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Malcanis
Vanishing Point.
The Initiative.
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Posted - 2009.07.09 12:09:00 -
[1]
Would some MD authorities care to help me out with a question that has been in my mind for a while now:
What would happen to T1 ship prices if insurance was removed (or effectively removed eg: only frigates can be insured, etc)
What would happen to mineral prices? (low/mids/highs)
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Kazzac Elentria
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Posted - 2009.07.09 12:14:00 -
[2]
They would go up.
Insurance allows the conversation of minerals to isk and back again. Controlling supply by introducing it despite the 'destruction' of the item. Effectively all you lose is the time involved with the logistics of that item.
You'd see mineral prices go up across the board, but specifically Mex and Trit the hardest |
Saehta
Sigillum Militum Xpisti
Novus Ordo Mundi
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Posted - 2009.07.09 13:20:00 -
[3]
Better question is how would it affect warfare. More goonstyle fighting?
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Dzil
Caldari
Banana Nut Pancakes
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Posted - 2009.07.09 13:54:00 -
[4]
 Originally by: Kazzac Elentria
They would go up.
Insurance allows the conversation of minerals to isk and back again. Controlling supply by introducing it despite the 'destruction' of the item. Effectively all you lose is the time involved with the logistics of that item.
You'd see mineral prices go up across the board, but specifically Mex and Trit the hardest
I disagree. I think the impact would be a decrease in ship prices and minerals to make them.
Consider this example: what happened to the price of trit when the shuttle seeds were removed? With the ability to convert isk->trit @ 4/unit denied, trit shot up.
In this hypothetical scenario, you are removing an ability to convert minerals to isk. This makes isk more valueable, and minerals less valueable.
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Dzil's Corp Sales - 200m for 7+ standings
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Kazzac Elentria
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Posted - 2009.07.09 14:24:00 -
[5]
Originally by: Dzil
Originally by: Kazzac Elentria
They would go up.
Insurance allows the conversation of minerals to isk and back again. Controlling supply by introducing it despite the 'destruction' of the item. Effectively all you lose is the time involved with the logistics of that item.
You'd see mineral prices go up across the board, but specifically Mex and Trit the hardest
I disagree. I think the impact would be a decrease in ship prices and minerals to make them.
Consider this example: what happened to the price of trit when the shuttle seeds were removed? With the ability to convert isk->trit @ 4/unit denied, trit shot up.
In this hypothetical scenario, you are removing an ability to convert minerals to isk. This makes isk more valueable, and minerals less valueable.
I guess you could argue that end as well.
However, assuming all things equal, the entire available supply of minerals would in essence continue to go down without the supply of isk going up to compensate. More isk in game, less minerals equals high priced mins.
But then again you might see demand curves shift wildly as well, since there are plenty of people who only do X activity because of insurance. |
Dzil
Caldari
Banana Nut Pancakes
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Posted - 2009.07.09 14:45:00 -
[6]
Originally by: Kazzac Elentria
However, assuming all things equal, the entire available supply of minerals would in essence continue to go down without the supply of isk going up to compensate. More isk in game, less minerals equals high priced mins.
I just can't wrap my head around this. Wouldn't there be less isk in game than before a change that removed insurance?
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Dzil's Corp Sales - 200m for 7+ standings
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Kazzac Elentria
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Posted - 2009.07.09 14:56:00 -
[7]
Originally by: Dzil
Originally by: Kazzac Elentria
However, assuming all things equal, the entire available supply of minerals would in essence continue to go down without the supply of isk going up to compensate. More isk in game, less minerals equals high priced mins.
I just can't wrap my head around this. Wouldn't there be less isk in game than before a change that removed insurance?
No, remember insurance in eve is a conversion tool. It merely changes one resource minerals, into another isk and back again. There is some loss and some sink drain at times, but over all it is nothing more than a faucet which supplies those resources into the game at various stages.
Less mins, more stagnant isk. Not necessarily more isk over all, but more of it sitting dormant and worth less. Essentially it slows the velocity of money in EVE which should lead to an increase in price on all things used to trade for that money. |
Claire Voyant
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Posted - 2009.07.09 15:08:00 -
[8]
Kazzac, you need to reread your own stuff:
Originally by: Kazzac Elentria
However, assuming all things equal, the entire available supply of minerals would in essence continue to go down without the supply of isk going up to compensate. More isk in game, less minerals equals high priced mins.
In the first sentence you say the supply of isk will not go up.
In the second, you say "more isk in game."
I think you need to pick one or the other.
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Kazzac Elentria
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Posted - 2009.07.09 15:16:00 -
[9]
Originally by: Claire Voyant
Kazzac, you need to reread your own stuff:
Originally by: Kazzac Elentria
However, assuming all things equal, the entire available supply of minerals would in essence continue to go down without the supply of isk going up to compensate. More isk in game, less minerals equals high priced mins.
In the first sentence you say the supply of isk will not go up.
In the second, you say "more isk in game."
I think you need to pick one or the other.
I should prolly clarify a little. There technically will be more isk in game as it won't be sunk into insurance contracts. This isk will also get transferred into other resources less, increasing the individuals outflow of isk as well.
So when I say increase, essentially what I mean is that it will traverse less often from hand to hand to hand.
Think of it like this. When you buy a ship from someone you are essentially buying the minerals and time it took to make that ship. Insurance ensures that the time and minerals can be converted back into your isk.
Remove the insurance link now. Those minerals and time get sunk and removed from game, however the isk is still there just sitting.
So while not technically more coming into the game, there will be more of it just sitting around doing nothing. And with all things being equal, there would now be less materials, etc.. as they would now permanently leave the game.
Materials go up. |
Dzil
Caldari
Banana Nut Pancakes
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Posted - 2009.07.09 15:41:00 -
[10]
So based on your argument above, are you suggesting that the in game insurance system is currently acting as a net isk sink, rather than a faucet?
It functions as both, but I had always assumed there was a net generation of isk by the system, in excess of any impact on inflation by money tied into the system.
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Dzil's Corp Sales - 200m for 7+ standings
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Kazzac Elentria
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Posted - 2009.07.09 15:51:00 -
[11]
Originally by: Dzil
So based on your argument above, are you suggesting that the in game insurance system is currently acting as a net isk sink, rather than a faucet?
It functions as both, but I had always assumed there was a net generation of isk by the system, in excess of any impact on inflation by money tied into the system.
Net sink IMHO, but a sink of materials not isk.... which I guess you could argue are one in the same. (yes I've flip flopped sides) |
Martosh Toma
Gallente
Fraction Investment
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Posted - 2009.07.09 16:29:00 -
[12]
If you only look at the isk transactions from insurance then it depends.
If you think insurance is an isk sink now, then mineral prices will rise (same amount of minerals, more isk > higher prices).
If you think insurance is an isk faucet, then prices will drop.
However, most insureble ships are lost by people having smaller wallets.
People that often rely, in part, on the insurance to enable them to purchase a new ship.
These people will have less money availeble.
Demand will lessen and prices will drop to maintain sales.
Mineral prices will have to follow suit.
Also these same people will be foced to spend more time (or real money) to get the isk they need for their pvp.
This will lead (directly or indirectly) to a bigger supplie in minerals (as even missions give more stuff than isk, or so I am told).
bigger supplie in minerals will lead to lower mineral prices.
In all, while I personally think that insurance is a faucet,
I also believe that the other effects are stronger than the direct effect removing insurance would have on mineral prices.
Of course another effect with completely unpredicteble results would be, in my opinion at least,
a steep decline in the number of paying/active accounts.
I have no idear how this last thing would affect prices.
PS: How would you use insurance to transmute isk into materials?
PS2: I hate this forum, how ccan you even post like this?
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Claire Voyant
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Posted - 2009.07.09 18:09:00 -
[13]
A few things need to be clarified at this point. First, there are really two types of insurance in Eve, the free kind and the kind you pay for.
If you lose an "uninsured" ship in Eve, you get 40% of the "base price" of the ship. You can also buy insurance to increase the payout to up to 100% of the base price. There are six levels of insurance, but they all pay out double what you paid (on top of the 40% which is free) if you lose your ship in the next 12 weeks.
So the lowest level of insurance you can buy (basic) costs 5% of the base price and it increases your coverage from 40% to 50%. Each level of insurance cost an additional 5% and increases the payout by 10%. The highest level of insurance (platinum) costs 30% of the base price but pays out 100%, or 60% over the free insurance.
Second, let's look at three different kinds of pilots (one player can fit also two or three categories, but when it comes to buying insurance they still will probably choose from one of the following strategies for each ship they fly.)
1. Carebears, defined as miners, haulers, and mission runners. Carebears really don't like losing their ships, they tend to have expensive modules, expensive cargo, or just plain expensive ships like barges and exhumers. In most cases even the platinum insurance wouldn't even begin to cover the cost of the ship, fitting, and contents. And carebears tend to hang on to their ships, so they are as likely to see their insurance expire as they are to see a payout. Many see insurance as a bad bet, costing more in the long run than they would expect to see back from it because they keep their ships longer than 12 weeks.
2. PvPers expect to lose their ships (some more than others.) Fitting a t1 ship with inexpensive modules and insuring it to the max allows them to pew pew without significant risk of loss.
3. Gankers not only expect to lose their ships, but that is entirely the point. The whole ganking game is all a matter of calculating how much damage you can do with a cheaply fitted ship, and calculating the expected return in the form of loot and salvage over the cost of ship and fittings minus the net insurance payout.
When you talk about the economic impacts of removing insurance, you first have to ask whether you mean all insurance or just the additional insurance you pay for. I don't think removing the optional insurance would have much of a negative effect on carebears, as they would continue to play the game the way they have always played it, losing just as many ships and receiving about the same net insurance payout.
However, gankers and to a lesser extent PvPers would be more effected and you would expect to see them losing fewer ships (especially the gankers) and getting a lot less in net insurance payouts. That's where I would expect to see the largest economic impact. Destroyed ships consume minerals and insurance payouts create isk. Reducing or eliminating the optional insurance would consume fewer minerals and create less isk, leading to more of a mineral surplus and less isk to go around, which would mean lower prices for minerals and ships.
Another way to look at it is that the current insurance policies create a price floor for t1 ships at 70% of the base price. If prices ever fall that low (and they have recently) you could make money by buying a ship below that level and committing insurance fraud by self destructing the ship, or more typically buying the minerals, building the ship, insuring it, and then destroying it. Even if it is not profitable to self-destruct, you can see how low mineral prices (combined with insurance) would effect the economic incentives of gankers.
One option might be to remove just the higher insurance level(s), which would lower the floor to 65%, 60%, or 55% of the base price, but in a less disruptive way than removing all optional insurance.
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Weight What
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Posted - 2009.07.09 18:18:00 -
[14]
i like insured turtles
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Annonymous, trading as "Weight What". |
Malcanis
Vanishing Point.
The Initiative.
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Posted - 2009.07.09 19:50:00 -
[15]
I have been assuming that the fact that T1 ships are currently priced at (platinum insurance value-premium) is a strong indication that insurance is holding up ship prices, and therefore by extension mineral prices.
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Omarvelous
Destry's Lounge
Important Internet Spaceship League
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Posted - 2009.07.09 19:53:00 -
[16]
This is an interesting discussion. I've been a fan of removing insurance from ships (mainly to make the relative loss of a T2 ship vs t1 not as bad - ie BC vs HACs, or BS vs CS) - but this discussion makes me wonder what would happen to T1 ship prices as a result.
I also wonder what would happen to the T2 market. Maybe some people won't feel as bad about buying a CS vs a BS since the insurance is out of the question. Ter 3 BS especially would be a hefty loss.
Important Internet Spaceship League Wants You |
Clair Bear
Perkone
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Posted - 2009.07.09 20:25:00 -
[17]
T1 hull prices would utterly implode in short order. Eventually people would stop producing minerals (whether by looting or mining) and ship prices would start creeping up, but to nowhere near current levels. I think it's reasonable to expect 10M battlecruisers and 20-30M battleships if insurance payout is removed.
Recently tier1 and tier2 battleship prices approached insurance payout. My BS sales business *exploded*. I mean, an order of magnitude increase in business.
Since then they've gone up 7-10M in mineral costs and demand returned to the previous lackluster level.
What this tells me: the further a vanilla T1 ship is from insurance payout the less people are interested in losing it and thus flying it in the first place. Without insurance you'd have many, many more people cowering in L4s rather than taking "risks" and pewing for fun. Less demand eventually leads to lower prices.
And in summary, bigger blobs are the answer. Now what was the question? |
Jagga Spikes
Minmatar
Sebiestor tribe
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Posted - 2009.07.09 20:34:00 -
[18]
lower ship prices would have to be reflected by lower mineral prices. would miners actually accept to mine/sell at that level?
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Malcanis
Vanishing Point.
The Initiative.
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Posted - 2009.07.09 20:51:00 -
[19]
Originally by: Jagga Spikes
lower ship prices would have to be reflected by lower mineral prices. would miners actually accept to mine/sell at that level?
That's what I'm interested in, along with which minerals would take what proportion of the hit.
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Clair Bear
Perkone
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Posted - 2009.07.09 23:08:00 -
[20]
Originally by: Malcanis
That's what I'm interested in, along with which minerals would take what proportion of the hit.
Let's discuss the differnet types of mineral producers.
Cargo expanded AFK hulk guys mine for 6-7M an hour now and would continue mining for 2-3M an hour. They most likely don't have the SP to do much else. If demand falls they will be the ones most willing to absorb the deflation in mineral prices.
0.0 and w-space miners are likely to have options in what they do for a living, so highends won't be impacted as much.
Missioners can either spend time looting or generate more ISK. If looting is 1/3 as lucrative then they simply won't do it. This means, once again, mids and high ends are more resistent to deflation.
The same goes for drone region inhabitants. They'd probably move their operations to rats which give bounties as well as minerals. Which means less nocx, zyd and mega.
So if insurance is removed you'd see slow leakage in all minerals, but the lowends would fall faster and harder than everything else.
And in summary, bigger blobs are the answer. Now what was the question? |
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Malcanis
Vanishing Point.
The Initiative.
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Posted - 2009.07.10 09:10:00 -
[21]
So if removal of insurance was combined with the removal of T1 basic modules from rat loot drops, mineral price ratios would probably rebalance moderately towards high-ends?
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Vaerah Vahrokha
Minmatar
Dark-Rising
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Posted - 2009.07.10 09:33:00 -
[22]
Originally by: Malcanis
So if removal of insurance was combined with the removal of T1 basic modules from rat loot drops, mineral price ratios would probably rebalance moderately towards high-ends?
Yes and this would remove every high sec miner off the game except bots. Now, this could be considered positive until considering how such people won't move to low sec in any case and will probably switch profession or quit the game.
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Before asking for investors, please read
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Akita T
Caldari Navy Volunteer Task Force
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Posted - 2009.07.10 11:41:00 -
[23]
Originally by: Malcanis
So if removal of insurance was combined with the removal of T1 basic modules from rat loot drops, mineral price ratios would probably rebalance moderately towards high-ends?
They wouldn't really rebalance much, only ever so slightly... and at much lower levels across the board compared to current price levels.
I fully expect T1 ships to sell for less than half, even a third of the current (already pretty damn low) price, and not just that, the volumes of ships manufactured/sold would also go down drastically.
I'd call trit at around 2.5 ISK per unit, pyerite at around 3.5, mexallon somewhere near 15, isogen around 35, nox 55, zyd 300, mega 450 or thereabouts... maybe even less.
EVE issues|Mining revamp|Build stuff|Make ISK |
Kazuo Ishiguro
House of Marbles
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Posted - 2009.07.10 11:47:00 -
[24]
If ships got cheaper, wouldn't people start purchasing more of them?
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20:1 mineral compression
ISRC Racing, Season 7 - schedule |
Akita T
Caldari Navy Volunteer Task Force
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Posted - 2009.07.10 11:54:00 -
[25]
Originally by: Kazuo Ishiguro
If ships got cheaper, wouldn't people start purchasing more of them?
If insurance is removed, unrigged ships would actually cost much more to lose even if they sold at one third of the price.
Not a couple of weeks ago, an unrigged T1 battleship with meta1/meta2 modules would cost you barely 10 mil or so to lose.
You only need to look at typical PVP fits, what is the total cost in modules and rigs compared to ACTUAL, post-insurance cost of ship, and you can't go much higher than that percentually without a severe drop in demand in spite of "face-value" lower price.
EVE issues|Mining revamp|Build stuff|Make ISK |
Yarinor
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Posted - 2009.07.10 12:48:00 -
[26]
Mineral prices would go down.
Lets look at it this way:
Lets say that with insurance it takes a pvp'er 0.5hrs of ratting to pay for a BS + fittings (using Akita's 10m figure from above, and an approximate 20m/hr figure)
Lets assume that you can "pvp" for 2 hrs before you lose your bs on average.
That means you have to buy a new ship ever 2.5 hrs.
Now, if insurance disappeared you'd have to rat for 4 hrs to buy a tier 1 bs with fittings, 5-6 for a tier 2, and 7-8 for a tier 3.
Meaning you'd only buy a new ship every 4, 6 or 8 hrs approximately, effectively cutting the demand to less than half, and not only a lowered demand, but if they loot while ratting they also put more minerals into the economy than they used to.
Aall this happens while the miners/missionrunners generate as much minerals as they've always done.
While i realize that PVP'ers aren't the only ones who lose ships, they do account for a huge number of them.
So I think it's safe to say that removed insurance will cause minerals to drop like a Rohynol in a girls drink.
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Malcanis
Vanishing Point.
The Initiative.
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Posted - 2009.07.10 13:07:00 -
[27]
Originally by: Vaerah Vahrokha
Originally by: Malcanis
So if removal of insurance was combined with the removal of T1 basic modules from rat loot drops, mineral price ratios would probably rebalance moderately towards high-ends?
Yes and this would remove every high sec miner off the game except bots. Now, this could be considered positive until considering how such people won't move to low sec in any case and will probably switch profession or quit the game.
I'm not advocating such a change, I'm asking people who know much more than I do about the way the eve market works to explore the consequences for me. Then, as and when the topic occurs, I will have a good reference.
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lacretia
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Posted - 2009.07.10 14:09:00 -
[28]
Originally by: Clair Bear
Originally by: Malcanis
That's what I'm interested in, along with which minerals would take what proportion of the hit.
Cargo expanded AFK hulk guys mine for 6-7M an hour now and would continue mining for 2-3M an hour. They most likely don't have the SP to do much else. If demand falls they will be the ones most willing to absorb the deflation in mineral prices.
As a miner, I now make around that 6-7mil per hour mark as you mentioned. If a BS hull now costs 80mil isk to purchase, I have to mine for around 12-13 hours to just buy the hull.
If a BS hull only cost 30-40 mil, but I am now only making 2-3 mil isk per hour, it is still going to take me 12-13 hours or so to mine up enough to afford one.
So, I guess my point is, if all prices go down, then being paid less doesnt matter as much. In fact...I think it would be kinda crap if I doubled the speed in which I could afford a BS. (well...it would rock for me personally...but might break the game).
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Dzil
Caldari
Banana Nut Pancakes
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Posted - 2009.07.10 14:18:00 -
[29]
Originally by: lacretia
So, I guess my point is, if all prices go down, then being paid less doesnt matter as much. In fact...I think it would be kinda crap if I doubled the speed in which I could afford a BS. (well...it would rock for me personally...but might break the game).
You're getting warmer. The trick is, not all prices would necessarily go down. T1 ship prices would go down, as well as the income of those professions whose regular output are those t1 ships. T2 might actually go up: current factored into the decision to go t1 or higher quality t2 is the cost of losing the ship. Say it currently costs a net 10m to lose a cheap insured battleship, or 100m to lose an insured (lol) Heavy Assault Cruiser. Now suddenly the net cost of the BS loss swings up to 60m. Guess what happens to the demand for HACs? With the gap in real costs diminished, HAC and other t2 combat ships become a more viable choice.
So the lowly high sec veldspar miner will take an income hit, but his t1 ships will adjust accordingly. However, t2 ships, including the miner's favorites (Mackinaw and Hulk) could actually see an increase in demand, thus their price going up.
And forums: I'm ready for you this time. I copied this post to my clipboard, so when you eat it, I'm just going to hit paste and laugh. **** you, cheap bum server.
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Dzil's Corp Sales - 200m for 7+ standings
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lacretia
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Posted - 2009.07.10 14:44:00 -
[30]
I think I got it!
We remove insurance and increase the tax on all starship sales. Out of this tax we give a small stipend to any dedicated high-sec miner that joins the Roid-Local 506. To prove that he is actually a living breathing player he has to be avaliable to sing "Workin'in a coal mine" on eve-voice at least once every hour if audited and post a picture of his eyes bleeding as he stares at yet another juicy roid field.
Everyone gets an incentive to fly fancier ships, music will be flowing in all high-sec systems, and the Trit will still flow.
***Chribba is not exempt...we all need to hear his sweet sweet voice***
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