #1 or #2.
Given the lack of the comprehensive measures I'm pining for, I realise this whole discussion kind of equates to so much intellectual ************. But, to me at least, it is interesting and I have a hard time believing games like EvE are anything other than intellectual ************, so if its fun lets keep doing it! Hopefully some of the people who have made interesting observations will continue to do so.
So given that I have set myself pretty firmly in camp #2, I have some questions for the camp #1 folks. Let us also stipulate that I'm going to take whatever you say about your sucess or lack thereof in the secondary market at face value. So my questions are for the camp #1 folks are:
A. Do you feel like you're able to make an adequate accounting of opportunity costs as they relate to your ventures in the secondary market? Are you using a methodology to compare how efficient it is to allocate your funds and time to the secondary market against other activities that you could be using your time and ISK for?
B. How do you feel about your ability to adequately assess the financial risk inherent in these activities and to compensate for it? What methods are you using to these ends?
C. How do you feel about the ability of the secondary market in EvE to emulate the functioning of real world markets as we understand them? Are there any distinct contrasts or similarities that you would draw between these two environemnts based on your accumulated knowledge and experience?
D. (This is related to C and more of a question for all players regardless of which camp you feel like you're in, or even if you don't feel like you're in either) Do you see it as realistic to goal to implement a vibrant mass-market secondary economy in Eve? Do you think there is enough interest from the player base and the developers to make this happen? If you could be in charge of EvE what would you do to make this happen?
Thanks, Kaiserf
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Kaiserf
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Posted - 2009.05.23 06:33:00 -
[27]
P.S. Having looked over some of the responses to my post I feel like some people may have interpreted it as something that was hostile to the idea of a secondary market in EvE generally, or the MD forum in particular. I'd like to assure everyone that it wasn't my intention to come off that way. As I mentioned in my original post I think the idea of of a vibrant economy in EvE that resembles what we experience in our real lives adds a tremendous amount of flavour to the game. I may not participate in it myself, but much as I feel like the distant and conflicting stories of POS and titan warfare among the 0.0 alliances adds to the lore of EvE despite my disdain for actually participating in blobbing, I think that folk-lore built around powerful and sucessful characters as tycoons adds immeasurably to my enjoyment of the game.
I can't remember where I initially encountered the sentiment, but I've been very influenced by the school of thought that basically says - we don't ***** about the thing we hate, we ***** about the thing we love. We do this because in it we can see a vision of perfection that ultimately falls short. For a person, that is infitely more frustrating and *****-worthy than something we feel like we can reject outright.
I have a couple of incidental questions - Have there been any detailed studies of inflation in Eve's economy? Also, is there an ISC candidate focused primarily on economic issues in the game world?
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