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Bloggers #25, EVE Economics

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Author	Thread Statistics \| Show CCP posts - 5 post(s)
JP Moregain Gallente Moregain Guaranty Trust	Posted - 2006.08.16 19:26:00 - [1] Wow, I cannot believe that no one has recommended: "General Theory of Employment Interest and Money" by John Maynard Keynes Best Regards, JP "In JP We Trust, All Others Require Collateral..."
JP Moregain Gallente Moregain Guaranty Trust	Posted - 2006.08.16 19:43:00 - [2] Originally by: Andargor theWise Originally by: Doc Brown Demand is vastly outstripping supply with almost all T2 items, hence the uber inflation on those. You don't see that on T1 items because the T1 market isn't based around monopoloies. More like an oligarchy. I think you meant oligopoly. Actually I believe (undocumented of course) that in some cases the BPO's of certain Tech II items(wild guess = hammerhead II's) have all been collected by one entity, which would then actually be a Monopoly. Regardless the market effects could appear very similar to a concentrated Oligopoly so it would be hard to tell externally anyway... "In JP We Trust, All Others Require Collateral..."
JP Moregain Gallente Moregain Guaranty Trust	Posted - 2006.08.16 20:10:00 - [3] Originally by: DigitalCommunist Quote: Are we ignoring that re-spawning asteroids are also magically created isk? Nobody seems to complain about that, and I assume that this was not a complaint in the early days of Eve either. Truth be told, they are every bit the artificial cash injection that bounties or insurance is because once mined they are pure isk. Minerals have ISK value, but they are not ISK. Converting it from an item in your hangar to a number in your wallet requires selling it. Since they removed NPC mineral buy orders a long time ago, there is no way mining asteroids causes inflation. Overharvesting and underharvesting can cause the value of minerals to change, but the total amount of ISK in EVE is unchanged. Absolutely correct, this just involves transferring existing ISK from one player to another. In fact one could easily argue that since the minerals are inputs into the production of ships and other items, the continuous spawning is actually deflationary to the prices of end products like HAC's... If minerals were a truly limited resource then this might be a problem. What are the ISK faucets? 1) NPC mission running for cash rewards (or for requested items for which they pay you cash ) 2) Concord bounties on rats 3) Net insurance payouts (payouts less premiums paid) 4) New player creation (5000 isk = small, but whatever..) others? JP "In JP We Trust, All Others Require Collateral..."
JP Moregain Gallente Moregain Guaranty Trust	Posted - 2006.08.16 22:59:00 - [4] Edited by: JP Moregain on 16/08/2006 23:06:13 Edited by: JP Moregain on 16/08/2006 23:04:18 Originally by: Daiashi Edited by: Daiashi on 16/08/2006 22:32:55 Correction: Demand / supply explains the prices of HAC's and other T2's but does not demonstrate a profit to the BPO ownwers - Actually the supply/demand curves can explain profits in a monopolistic market, which is likely at least some of the T2 market. Note that price increases related to the development of a monopolistic market is an entirely separate issue from the "isk from nowhere"/inflation issue. Interestingly we were having this debate (whether some t2 markets = monopolistic) a few days ago here if you care and here is the link for a nice graph of same. Regards, JP "In JP We Trust, All Others Require Collateral..."
JP Moregain Gallente Moregain Guaranty Trust	Posted - 2006.08.17 14:38:00 - [5] Originally by: Bagehi As far as economics books and theories, I'm surprised Keynes was mentioned repetitively. Though I am not an ôeconomistö, I have been forced to study it quite a bit as it relates to business quite a bit. I will be clear, I am not an expert. So, with that said, I will restrain myself from questioning what decade the person who suggested KeynesÆ book for reading material was born in; considering KeynesÆ work was mainly in the 1920Æs-1940Æs. There has been a lot of research and thus, reading material on macroeconomics that does a better job of explaining national and global economics and offers better advice on how to normalize them. One of the main things lacking in Eve that would allow economic theories to properly work in the game is savings. This is partially being addressed with the ôstock marketö, but banking institutions need to exist as well (a plug here for BIG and their valiant efforts to create a banking institution in the game). I was born in the 1960's, just because it is newer doesn't mean it is better (that applies both for people and economic theories , thank you ...) That aside I REALLY agree with you other points, specifically the need for a real (not fraud-ridden) banking system and other financial services structure. If we had some more specialized (and expensive) skills related to bank that required a ton of training this might make the trade off between reputational risk and the 'take the money and run' attitude of many more balanced. While the new CROTCH system will help, it still appears inadequate to promote real finanical services infrastructure. Part of the problem seems to be possession being 100% of the law in EVE. Thus secured lending is impractical in most cases. If we had a title ownership system for high value items (such as expensive BPO's and ships etc.) where the lender could hold the title in trust but still allow the use/control of the 'physical' asset by the borrower, lending would be much more doable. Because you don't want to tame EVE too much you could still allow the physical assets to be stolen/taken, but one couldn't legally sell the items in Empire without the title. This would create a lot of interesting side effects like selling untitled items in 0.0 at a discount (fencing...), smuggling stolen items around, and even perhaps create a new career for 'repo' men , who could attempt to go repossess the underlying assets in event of default/theft for a bank. My 2 cents JP "In JP We Trust, All Others Require Collateral..."
JP Moregain Gallente Moregain Guaranty Trust	Posted - 2006.08.17 15:44:00 - [6] Edited by: JP Moregain on 17/08/2006 15:46:43 Originally by: Brian Detaah Keynes is still the main go-to guy if you want to understand the basic priciples of a monetary economy. His basic insight is that money matters in the real economy and the expectations of the economic actors for the future. He is the father of Macroeconomics as a disiplin. A good article on the mainstream view on Keynes contribution by said Paul Krugman http://www.pkarchive.org/economy/GeneralTheoryKeynesIntro.html or read Keynes himself here: http://www.marxists.org/reference/subject/economics/keynes/general-theory/ Most modern economist who are so convince they are alot further than Keynes and his contemporaries have often just not read them. sorry for the spam, but it is a good article. I agree and frankly in current market applications (like say managing money at an asset manager which is what I do) the practitioners still tend to look to Keynes. Particularly so since he spent a lot of time on market derived values and bubbles etc. We don't live in truly efficient markets, either in RL or EVE so I strongly encourage a look at his theories. Regards, JP "In JP We Trust, All Others Require Collateral..."
JP Moregain Gallente Moregain Guaranty Trust	Posted - 2006.08.18 10:52:00 - [7] Originally by: InstaMaker Ok I was an insurance agent for 10 years so I know a little about REAL insurance. The prob with the game insurance is it is not based on real time statistics. And in REAL LIFE insurance operates at a loss (really it does) it is used to make cash that is invested elsewere by others to make profit. So lets just stay away from whole issue of the insurance and focus elsewere on the economy. Or else one of the poor devs is going to be stuck codeing an acturay for the rest of his or her life. I belive the answer to inflation lies elsewere perhaps faction taxs docking fees and reprocessing fees being added or increased. Trust me insurance in the game is fine as it is if you look at the big picture. Actually some insurance companies operate at a loss from the pure insurance side and attempt to make up for it through the investment income. But it is a tough businesses strategy, and certainly is not the case across the board. That aside, I agree that insurance is probably not the primary problem. "In JP We Trust, All Others Require Collateral..."

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