PLEX is too cheap

(Teckos Pech) #182

Heh…I love looking back and doom-n-gloom hysteria. :grinning:

Now everyone is arguing over low prices being bad or good. F—ing hilarious.

(Salvos Rhoska) #183

Or the “hysteria” caused this.

If anything the drop shows the PLEX market was artificially inflated beyond its real value.

Volume of trade has remained largely constant.

(Teckos Pech) #184

Or markets tend to be self-regulating. If the price goes up substantially, those sitting on large stock piles face increasing pressure to sell (think opportunity cost). When the price drops those wanting to buy PLEX have increasing pressure to buy (again, opportunity cost). These opposing forces mean markets will usually not spiral out of control. When a market is spiraling out of control there is usually something operating outside of the market to cause the problem.

But you were seriously concerned about PLEX prices hitting 4 million or even 5 million/PLEX making the cost of PLEXing an account 2-3 billion. Yet here we are with PLEXing an account at 1.382 billion ISK. And we have 182 posts of hand wringing and arguing.

Like I said, this is goddamn hilarious. I would summarize it thusly:

“The market is not behaving like I think it should.”

This highlights a serious failure at understanding markets. A market is not the product of a single mind. It is not being guided by any one person. The market is the result of interactions between thousands (or IRL millions) of people. The “market” is the sum total of all those interactions and the various reasons and justifications for all those interactions are varied and different based on each person’s own subjective valuation of a number of things in game.

Everyone likes to reason as if there is just one person out there determining things. But markets are themselves examples of emergence/spontaneous order. What we observe in the market is defined in the process of its emergence–i.e. it cannot be define ex ante because to do so you’d need to know all the things that all the market participants are doing, thinking, etc. Until you can read the minds of thousands or more people…just relax. The market process does what does.

(Salvos Rhoska) #185

Not so hilarious when you consider professional economists are wrong 99.9% of the time, like you.

(Teckos Pech) #186

This is very funny coming form the guy who was heralding doom with a 4 million ISK price for PLEX… :sunglasses:

(Salvos Rhoska) #187

Everything you say is funny coming from a so called “economist” whom isnt a billionaite IRL.

You are very big on discussing theory and results, AFTER the facts.
Just not before, when it would be of use.

20/20 hindsight is a great excuse!

(zluq zabaa) #188

Not necessarily. Why do people buy PLEX for money? Correct, because they want to transfer it into ISK (or use it as a substitute thereof) in one way or the other. Basically buy in-game money with real money.

Now the other way around, there are more reasons to buy PLEX with ISK. One of the main uses however is stil the 30 days game time, which would otherwise cost real money. So basically, buy real money with in-game money, albeit limited to pay for a specific service.

PLEX losing value could have diferent reasons. The most simple explanation would be that more players found jobs and have less time to grind for ISK. More PLEX being bought, in game price falls. Another explanation could be that the demand sunk because players who used to PLEX their accounts left the game or dropped to Alpha. Another is the seemingly longterm abuse of simulatenous Alpha logins, which made it unnecessary to PLEX alts for scouting etc. Yet another could be that a huge stockpile of ingame PLEX became available due to some reason (for instance someone deciding to RMT on the way out). Finally it could also be that CCP intervened in the PLEX market to cap the price.

It would be interesting to know at which in-game price spot most PLEX are being bought with real money. Ignoring special offers, the assumption should be that the higher the in-game price in ISK, the more people are interested in buying PLEX with real money.

But it should also be connected to buyer behaviour. If people are simply not buying, or more importantly consuming, as many PLEX if the in-game prices are too high, it could be reasonable that the price falls to that sweet spot where CCP makes the best bucks.

edit: the assumption here is also that CCP makes more cash on people buying PLEX than on people buying subscriptions for the 30 day game time. So if the in-game effort of grinding for ISK to pay for the PLEXing, they (CCP) will make less cash than they could.

(Teckos Pech) #189

Hahahaha…economists are not businessmen nor are they necessarily experts in finance. This is so funny as it again underscores a failing to understand.

I was pretty explicit that I thought your fears were simply unfounded.

(Salvos Rhoska) #190

It underscores how useless economists are, except after the fact.

(zluq zabaa) #191

IRL this depends on the market. Not all markets are open. Actually many markets are highly regulated in terms of who can participate and how. There are also some markets which are not very emergent, at least no in the short or mid-term. Markets for government bonds for instance. There, at least in Europe, participants in the primary markets are also limited to accredited banks.

Besides those examples, you always have some level of state intervention in any market. Some markets are simply not allowed. This can go from trading contraband, to certain derivates (like CFD’s) that are illegal in some countries. Then there are generally laws that regulate certain aspects of legal markets, from taxes on sales to import/export taxes and so on. We see a lot of good/bad examples in politics right now. We also have state subsidized business everywhere, sometimes in the form of straight out monetary support, uneven tax deductions or more complicated ways. And so on.

The reason for all that state intervention IRL is that it’s every governments task to a) guarantee the continous function of trade as a principle and b) protect itself and its population from overly negative effects. You can see that even the most neoliberal government will hit the break on the automatisms, in situations where negative effects for the countries economy get too much.

In EVE however, I think you’re right. Most of the markets here are open to all participants. None of them is bound to the market in a success or death kind of way like in real life. The worst that can happen here is to be an in-game poor, always with the chance to start again. That’s why we are seeing forms of self-regulating markets here, although one has to consider that the power of market manipulation with enough capital is a factor here as well.

(Salvos Rhoska) #192

Teckos has 20/20 hindsight.

(Zachri) #193

There is no such thing. What you are referring to is a belief system, like an ideology or another church :slight_smile:

Markets are agreements on exchange of either symbols or resources always rooted in a behavioural exchange of trust and / or emotion.

Nothing more, nothing less.

Now waiting for @Whitehound to pop up cause he sees a bees nest :slight_smile:

(Whitehound) #194

He’s talking about the EVE markets, and there demand and offer does regulate the price.

Don’t wet your pants over me.

(Zachri) #195

It’s the exact same human behaviour. Or are we aliens in here? Or out there? And before you say that we’re operating in the virtual, so do we in todays markets. Virtual is nothing but a measurement of distance and association through mechanisms. It has derivative effects, but through the same patterns and choices of behaviour.

The idea that supply and demand regulate price is a very very limited and derivative perception point either gained through passive exposure or what we call educational indoctrination. In many ways this is a necessity, because human behaviour - which includes exchanges - requires boundaries and pathways people can follow. But do not confuse belief or perception with the complexities of the underlying reality.

EVE’s markets are an absolutely amazing petri dish in testing the distinctions between what is taught, and the foundations of why such things are taught. And, obviously, applying the results.

Also, pants?

(Whitehound) #196

Nonsense. You only don’t trade. If you were then you’d know how and why prices change and you wouldn’t see it as an idea. Your lack of experience is what causes you to think in terms of belief and perception and causes you to go as far as comparing it to a petri dish. Get some experience and then maybe we can talk about it.

(Zachri) #197

You have absolutely no idea :slight_smile:

Look, let it go. I worked for two decades in a top slot position at one of the worlds oldest, most private and influential private banking institutes. I’ve applied that to New Eden a few fun times, focusing on the behavioural aspects and sitting back watching humans do their thing within the constraints of their beliefs. Best example ever, instigating the rush on GTC’s some people still bitch about :slight_smile:

I get the need for such constraints and beliefs. Honestly though, EVE is one of the few places that lets you lift the veil a little bit. Do some research, do some reading, do some thinking for a week or so, then revisit matters. Markets are just another behavioural exchange.

(Whitehound) #198

No, I do. I trade each day.

Of course you did. :rofl:

(Nana Skalski) #199

Markets are still driven by people and people get emotional. Rational is overrated. That is why I think PLEX price is also driven by what people think of CCP and the game, and what they believe will happen in future.

(Teckos Pech) #200

The second sentence does not make any argument against the self-regulating nature of the market proces.

This sounds like mumbo-jumbo. Sure economies are complex, extremely complex. However, economies work pretty darn well despite that complexity. In fact, a market process works pretty darn well because it actually utilizes that complexity better than other systems. The market process can take advantage of local knowledge which other systems either cannot utilize or even worse ignore.

(Salvos Rhoska) #201

Predicting a market always involves psychology.

The entire field of economics is mumbo-jumbo.
If it wasnt, every economist would be a billionaire.
Frankly, even meteorologists have a better prediction rate.