Eve Economy

[Murgos]

I  this thread.  If we could merge it with the Council of Stellar Management thread it would be in contention with some of the UO and SWG threads we've had for sheer bizarreness.

[Hellinar]

So what you are saying was "Supply was high and very inelastic"

We have now modeled your situation. All other modeling is just defining how high it was and how inelastic.

No you haven't. My situation was that I was playing the game for fun. Sure your edge case covers that, but has nothing useful to say about it. Thats what I mean by "over applying the economic model".

[Jayce]

So what you are saying was "Supply was high and very inelastic"

We have now modeled your situation. All other modeling is just defining how high it was and how inelastic.

No you haven't. My situation was that I was playing the game for fun. Sure your edge case covers that, but has nothing useful to say about it. Thats what I mean by "over applying the economic model".

Hellinar, I think your example is flawed.  Eve and ATITD are apples and oranges.  A realisitically modeled economy always serves some other purpose; it doesn't exist in a vacuum. In life, it's this thing called survival; in EVE it's  war or PvE.  In your example, people made stuff because the process was fun and gave it away, so it really isn't a realistically modeled economy because the primary activity was the making, not the selling/buying.

From your example and for that reason it sounds like you can't apply classical economics to ATITD, but you can in Eve because the motivations are more like real life.  Many people take fun from acheivement in persistent worlds, which explains why the act of making something might not be fun, but people still do it to feel like they earned an honest buck by supplying something that real people want for their own purposes.

[MahrinSkel]

That seems about right.  Although there are some people who produce just for the sake of production, because they find that enjoyable in and of itself, most of the economic actors are doing it mostly for the money.  They're doing that instead of ratting, mining, or missions because for them working production or the markets is more fun, but they wouldn't be doing it if it weren't giving them in-game profits.  I enjoy the complexities of the market game, but my main motivation was the in-game power that huge stacks of cash gave me.  If there was an alliance problem that throwing a couple of billion at could make go away, I could throw the money at it and get the rush of knowing I had just changed something significant (in game terms, as I saw them).  My motivation was still fun, but making large amounts of money was fun because it was in service to some other goal.

For some people, just getting the biggest stack *was* the fun.  I had an income comparable with the top 20 or so Eve plutocrats, but a comparatively small net worth to most of those because I didn't stack my money, I spent it.

--Dave

[Goumindong]

So what you are saying was "Supply was high and very inelastic"

We have now modeled your situation. All other modeling is just defining how high it was and how inelastic.

No you haven't. My situation was that I was playing the game for fun. Sure your edge case covers that, but has nothing useful to say about it. Thats what I mean by "over applying the economic model".

Yes I have, you fail to understand what "playing the game for fun means" it means the values are different. Different values produce different supplies/demands. That doesn't mean it doesn't apply.

E.G. I play baseball for fun. And some people watch baseball for fun. And other people produce baseball equipment that i can use while i play. Now, i don't charge people who want to watch me play baseball to do so. But if i could, i would play baseball more than I do now. If i charged for people to watch me play less people would come. Professional baseball players have fun playing baseball. But i am willing to bet that they play more than they would if there wasn't the demand to pay them.

Its the sum of all the varying values that make up supply and demand. If something becomes more fun, then people will produce more of that good at any price. If its fun enough and demand is low enough then price might be zero.

Unless supply is perfectly inelastic over the entire range, which it cannot be because that would require that players have infinite time and no real world obligations then you are wrong. Since Supply cannot be perfectly inelastic over the entire range then you are wrong.

[Phildo]

People who manufacture to have fun must also consider how to CONTINUE having fun.  If I make a lot of something and it's expensive and I don't turn much of a profit, that limits how much MORE fun I can have in that I may run out of money and have to do things like mission or rat to raise funds.  So even producing just for fun, it benefits me to manipulate the market to make a bigger profit in order to ENHANCE my fun, rather than sidetracking on time-consuming activities that I don't enjoy.

[Johny Cee]

I  this thread.

[Hellinar]

People who manufacture to have fun must also consider how to CONTINUE having fun.  If I make a lot of something and it's expensive and I don't turn much of a profit, that limits how much MORE fun I can have in that I may run out of money and have to do things like mission or rat to raise funds.  So even producing just for fun, it benefits me to manipulate the market to make a bigger profit in order to ENHANCE my fun, rather than sidetracking on time-consuming activities that I don't enjoy.

I think what you are missing is that you can ignore the market as long as it is providing enough money to do the production you enjoy. If making a bigger profit enhances your fun, then you are no longer producing solely for the fun of it, but to maximize your income. And then that aspect of your behavior becomes predictable by economics. 

Economic models have nothing to say about how to make a game where producing is fun. Or fighting is fun for that matter. Looking at salvaging, the first design question should be “does this change make the game more fun?”. An obvious component of that is the effect on the economy, as it is a fun part of EVE. But it’s a secondary question, not the primary one. The primary question, economics doesn’t answer.

[Goumindong]

People who manufacture to have fun must also consider how to CONTINUE having fun.  If I make a lot of something and it's expensive and I don't turn much of a profit, that limits how much MORE fun I can have in that I may run out of money and have to do things like mission or rat to raise funds.  So even producing just for fun, it benefits me to manipulate the market to make a bigger profit in order to ENHANCE my fun, rather than sidetracking on time-consuming activities that I don't enjoy.

I think what you are missing is that you can ignore the market as long as it is providing enough money to do the production you enjoy. If making a bigger profit enhances your fun, then you are no longer producing solely for the fun of it, but to maximize your income. And then that aspect of your behavior becomes predictable by economics. 

Economic models have nothing to say about how to make a game where producing is fun. Or fighting is fun for that matter. Looking at salvaging, the first design question should be “does this change make the game more fun?”. An obvious component of that is the effect on the economy, as it is a fun part of EVE. But it’s a secondary question, not the primary one. The primary question, economics doesn’t answer.

So, you're losing an argument. Windows Helper would suggest to

• Call them a name
• Change the Subject
• Strawman their argument

I see you've chosen to change the subject: It looks like you have been talking about economics. Windows helper suggests you tell them that it isn't really about economics and instead its really about bunnies. Everyone loves bunnies. If you keep trying to tell them that economics doesn't apply in the situation you're going to lose, but if you can convince them that people don't value things because they have to build a house right now, then you have a chance of making them forget what it was you were talking about in the first place.

________________________________________

Time is a finite resource for the players of a game. It takes time to do these mini games that produce. The output of these mini-games is not infinite. So the amount of stuff produced from these minigames is a direct result of the amount of time played. Time has value based on what you can do with that time. Value is a subjective measurement that varies from activity to activity. The less an activity is valued the more compensation is required to make that activity happen.

If an activity is valued highly(I.E. its fun) then little compensation(price) is needed in order to make that activity happen(people playing ATIND, producing stuff and selling it or giving it away).

Yes, economics won't tell you how to make something fun, but it will tell you how much people value doing things and what those activities produce. That economics won't tell you how to make something fun is irrelevant to the question.

[Hellinar]

That economics won't tell you how to make something fun is irrelevant to the question.

There we will have to disagree. In applying any model, I think its critical to first check how much it applies to the case in hand, and what is beyond its boundaries.

In the case in hand, rigging, I think changing how rigging works purely to tune the economy would be taking a dangerously narrow view. And could lead to results your economic model can’t predict. Someone should be asking “how does this effect the overall fun of the game?”.

One trap in design is the temptation to optimize what we can measure, and ignore what we can’t. Following that route can lead to an economy that works great in theory, but a game that sucks.

[Goumindong]

That economics won't tell you how to make something fun is irrelevant to the question.

There we will have to disagree. In applying any model, I think its critical to first check how much it applies to the case in hand, and what is beyond its boundaries.

In the case in hand, rigging, I think changing how rigging works purely to tune the economy would be taking a dangerously narrow view. And could lead to results your economic model can’t predict. Someone should be asking “how does this effect the overall fun of the game?”.

One trap in design is the temptation to optimize what we can measure, and ignore what we can’t. Following that route can lead to an economy that works great in theory, but a game that sucks.

Economics will not tell you whether or not its fun, economics will tell you what will happen if you make it more or less fun, more or less compensated(better stuff), or produce more or less end product. You have flat out claimed that this is not true and are now trying to change the subject when someone takes the time to explain how and why it does

No one is trying to optimize a market, they are looking at a goal and then figuring out how to achieve that goal. They are looking at an action( possible increased salvaging rates) and trying to figure out what that means for the game. You can then use that to determine whether or not it will suck.

[Murgos]

That economics won't tell you how to make something fun is irrelevant to the question.

There we will have to disagree. In applying any model, I think its critical to first check how much it applies to the case in hand, and what is beyond its boundaries.

In the case in hand, rigging, I think changing how rigging works purely to tune the economy would be taking a dangerously narrow view. And could lead to results your economic model can’t predict. Someone should be asking “how does this effect the overall fun of the game?”.

One trap in design is the temptation to optimize what we can measure, and ignore what we can’t. Following that route can lead to an economy that works great in theory, but a game that sucks.

Economics will not tell you whether or not its fun, economics will tell you what will happen if you make it more or less fun, more or less compensated(better stuff), or produce more or less end product. You have flat out claimed that this is not true and are now trying to change the subject when someone takes the time to explain how and why it does

No one is trying to optimize a market, they are looking at a goal and then figuring out how to achieve that goal. They are looking at an action( possible increased salvaging rates) and trying to figure out what that means for the game. You can then use that to determine whether or not it will suck.

From what I read, he just said that.  Why don't you go take a smoke break and go get some air?

[NiX]

This thread gave me PTSD.

[Goumindong]

From what I read, he just said that.  Why don't you go take a smoke break and go get some air?

There we will have to disagree. In applying any model, I think its critical to first check how much it applies to the case in hand, and what is beyond its boundaries.

As things are more expensive we sell more of them, as things are cheaper, we sell less.

Not True

If i went into a discussion about whether or not certain aspects of design made something fun and said "This thing isn't fun because its not about whether or not its fun, its about whether or not the space government taxes it efficiently!" i would rightly be told that i was an idiot.

He is still denying that economics can give us insight into what will happen to the market and the game when you make changes. His specific argument is "Economics doesn't work because something should be fun". Everything "should" be fun. Great, we've reached an epiphany the quality of "humans need food to live".

Am i wrong in that understanding?

[Hellinar]

Yes. I am not denying that economics gives insights, or saying the “economics is wrong”.  I am however questioning a very specific statement you made.

…. as things are cheaper, we sell less.
 

Not merely because you typed “less” instead of “more”. I took that as a typo. That statement, like many economics statements, are true up to a point. It ceases to be relevant when demand is entirely satisfied. Lowering the price won’t then increase demand.

It is a much more important point in game economies than the real world one. For a couple of reasons. First, in the real world, lowering the price means your product starts substituting for more expensive goods. In game economies, uses are usually hard coded, and this substitution can’t take place.

Second, players in games are often using the goods for fun. The odd thing about fun is that using ten of something can be fun, using twenty gets a bit boring, and using thirty can seem like a job. This contrasts with the real world, where goods are often acquired for power or status, both of which reward infinite consumption.

I’m saying that economics is useful but limited tool when figuring out what is going on in your game. If you are looking at changing a feature like salvaging, its not the first tool you should be pulling out of your toolbox.

[Phildo]

Goumindo's quote was absolutely correct.  As a producer who enjoys producing, if something is cheaper I will sell less of it in favor of other things that sell higher and will allow me to produce MORE FUN THINGS.  The original product will enable me to HAVE LESS FUN BY PRODUCING LESS.

One of the fundamental theories of economics is that as price decreases, demand increases.  The only way it possibly wouldn't is if everyone in the game already owned enough of a product that they never, ever thought they would need it again.  This is nearly impossible.

RE: salvaging is fun.  If the only change in the mechanic is how much or how little salvage is recovered from each wreck, that in no way at all impacts the fun of the activity except for "ooh, more loot."  If they changed the mechanic itself, then yes fun comes into play more prominently, but it is instantly an economic issue when it changes the availability of more or less salvage.

[Goumindong]

Not merely because you typed “less” instead of “more”. I took that as a typo. That statement, like many economics statements, are true up to a point. It ceases to be relevant when demand is entirely satisfied. Lowering the price won’t then increase demand.
 

O.K. There is a fundamental problem here in that you do not know what supply and demand are.

Supply is the sum of all the values of all the people in the economy regarding the question "how much x would you sell at y price" for all values of y

Demand is the sum of all the values of all the people in the economy regarding the question "how much x would you buy at price y" for all values of y.

As the price of a good changes, assuming no other changes(at all, period, ever only thing that changes is the price). People will want to buy more of the product and sell less of the product

Lets use an example in the real world. If it cost 100 dollars an hour to have someone mow your lawn fewer people would pay to have a lawn mowed than if it cost 25 dollars an hour to have someone mow your lawn. If it cost 100 dollars to mow a lawn, more people would set up shop to sell their services as lawn mowers than if it cost 25 dollars an hour.

Lets use an example from Eve. If Zealots cost 100m isk fewer people would pay to fly zealots than if they cost 25m isk. If Zealots cost 100m isk, more people would set up shop to sell zealots than if they cost 25m isk.

Why? Because people have different values for items. If i value zealots at 90m isk apiece so long as I have one to fly, and i had 4. If the price were above 90m isk, i would sell 4 zealots. If you valued Zealots at 110m isk so long as you had fewer than two(one to fly and one for backup), then if the price were 100m isk, you would buy 2 Zealots. But if the price of zealots were 200m, i would want to sell all 5 and i would build more zealots in order to sell as many as i could make which is say, limited to 2/month more than i could when i was making 5/month so long as i had one to fly. So i would sell 6 zealots. But at 200m you could only afford one zealot and you probably wouldn't want to take the risk, you would buy 0 zealots.

So what happens? People bargain until the price and quantity sold get to a point where the same number of product would be bought at the price than would be sold. That price and that quantity is called "equilibrium". Not everything reaches equilibrium, its a process. But we can use this then, when demand and supply shift and when other factors are applied to the market, to figure out which way the price will go, and whether more or less stuff will change hands.

Slight Semantic correction:

Now, Phildo made a mistake when he said "demand increases". Its a small mistake, but it causes a lot of confusion among many people. Quantity demanded increases, not Demand. Its an important distinction because demand refers to that aggregate of all the values. And quantity demand refers to "how much stuff people would buy". Price goes down, quantity demanded goes up. But if Demand goes up, price will go up(demand going up meaning that people value the product more). If you have two people referring to each with the same term it can get very confusing when one person is talking about demand going up because the prices went down and another talking about how prices increase when demand increases. The people trained in economics probably understand what is going on, but the people who aren't will not. Thus the layperson is sitting on the side wondering why two people are agreeing with each other while saying exactly the opposite thing.

Demand shifts are things that make the product more of less valuable. If zealots received 3 more hit slots, 3 more turret slots, 2 meds, another low, and three extra bonuses, people would value them more. And would be willing to buy more zealots at any given price. The demand line would move to the right equilibrium would now be at a higher price with more of the product sold. Quantity Supplied would follow the price up to the new equilibrium(because the value of the good for the sellers hasn't changed, but all of a sudden, people want to pay more for them, inducing more people to sell more)

Supply shifts are things like "it became more fun" or "it produces more stuff" or "it produces less stuff" or "it became less fun" or "it makes less stuff"

[Hellinar]

Goumindo's quote was absolutely correct.  As a producer who enjoys producing, if something is cheaper I will sell less of it in favor of other things that sell higher and will allow me to produce MORE FUN THINGS.  The original product will enable me to HAVE LESS FUN BY PRODUCING LESS.

I was reading the "we"  as producers collectively, who will collectively sell more of a product if they drop their prices. But your alternative reading makes some sense. 

[Johny Cee]

Hellinar,

I think the basic point of contention in this thread is a definitional one:  you say "you can't model this with economics" by which you mean something like a market-based private property model.  The discipline of economics is much broader than that,  and encompasses the scientific study of all systems that seek to allocate scarce resources, and encompasses a number of approaches from Marxism to Libertarianism (economic, rather than political) and multiple stops in between.

Goumindong, Phildo, etc. see that statement and interpret it as "you can't model this with science",  which obviously generates the responses.

[Hellinar]

Hellinar,

....  you say "you can't model this with economics" ...

Err, that’s not my position at all. I’m sorry if my poor communication skills led to that conclusion. Looking back, I can see I haven’t been very clear. I believe game worlds are a great place to research modern economics. I hope that is what the CCP economist is doing. My beef lies entirely with over extending the classic model into areas it doesn’t work. My position is well supported in modern economics.

I’m arguing against the over application of the classic supply and demand curves to game worlds, not against the discipline of economics. In the classic curve, supply increases if the price rises. (See Wikipedia for a picture.) But economists have long known other supply curves exist, such as the Labor supply curve.

My contention is that these other supply curves are more common in game economies than real world ones. Particularly in playstyles where “fun” is the dominant motivation. Game designers, and game board discussion, often focuses on the classic curve, as if it was some “law of economics”. Rather than simply the most commonly observed curve. Designing your game economy with that erroneous assumption will tend to encourage playstyles for which it is true, and discourage those which produce non classical supply and demand curves. While I like the trader playstyle, I also like some of the others.

[MahrinSkel]

What game economies offer is a fantastic opportunity to study is *behavioral* economics, which is a "hot" field in that trade right now.  With value being abstracted into a pure form, with "goods" that are strictly protean in essential nature but still holding perceived utility, you get a fascinating picture of what an economy can be.  It allows laboratory experiments on economics in a perfect goldfish bowl and with absolute control.

--Dave

[Goumindong]

But economists have long known other supply curves exist, such as the Labor supply curve.

Are you saying a supply shift is going to increase the opportunity costs for salvaging greater than the marginal returns?

You have any evidence to support that?

[lamaros]

I am not sure if this is cool here, but i am tired of posting logical arguments and not getting through to people.

It's totally cool. Especially after you take someone's argument apart bit by bit.

When you get bored of this, come down into politics.

Seconding.

Steady on the post splitting though. While some (I'm one of them) think it is quite useful in situations like the one you've employed it in it is generally frowned upon and you'll need to tone it down.

Turn to the ad hominem earlier though, btw.

[Hellinar]

But economists have long known other supply curves exist, such as the Labor supply curve.

Are you saying a supply shift is going to increase the opportunity costs for salvaging greater than the marginal returns?

You have any evidence to support that?

I’ve no idea on salvaging, outside my area of knowledge. But on the observation of labor type supply curves effecting game economies, yes. No hard numbers, I don’t have access to the server data to provide that. Just years of reading MMOG boards, and playing MMO games.

The classic backward bending labor curve appears when a workers wages rise so high he has enough money to pursue his leisure pursuits, and cuts back on working time to do that. Further rises in wages just enable him to reduce his supply of labor even more, not increase supply.

This is pretty common on the multi-server fantasy game worlds, with their small populations and “boring” crafting. Only a small portion of the playerbase want to grind up the levels to make the good stuff. And when they get there they find that making the good stuff is pretty annoying, but pays very well. After a while, they find they can satisfy all their needs for gold just making a few “Maces of Ultimate Smashing”, and no price offer will induce them to make more. I’m sure anyone who has played many of these games is familiar with the high level crafter who has gone anon to avoid tells from people who want to give him buckets of money.

I doubt if this particular supply curve applies much in EVE. The world is larger, and production is game time but not player time intensive. But I wouldn’t be surprised if there are items and times even in EVE when this curve kicks in.

[Goumindong]

The classic backward bending labor curve appears when a workers wages rise so high he has enough money to pursue his leisure pursuits, and cuts back on working time to do that. Further rises in wages just enable him to reduce his supply of labor even more, not increase supply.

Yes, you quoted me saying that, we can move on.

I doubt if this particular supply curve applies much in EVE. The world is larger, and production is game time but not player time intensive. But I wouldn’t be surprised if there are items and times even in EVE when this curve kicks in.

Its very easy to determine whether or not this situation exists(I.E. whether or not the top end of the supply curve is relevant, I.E. intersects with demand). Increase supply and check to see if price rises.

Its also important to note that in any backwards sloping supply(with two intersections), the price setter will be the one with the most power. Otherwise you will have two equilibrium prices. I am going to wager buyers of rig materials have the most power.

[Amarr HM]

Yes I would put money on that also.