BBC thinks Eve Online could give lessons on how to deal with Economic Crises

[Sir T]

http://news.bbc.co.uk/2/hi/technology/8545268.stm

Money matters in Eve Online game

By Chris Vallance
Reporter, BBC News

"Eve Online has taught us how to deal with the crisis in the real world'

Of all the economists in Iceland Dr Eyjolfur Gudmundsson has the most unlikely vantage point from which to observe the tribulations of the financial markets: deep space.

Dr Gudmundsson is the lead economist for CCPgames, the company responsible for Eve Online a sci-fi themed Massively Multiplayer Online Role Playing Game with more than 300,000 players.

It is similar in concept to the BBC micro classic Elite and puts trading of commodities and manufactured goods at the centre of the game.

From CCP's headquarters in Reykjavik, Dr Gudmundsson monitors Eve's in-game economy, watching the price of raw materials or the latest type of ship with the same rigour that other economists watch the price of copper or coffee.

He told the BBC that on the "markets of Eve there are about 1.2 to 1.4 million transactions each day".

There's even the Quarterly Economic Newsletter which records and analyses Eve's economy in the kind of detail more usually associated with a prospectus for an investment fund.

Economic aid

For Dr Gudmundsson, who enjoyed a successful career as an academic economist, watching the economy of Eve Online presents a unique opportunity.

"I said to myself I must do this. No economist has ever before been able to have such minuscule information about transactions, about the participants of that economy. I don't regret that. It's been one hell of a ride."

The virtual universe with its hundreds of thousands of players is an economic petri-dish in which the operation of markets can be observed with a clarity impossible in the real world.
Geyser in Iceland, BBC
Iceland's economy suffered in the global downturn

And having an in-game economist is useful for CCPgames as well.

"We assist the developers in evaluating changes to the game, as well as assisting customer support finding people who are not playing according to the rules", said Dr Gudmundsson.

When players discover exploits in the game allowing them to "cheat", it shows up in the price of in-game items. For example, a fall in the price of a product, may indicate that someone has found an exploit which allows them to produce it very cheaply.

"We go and research price changes, and sometimes they have shown us that players found an exploit and hence we have been able to plug the game," he said.

Dr Gudmundsson is, in effect, an early warning system for CCP.

Similarly the actions of bots and players interested in making real money out of trading Eve's virtual currency and goods can be analysed in economic terms.

By diagnosing issues like this, and offering solutions, he is able to use his economic skills to help maintain the integrity of game play.

However, unlike many real world economists, Dr Gudmundsson isn't concerned with ensuring the prosperity of players. Economic ups and downs, booms and busts, even skulduggery that would normally result in the attentions of the financial authorities are all perfectly acceptable.

Eve is a universe in which piracy is a viable way of making a living. Learning to deal with cut-throat business practices is part of the fun of the game.

Unfortunately the same can't be said of financial crises in the real world.

Iceland has been deeply affected by the troubles of the banking industry. In a small country, the affects have been impossible to for Dr Gudmundsson to ignore.

"It's been difficult times for Icelanders, to watch the unfolding saga."

Piracy please

Last December the number of people playing Eve exceeded 317,000 - the current population of Iceland.
Screenshot from Eve Online, Namco Bandai
Eve revolves around exploration and space combat

In Dr Gudmundsson's personal view, it's possible to discern lessons in how future global crises may be avoided, from the economic behaviour of the Eve population. His main belief is that greater transparency would help individuals make better economic decisions.

"We should trust people in making their own decisions. People do make the good choices when they have the right information. More transparency is definitely something we need in the real life."

Dr Gudmundsson illustrates his point by looking at how player-run banks work in Eve.

There have been some notable swindles with billions of ISK (Eve's game currency) going missing. Because Eve has no "lender of last resort" players are consequently very careful about who they trust with their in-game money and very wary of those who aren't open about their business.

He believes it's been a lack of information has been a problem in the current crisis.

Savers should have the information they need to be able to make their own decisions about who to trust with their money, instead of relying solely on regulators who may not be able to keep up with changes to the banking sector, he says.

But the harsh realities of space commerce have not lead Dr Gudmundsson to embrace Eve style laissez-faire economics in the real world.

"It has sharpened my view on neoclassical economics, at the same time I do see the faults of that system. Personally I am very fond of the Scandinavian model, a good combination of healthy competition whereas the government helps those in need."

You can hear more about Eve Online on Digital Planet during the BBC's SuperPower season on the BBC World Service.

[Goumindong]

Someone should tell the BBC that they're retarded.

[Gets]

Took them two years to find the ferrogel dupe. The early warning system needs a tweaking.

[eldaec]

Took them two years to find the ferrogel dupe. The early warning system needs a tweaking.

I don't know, by the standards of the world's major financial regulators, 2 years would be pretty damn hot.

[Simond]

Niart Epar for Chancellor of the Exchequer!

[caladein]

I've always found Eve really fascinating from a behavioral and microeconomic standpoint.  It presents an easy (and moderately safe) way to ask questions like "What is my time and/or this risk worth?" in a very accurate sandbox.

The point that Dr. Gudmundsson makes from a macroeconomic standpoint can't be stressed enough.  In the real world we're still dealing with fluctuating estimates of GDP even a year out from the end of the reported quarter.  (For example, in the US the headline GDP rate for the last quarter of 2009 was revised up, but beneath that the news was actually a good deal worse as the increases became more attributed to one-time events like inventory changes.)  To have to-the-transaction information about an essentially full-scale laissez-faire economy is pretty awesome.

[Goumindong]

I've always found Eve really fascinating from a behavioral and microeconomic standpoint.  It presents an easy (and moderately safe) way to ask questions like "What is my time and/or this risk worth?" in a very accurate sandbox.

The point that Dr. Gudmundsson makes from a macroeconomic standpoint can't be stressed enough.  In the real world we're still dealing with fluctuating estimates of GDP even a year out from the end of the reported quarter.  (For example, in the US the headline GDP rate for the last quarter of 2009 was revised up, but beneath that the news was actually a good deal worse as the increases became more attributed to one-time events like inventory changes.)  To have to-the-transaction information about an essentially full-scale laissez-faire economy is pretty awesome.

Eve isn't a full scale laissez-faire economy. It has fixed infinite labor demand, it has fixed costs of capital, it has no functioning credit markets, is has perfectly complementary labor and capital productivity. It has automatically scaling money supply to production...

Micro-economically its interesting. Macro-economically its not. Half the things that matter have been set as fixed

[Murgos]

...it has no functioning credit markets...

Well, seems like there is a niche where an enterprising player could make a name for himself.

[Amarr HM]

 

[caladein]

I've always found Eve really fascinating from a behavioral and microeconomic standpoint.  It presents an easy (and moderately safe) way to ask questions like "What is my time and/or this risk worth?" in a very accurate sandbox.

The point that Dr. Gudmundsson makes from a macroeconomic standpoint can't be stressed enough.  In the real world we're still dealing with fluctuating estimates of GDP even a year out from the end of the reported quarter.  (For example, in the US the headline GDP rate for the last quarter of 2009 was revised up, but beneath that the news was actually a good deal worse as the increases became more attributed to one-time events like inventory changes.)  To have to-the-transaction information about an essentially full-scale laissez-faire economy is pretty awesome.

Eve isn't a full scale laissez-faire economy. It has fixed infinite labor demand, it has fixed costs of capital, it has no functioning credit markets, is has perfectly complementary labor and capital productivity. It has automatically scaling money supply to production...

Micro-economically its interesting. Macro-economically its not. Half the things that matter have been set as fixed

Yes, but compared to an economy where you're really not sure what happened this quarter years from now, there's a use to it.  Full-scale was probably not the best choice of words, although I'd say that the lack of a credit market does not mean credit does not exist, it's just OTC... with all the perils and benefits that that entails.

[Goumindong]

Yes, but compared to an economy where you're really not sure what happened this quarter years from now, there's a use to it.  Full-scale was probably not the best choice of words, although I'd say that the lack of a credit market does not mean credit does not exist, it's just OTC... with all the perils and benefits that that entails.

I am not sure it really has much of an OTC system either. Credit exists in small quantities. In these quantities its just not significant. It might as well not exist.

And without a market, we can't track it. It would show up as any other transaction(and get muddled up with all the other transfer payments which are macro-economically unimportant). So we can't see it anyway.

[Kovacs]

EDIT:  I guess I need to quote this now.

Eve isn't a full scale laissez-faire economy. It has fixed infinite labor demand, it has fixed costs of capital, it has no functioning credit markets, is has perfectly complementary labor and capital productivity. It has automatically scaling money supply to production...

Micro-economically its interesting. Macro-economically its not. Half the things that matter have been set as fixed

Eve is actually laissez-faire and the lack of credit markets is a result of that.  With no regulatory force or outside agency publishing or punishing unethical financiall practices credit markets are local or nonexistent.

The other conditions which you mention are ones that describe the endogenous conditions (forces determined by the model) of the economy and not the regulatory structure.   As far as those conditions are concerned they tend very closely toward a perfectly competitive model.  No barrier to entry, perfectly mobile capital and labor, no product differentiation (which is what I think you mean by complementary labor and capital productivity), perfect information etc.   And anytime you can get yor hands on an economy with 300K+ members and closely resembles the "perfect" economy that's useful.

As for the cost of capital I think you may be talking about the mission system, which really isn't the economy to me.  In the actual economy as there's no functioning credit markets with a standard interest rate to create a basseline so the traditional masure of cost of capital is 0 but more usefully it's measured by its opportunity cost, that is the cost to the player of having to forego the next most profitable venture, which is determined by the player's skillset.  You only have so many production slots and by using them to produce 10 SPR's you aren't producing 10 LSE's, so your cost of capital is the revenue you don't get from producing LSE's.

So you're right in that the static economy of the mission runner is pretty uninspiring but the real Eve economy is a fairly useful petri dish for measuring economic discision making at a macro level.  Although hiring what must be one of the last remaining neoclassical economists to measure an Eve players economic activities seems particularly sadistic.  

Neoclassical economists base their modeling on the idea that 'rational choice and expectations' are the guiding model of human economic behavior.  Yeah, nobody really thinks that anymore.

And yeah I do hate taling about economics on the internet about as much as I hate syphillis.

[Goumindong]

The other conditions which you mention are ones that describe the endogenous conditions (forces determined by the model) of the economy and not the regulatory structure.   As far as those conditions are concerned they tend very closely toward a perfectly competitive model.  No barrier to entry, perfectly mobile capital and labor, no product differentiation (which is what I think you mean by complementary labor and capital productivity), perfect information etc.   And anytime you can get yor hands on an economy with 300K+ members and closely resembles the "perfect" economy that's useful.

You know that i was talking about why the model changes make it not representative. An economy that closely resembles a "perfect" economy but is predicated on infinite labor demand is not a "perfect" economy.

Oh and i was actually referring to price of capital, my bad. But its very much fixed. Capital and Labor are not perfectly mobile but the isoquants relating to them are perfectly complimentary(not sure the right term here). There is no substitution labor for capital that will allow higher production or the other way around.

Information is very much not perfect, there are barriers to entry.

[Kovacs]

I'm not sure what you mean by infinite demand for labor, unless you are referring to the mission system which we decided isn't really part of the Eve economy.  There's actually no demand for labor in Eve.  There are no wages to add to the cost of production and you don't hire workers to produce your goods, and the only capital is the time investment necessary to acquire the skills for production.  Eve provides the infrastructure necessary for prduction and the player just provides the capital and the inputs and waits for the timer.  So your isoquant is actually vertical for each good*. 

And the perfect information and barriers to entry that I mentioned do actually hold true in the Eve model but only because the terms have a very specific definition.  While there are definately barriers to entry in the sense that it's impossible for a new player to be profitable in certain markets and you do have to have the skills the only measurable cost is time and profitablility isn't considered in the economic definition.  Barriers to entry in the model means extremely high capital or regulatory requirements acting to keep potential producers out of a market.  Drug producers are a good exapmle of companies that have a regulatory barrier to entry and of course telecom pre MCI is cited as having a high capital barrier.  Having to string a phone wire to evey house you want to provide service too was such a high capital cost that it would be impossible to compete with the existing company.  In Eve you don't have forms to fill out or infrasturcture to build before you can produce your first unit.  It's just time and time has no value (to an economist).

Perfect information doesn't mean you have to have a crystal ball.  It actually has to deal with information about the market and the good produced.  In Eve you know everytime exactly what inputs are required, what it will cost to use he stations production facilities and how long it will take to produce the perfect LSE or SPR.  The market is perfectly transparent because with eve-central you have access to the exact bid/ask across the whole universe and even the quantities available on both sides of the trade.  Now there is some localization based on the skills of the seller or buyer and each market is not visible across the entire economy from any location but the information is available and accurate and with eve-central almost in real time.   Now while this falls pretty far short of what most would think of as 'perfect information' it does satisfie the requirements of the model.

*FYI: If you have 10 units of snow and 10 units of water you can draw an isoquant describing what combination of snow and water you need to produce X number perfect slushballs.

[Endie]

Kovacs for LoveU CFO.

[eldaec]

...it has no functioning credit markets...

Well, seems like there is a niche where an enterprising player could make a name for himself.

There are whole forums dedicated to this already. EVE has a functioning credit market, it just isn't open to random scrubs who show up with no collateral or reputation to stake. Much like real life (outside of sub prime silliness).

[Trigona]

I believe that mmos are excellent teaching tools for getting a kids head around economics. 

My boys after years of mmo playing understand that something is worth only what someone else is willing to pay.

They also understand the concept of 'buyer beware' and having been ripped off are much more wary about deals that sound too good to be true.  They also know to check the fine print to avoid substitute scams etc.

One of my boys knows how to manipulate markets to the point he was warned off by WoW devs to desist or face a ban.  He's now playing Eve so it could get interesting.

Mmos are great for learning economic lessons as the rl pain is relatively small, while they get a good grounding in the wonders of capitalism.

[MahrinSkel]

One of my boys knows how to manipulate markets to the point he was warned off by WoW devs to desist or face a ban.  He's now playing Eve so it could get interesting.

Mmos are great for learning economic lessons as the rl pain is relatively small, while they get a good grounding in the wonders of capitalism.

Well, he's left the kiddie pool.  Seriously, if he thinks he's found a new angle, make sure he tries it with small amounts to start with, and doesn't blow a few hundred real dollars accumulating capital for a big score, only to find out that was *last* year's trick.

As far as credit markets: There's credit, but it's all hand to hand.  There have been various efforts to build real lending structures, they've all ended in tears and lulz.  That being said, I've put together 30B isk projects on reputation, and seen others do the same on the 100's of billions level.  If people feel they know you, and that you're a good risk, you can get credit.  Renaissance levels of market operation, essentially.

--Dave

[Kitsune]

Whatever happened to your EVE empire, Mahrin?  I can't recall having heard anything about your business endeavors in several months.

[Stabs]

So many parts of the Eve economy simply don't make sense in real world terms.

A great many manufactured goods actually cost less than the raw materials. Players like to craft. Many players attach a zero value to minerals they mine and transport themselves.

Many markets are seeded under constraints that are very different from real world situations. In 0,0 markets are usually seeded by people who can move cargo ships there safely - ie members of the local alliance. However the expectation is that prices should be low, close to Jita. In fact if you sell an item that no one else is selling you can easily get ten times the Jita price or more. I don't think the locals think it would be nice if you sold stuff cheap plays a major part in real world economics.

There are so many similar examples where the Eve economy doesn't work like the real world economy because it's a game and isk strategically and psychologically is not thought of in the same way as real money.

Using Eve to discover truths about the real world is not intellectually safe. You may as well use children's literature to explain economics. The bail-out of the banks is kind of like the time in Noddy where all the kids pool their pocket money to pay for a window Big Ears broke. Can I get a research grant to study this important and instructive field of ground-breaking academia further please?

[Goumindong]

I'm not sure what you mean by infinite demand for labor, unless you are referring to the mission system which we decided isn't really part of the Eve economy.  There's actually no demand for labor in Eve.  There are no wages to add to the cost of production and you don't hire workers to produce your goods, and the only capital is the time investment necessary to acquire the skills for production.  Eve provides the infrastructure necessary for prduction and the player just provides the capital and the inputs and waits for the timer.  So your isoquant is actually vertical for each good*. 

You mean there is no labor input for some methods of production. But there certainly is labor, in terms of NPC'ing, mining, etc. Just because another person does not pay your wage does not mean that your wage does not exist. And eve supplies an infinite amount at the given prices.

It is vertical for each good you produce with a blueprint, but not goods that you produce in other manners, like the majority of input goods. For those, the isoquant is a right angle (I.E. more capital or more labor does not increase production without more of the other once you've reached density)

In Eve you don't have forms to fill out or infrasturcture to build before you can produce your first unit.  It's just time and time has no value (to an economist).

No natural monopolies =/= no barriers to entry.

Oh and what the fuck "time has no value to an economist"? Are you retarded?

 Now while this falls pretty far short of what most would think of as 'perfect information' it does satisfie the requirements of the model.

The major imperfections in the model do not lie within the market structure themselves, but rather the violent nature of eve.

There are whole forums dedicated to this already. EVE has a functioning credit market, it just isn't open to random scrubs who show up with no collateral or reputation to stake. Much like real life (outside of sub prime silliness).

Whole forums where the total savings/investment is so small as to not matter.

[Kovacs]

Yeah pretty much all this is wrong. And

And yeah I do hate taling about economics on the internet about as much as I hate syphillis.

QED

[Endie]

Kovacs, this is Goumindong. Gou wasn't allowed to post in theorycrafting threads on goonfleet dot com. 

[brellium]

Gou is right, but mainly the whole time thing.

Time has value in so much as an opportunity cost, however in a purely commodity based economic system (such as Eve) there is no value for your time. It is up to each player to determine the value of their time and to attempt to use it in the most economicly efficient manner.

[Goumindong]

Kovacs, this is Goumindong. Gou wasn't allowed to post in theorycrafting threads on goonfleet dot com. 

Yes I was. Unless i got banned after i stopped playing and didn't notice because i didn't log into gf.com

and Kovacs, you're wrong. You're defining each player as a firm, when there is no reason to do so. Treat them as people instead, who have to divide their time between leisure(I.E. killing stuff) and production(I.E. making money) and you get a much clearer picture of the eve economy(I.E. the standard labor supply model). Once you do that you will understand while labor demand is infinite rather than non-existent and what that means for the system. Now you might say "some people do no leisure" and that is prefectly fine for people to have corner solutions on the good/leisure budget line.

If you don't account for how the system behaves and how that makes players behave then your conclusions are going to be suspect. So long as the prices appear to the players, it doesn't matter that the offering mechanic is a computer, its fulfilling the same role as an economic actor with whatever criteria its running at. You cannot simply ignore mission running in your model of the eve economy. Hell, its the number one method of item production in the entire game!

[Endie]

Kovacs, this is Goumindong. Gou wasn't allowed to post in theorycrafting threads on goonfleet dot com. 

Yes I was. Unless i got banned after i stopped playing and didn't notice because i didn't log into gf.com

You weren't banned for ages.  You just weren't allowed by public opinion to post in PvE/PvP threads.  I just did a GF search to confirm my recollection.  Apart from the most recent hit (Rashiro saying to Jackal (when he theorycrafted a dumb setup) "how does it feel to be the dumber goumindong?") the first page was pretty much all people saying "goumindong don't post in PvE/P" or similar responses (Popperr, Daviclond, Schliski, VCBee 498, Goatface Man, Henze and more).

I quite like you and never joined in the dogpiling.  But you're an awful interlocutor in a theoretical or opinion-centric debate.

[Goumindong]

So now i was "banned by my choice" from the forum?

Uh huh...

edit: oh, and i am just fine in theorcrafting discussions. People just don't like hearing that their pet idea is a bad one.

[Kovacs]

Well, as a completely seflish exercise to validate my self-loathing by inviting more ad hominem ridicule...

It's hard to have a useful conversation in any field when you disagree as to the definitions of the terms you're talking about.  This thread for better or worse if rife with this.  For example, when discussing barriers to entry into a market you would find that pretty much every American who you would expect to speak knowledgeably about the subject would mention natural monopolys as The Definition of this and almost certainly use the work AT&T or Ma Bell (depending on age) in the first 2.2 minutes.  With that said, contrasting several hundred billions dollars in initial investment before the first bill goes out versus the Eve model where exiting the Veldspar market and entering the Pyerite market is simply a matter of misaiming your laser before you start your macro (Err, or so I've heard) you would think we could agree that having no natural or regulatory hurdles to clear before entering and no penalties for completely exiting a market (Damn you WOTLK!!) we could agree that we have The Definition of the opposite of AT&T.  But no.

The same misunderstanding is true for the labor disagreement.  The fruits of labor are wages paid by an employer, By Definition.  There are no employers in Eve, there are no wages, no wage competition, there is No Labor Market.   The prodcut of your labor is your own to do with what you will and NOT your employers.  This is true whether you are mining or ratting or involved in any link of the production chain.  Production literally consists of the player (or firm) providing the capital, whether it's a Hulk, ratting BS or supply chain management 5 and waiting for a timer.  

Now contrast this with the mission system and the difference I think becomes more clear.  Amarr War Ministry is your employer (the firm) employing you to perform a task for which you will be paid at the end.  If you delivered something to them they get to keep it.  Missions simply act as a faucet to the economy so I'm not sure how it's the number one method of production although it may be the number one way of earning wages.  

Now whether Eve is capable of absorbing an infinite number of additional players, whether it in effect has an iinfinite demand for labor, as an economy, without consequence at the margins is a completely different conversation.  And probably an interesting one honestly.  The same whay it's interesting to compare population and demographic consequences intra or inter nationally e.g. Ireland in 1840 or Russia v. England.

An (un)interesting macro-mmo conversation is how well that money faucet has been controlled by the sinks in Eve and what if any deflationary effects Dominion may have.  Eve has a 3% mud'flation rate year over year (as measured by CPI) and is something I'd think any MMO would kill to have.  If nothing else then hiring an economist to keep track of this is worth the money imo.  

Finally I think that these conversations are hard because economics is a social science ;..; so anything that makes sense to someone is often considered fact.  Like this,

In fact if you sell an item that no one else is selling you can easily get ten times the Jita price or more. I don't think the locals think it would be nice if you sold stuff cheap plays a major part in real world economics

And honestly I'm not trying to pick on anyone in particular or saying that this conclusion is so far out of left field I can't believe anyone would say that, far from it.  It's simply a handy example of believable statement where the premise is probably true but the conclusion isn't.  Although I haven't done it I'll bet if you Google 'windfall profit tax' you will quickly discover some of the pitfalls of defying traditional pricing of even the most essential goods.  That is, locals taking out their ire on perceived price gougers.  And believe it or not there is demonstrable evidence that many local markets are self-regulating and an absolutely Obscene amount of money is spent to discover why.

Eve provides a completely unregulated look at the animal spirits of ecomoics and its simplicity and contollability are actually one of its strengths.  The credit market, which I had completely discounted at the beginning of this thread is a perfect example.  Where else could you combine 330K moving parts with 'rationa' motivations in a completely unregulated but controlled environment and study the burgeoning credit market?  If you think that that's not something an economist can learn from or that the effeccts of regulation or deregulation in this case on the cost of capital (interest rates) isn't relevant or useful today well then you're probably one of those people who does stuff, you know, outside.  ekkkk.

As for the value of time.  Fuck guy it is not valuable and its worth is only determined by figuring out what you're not doing with it.  Which honestly at this moment seems auspicious.

[Goumindong]

Well, as a completely seflish exercise to validate my self-loathing by inviting more ad hominem ridicule...

No one ad hom'ed you... Insinuated that you were stupid, yes. But that isn't an ad hominem. An ad hominem is when someone says you are wrong because of some aspect about the person. Which is possibly what Endie was trying to do to me. I insinuated that you were stupid because you were wrong. That is not an adhom, though yes you could question the validity of statement or truth of the premises.

pretty much every American who you would expect to speak knowledgeably about the subject would mention natural monopolys as The Definition of this and almost certainly use the work AT&T or Ma Bell (depending on age) in the first 2.2 minutes. [...]

The same misunderstanding is true for the labor disagreement.  [...] Production literally consists of the player (or firm) providing the capital, whether it's a Hulk, ratting BS or supply chain management 5 and waiting for a timer.  

Now contrast this with the mission system and the difference I think becomes more clear.[..]  Missions simply act as a faucet to the economy so I'm not sure how it's the number one method of production although it may be the number one way of earning wages.  

An (un)interesting macro-mmo conversation is how well that money faucet has been controlled by the sinks in Eve and what if any deflationary effects Dominion may have.  Eve has a 3% mud'flation rate year over year (as measured by CPI) and is something I'd think any MMO would kill to have.  If nothing else then hiring an economist to keep track of this is worth the money imo.  
[...]

Eve provides a completely unregulated look at the animal spirits of ecomoics and its simplicity and contollability are actually one of its strengths.  The credit market, which I had completely discounted at the beginning of this thread is a perfect example.  Where else could you combine 330K moving parts with 'rationa' motivations in a completely unregulated but controlled environment and study the burgeoning credit market?  If you think that that's not something an economist can learn from or that the effeccts of regulation or deregulation in this case on the cost of capital (interest rates) isn't relevant or useful today well then you're probably one of those people who does stuff, you know, outside.  ekkkk.

As for the value of time.  Fuck guy it is not valuable and its worth is only determined by figuring out what you're not doing with it.  Which honestly at this moment seems auspicious.

With regards to barriers to entry. Yes that would be true if you were referring to onerous barriers, but you didn't. (and onerous barriers exist too, especially in the production of tech 2 items, but this presents other problems in our model since nationalistic corporations producing makes the models funky). You want to chalk that that to miss-communication, that is fine, but don't bitch about someone else taking you at your word if you're not as specific as you need to be.

The same cannot be said of the labor disagreement. Because you've excluded the system as an economic actor. The system of course does not make sense to be seen as anything else. It is not a set pool of common resources that is owned or exploited. Wages do not need to be provided by employers. Wages are simply the price of labor. A person who owns a business and works at that business is not receiving capital gains but gains from labor when he does so. He receives wages regardless of whether or not he owns the business(yes, yes we can differentiate between salary and wages here but its not really important), after all, he would have had to hire someone to do the work instead if he had wanted it done, so the amount of benefit he gains is the amount of wage he would have had to pay.

You cannot simply discount the time it takes is economically valuable. The players could be doing other things, like shooting other people, or not playing the game. It makes even more sense to think of these transactions as wages because players literally have the ability to trade their time for goods and services at the going rate hour by hour with no other constraints. The only way it differs from a very simple labor supply model is that players have three options for their time rather than two(but we can probably ignore time not spent playing the game which brings us back down to two)

With regards to missions/ratting, they are the only method that all named items come into the game. They used to be as well, the number one income for minerals via refining t1 loot. They still are the number one source of salvaged materials.(exploration as well, but again, that is just another mission/ratting system really)

In order to assume that these things are not labor you have to assume that they do not take any time or that you do not gain any financial benefit from them. Neither of these things are true. Your beef seems to be that capital is very distributed and players can run their own "business". You are using that as an excuse to claim there is no labor. But labor is not defined by an employer. Labor is defined as the work that humans do. Its a special input in economics because it does not follow the rules that goods normally would.

This also doesn't make sense given how we would then define the outcomes. Unemployment? Everyone is always doing as much work as they want to at any time. Unemployment in EVE is always zero, frictional unemployment is zero, you can never have underemployment or overemployment. The instant anyone wants to work for profit they can get up and do it and make money. Hence, labor demand is infinite. If you are willing to work at the given wage, you will always get paid.

You are right in that some forms of production do not have labor inputs(or at least, they aren't really worth measuring). But simply because there exist some production methods (that are limited in profit ability) that do not require actively doing things does not mean that labor does not have a fixed wage and infinite demand.

EVEs ability to absorb an infinite number of players doesn't really matter, that is a server issue and not a system issue and the servers aren't taxed yet in terms of production.

With regards to mud-flation. How do you measure that by the CPI? And by my reckoning prices have fallen for ages rather than increased, the CPI for eve should not be 3% over its history. Granted i haven't looked at the calculations, but on the surface it seems suspect

Eve might provide a look at the "animal spirits" of the credit markets, but I don't buy it. Economics has enough variables and variables affecting other variables that once you remove a few of them you can easily get incorrect data. No matter what the empirical data from an eve credit market shows regarding whatever your independent variable is its always going to be suspect. I mean, empirical data from studies often show entirely different effects of the same independent variable changes(off the top of my head i am recalling a study that found significant and opposite effects of minimum wage changes in different developing nations). And this is under similar conditions. You're going to tell me that we can figure out how to regulate the real economy by looking at a credit market under so dissimilar situations that the system cannot sustain a functioning credit market?

I won't argue that its not interesting, but i will argue that you can use that information to regulate the real economy. People simply change their expectations and norms too often to have it work(to give a behavioral explanation to it)

With regards to the value of time. Time is always valuable and its valuable in the exact same way that everything else is. Its valued at what else you could do with the resources. Time is just a resource that everyone has in a fixed amount.

[Nerf]

WALL OF TEXT

Welcome back, Winger Dickgirl.

[MahrinSkel]

Whatever happened to your EVE empire, Mahrin?  I can't recall having heard anything about your business endeavors in several months.

I quite playing for a while, went to re-activate right after the Haargoth Event, but found I had been hacked (2 out of my 3 accounts, and the third was just spy/market alts).  Finally got that straightened out, but most of my stuff was gone, give or a take a few billion and a capital ship or two (mostly stuff so inconveniently placed in contested space the hijacker hadn't bothered to retrieve or sell it, plus the proceeds of some sales that were left up after they were through looting my hangars and stopped logging in), and all things considered I just didn't bother.  At my peak, I had around 50B isk, there's maybe 5B or so left of that (mostly in the form of the carrier and freighter they didn't/couldn't steal).

--Dave

[Goumindong]

Welcome back, Winger Dickgirl.

That was never me. You're thinking of someone else.

[Kitsune]

Whatever happened to your EVE empire, Mahrin?  I can't recall having heard anything about your business endeavors in several months.

I quite playing for a while, went to re-activate right after the Haargoth Event, but found I had been hacked (2 out of my 3 accounts, and the third was just spy/market alts).  Finally got that straightened out, but most of my stuff was gone, give or a take a few billion and a capital ship or two (mostly stuff so inconveniently placed in contested space the hijacker hadn't bothered to retrieve or sell it, plus the proceeds of some sales that were left up after they were through looting my hangars and stopped logging in), and all things considered I just didn't bother.  At my peak, I had around 50B isk, there's maybe 5B or so left of that (mostly in the form of the carrier and freighter they didn't/couldn't steal).

--Dave

Wow, that sucks to a grand degree.  I'm sorry you got burned that way.

[Sir T]

A very common story however.

[Nerf]

Welcome back, Winger Dickgirl.

That was never me. You're thinking of someone else.

Welp, there goes anyone thinking you're smart.