I've got a comment for my post where I've said you must know who is the "stupid" who let you have money without work. If you don't know who he is, it's probably you.Nils wrote: "I wonder if you really understand economics, and not just business. Your statement that there have to be losers in this scenario is simply incorrect. No one has to lose anything for you to make a profit out of your investment. The fact that you don't do any work doesn't mean that value doesn't increase. The fact is that you buy from people who value liquidity now compared to potential further profit. This decision can often be entirely rational and beneficial to the economy as a whole. You on the other hand have the capital to make long term investments and can sit on unsold goods for a longer period of time. This will benefit potential buyers in the future, when stocks run low and demand goes up. Without your stockpiling prices would be even higher in the future and the material you bought would, to a larger extent have gone to waste, through vendoring of unsold mats or products of said mats."
I think he is completely wrong, and dangerously so. Let's leave the "danger" part for tomorrow, and go with the wrongness.
At first, for someone who learned physics and chemistry, the "value without work" scheme looks exactly like perpetuum moblie. Imagine a society where no one works and everyone buys and trades! It would obviously collapse in weeks.
Let's separate the milked "idiots" into three groups. The first group belongs to the slackers. While they know that they are doing something economically stupid, they are fine with that. For example when I buy ice cream, I'm fully aware that the nutrients I consume could be accessed from cheaper foods, and I'm also fully aware that the "fun" it produces by its taste and coldness is completely irrational (for further info see Cypher and Agent Smith) and I'm also fully aware that by eating sweets I increase the chance of bad teeth. Still I eat ice cream sometimes.
Can I do it? Yes I can.
Can anyone blame or stop me from doing it? In a democratic (or not insane-lead dictatoric) country not.
Is an ice cream a big deal? No it's not.
Does the above saves me from being stupid? No they're not. I'm irrational therefore rightfully called stupid. Not a harmful one, not a huge one, but still. And my little stupidity, combined with the equally small stupidity of others let a completely useless industry (the ice-cream factory) exist.
Secondly let's see the "remilkers". They are also aware of the stupidity of their actions but accept it as a cost for a greater income. Typical example: I'm fully aware that the $500/dish food in the five-star hotel restaurant is exactly the same as the $100/dish food of a good restaurant and 99% as good as the $20/dish food of an average restaurant. Yet I bring clients to diner to such restaurants because the "millieu" of the restaurant gives me a "high status" and make them believe my proposal (what they definitely shouldn't). This case the money I get from them compensates me for my losses for the pretty stupid restaurant selection.
Am I stupid? No I'm not, as I have positive income.
Are we (me+him) stupid? Yes we are, as we lose the restaurant costs and the opportunity cost of our work income for the time spent in the restaurant. The fact that the loss is distributed extremely unevenly (he pays them all, plus more to me), does not change anything.
So remilking is accepting being stupid to make someone even more stupid and profit from the difference.
The third group is the simple morons who can't see their own interests. Nils gives us the standard politically correct crap: "One major feature of capitalism is that value is created through discrepant valuation of a certain product or service between the seller and the buyer. This is what is at play here. Some people will value a certain, small, profit today higher than a potential, large, profit tomorrow, for various reasons." That's bullshit. There are no various reasons. There are just two reasons: they cannot calculate or they cannot control their impulses and waste their money.
He also wrote: "There is also the fact that the profit you make is a result of the risk you are willing to take. Most people are risk averse, often with good reason." There are no good reasons here. One reason is simply being unable to calculate odds. The other one is simple cowardice (unable to stand unsure situations), that's mental weakness (stupidity). The third one is being unable to survive if the investment goes down, that's lack of safety-money which is the result of previous stupid moves.
There is only one kind of the business where no one is stupid. When I'm able to do something (as I have skills and devices) and you are able to do something else. I sell you my service, you sell me yours. If I'm a skilled carpenter but not a skilled car mechanic, you are better off paying me making your roof than doing it yourself as I'm also better of get my car fixed than do it myself.
The "something" I'm able can be less obvious than carpentry. For example I can have warehouses, so you can be better off buying the expensive vegetables in winter from me than buying a lot cheap ones in autumn and try to store them yourself (as the storing work and equipment would cost you more than the difference).
There must be work for a win-win scenario. If there is no work done, it's a zero-sum action, you make profit from the dumbness of some victim. I see nothing wrong in that. On the contrary: I believe you do a service to the mankind by taking away money (=power) from a moron. But denying the obvious fact that you are playing a zero-sum game and coming up some mythical explanation about "discrepant valueations" is not not just a bag of lies. It's a very dangerous bag of lies! Tomorrow you'll see why.
For today, let's just go with a Goblin saying: if you don't know who loses on the business, you shall check the mirror!
39 comments:
The saying we use on Wall Street is "There's a loser in every trade and the moment you realize you don't who know who that loser is should be the same moment you realize it is you." Don't know if it is as important in WoW trading to know 'who' the loser is but I do agree strongly that you've got to be pretty damned sure it ain't you. Nice one mate.
Does the above saves me from being stupid? No they're not. I'm irrational therefore rightfully called stupid.
WRONG. Irrational =/= stupid. the two are very different things.
Stu*pid"i*ty' : The quality or state of being stupid; extreme dullness of perception or understanding
Ir*ra"tion*al' :Not according to reason; absurd; foolish.
Stupidity is synonymous with ignorance. It is a lack of knowledge and understanding.
One can understand something and still make an emotional, and thus irrational choice. That doesn't indicate a lack of knowledge though.
So... in fact... you were being stupid in post; as you lacked the understanding of what the words you used.
The flaw in your reasoning is that you confuse reasons (that others have for doing things) that you do not understand as stupidity.
If someone chooses to buy something on the AH when they could get it cheaper elsewhere they are not always being stupid. Many times they have reasons for doing so. They place a higher value on their time then they do on their in game gold, or they are in a rush for a respec and reglyph in the middle of a raid so their group can continue and get the gear said person wants, etc etc.
The sad thing is that you obviously place lots of value on logical transactions and business and none of social interactions and reasoning..... yet.... said social skills would actually benefit your business.
If Nils would have elaborated on how such a behaviour can not only be rational (which is correct, it sure can be, it just means you have to stick to your preference order) but also beneficial to society (which is just a thesis with no proof), his point may be worth considering. Its the common fallacy of a first semester economics student who gets in touch with utility theory for the first time. Just because you have a preference order and are maximizing your utility according to that order does not mean you are not doing something stupid.
What he fails to see, is the fact that World of Warcraft only simulates a mercantilist economy, and has specific flaws at that. The absence of interest rates for money in your pockets plus the constant influx of new capital from dailies (combined with not very effective gold sinks) devalues your money constantly. By doing nothing, e.g. being "risk averse", you are constantly losing money. Again, from a utilitarian point of view, such behaviour can be perfectly rational.
It is entirely possible to discuss in a way that there are no "gains" or "losses" if you see mercantilism just as a huge society of traders that provide a service. If I overpay by a large amount, I just used the services of a trader and Im still better off because I did something more worthwhile with my time (probably investing in something else).
The reality is just different. I stockpile cheap flasks and sell them on Wednesday evening for a 10g markup. Starting at 6:30 pm you can see all the flasks vanish from AH because of all the people who just remembered that they will be raiding in an hour and dont have flasks. They could have bought the flasks a day before for 10g less, but they didnt remember. That is plain stupid, even if the transaction itself is still rational (they need a flask, they will get minus dkp if they dont have one, so the price they would be willing to pay is probably still higher than what i can charge). That is pure and simple just dumb. Yes, there may be the odd case where someone didnt have the money the day before, but that is, well, theoretically possible at best.
An utilitarian view in a mercantilist economy is a bit like a sheep that joins the annual lion's conference.
I agree here with Greedy Goblin.
There would be no business for the bussines men if there would be nobody working, only business men.
In real world there are a lot of professions that do not produce anything but are overpaid.
In my opinion the truth is somewhere between Greedy Goblin and Nils. While i agree that there are reasons behind every "buyer/seller" that brings you money, i do believe that those reasons are not a "win/win" situation, but rather ignorance, and stupidity.
Greedygoblin, you have an very narrow definition of "useful" in your real world example (and hence a very broad definition of "stupid", since you seem to view both as opposites).
Your definition of useful seems to be focussed primarily on either or both:
1. Surviving (gathering nutrients)
2. Making money
Making money in your definition is not a subset of surviving, since you presumably are in favor of making excess money for your survival requirements.
This begs the question, what are you surviving and making money for? i.e. what is the point? This question has a different answer for most people. Presumably, for someone in the world, that includes eating ice cream occasionally, and for him, by your strict definition, he would have:
3. Eating ice cream (or some other variation of the pursuit of happiness, which is considered a worthwhile goal by most philosophers).
under the definition of useful.
However, once you add definition "3", the model becomes a statement of the obvious. I'd stick simply with supply and demand -> this is especially true since Warcraft is a game, so by your definition nothing you do is useful.
Several comments...
On the restaurant analogy - in principle you are correct if you take into account solely the nutritional value of the food itself. By doing so you deliberately ignore the complete picture to support your theory.
Cheap restaurants often are a poor environment for discussing business. Thick smoke, loud music, loud customers, shady customers. Hardly the proper environment to bring your laptop and important contract papers and have a nice quiet discussion.
Thus you decide to pay the premium not for the same nutritional value of the food itself, but for a proper environment to do business in.
"The fact is that you buy from people who value liquidity now compared to potential further profit" in my oppinion is the key phrase in Nils comment. You have the capital and business model suited for long term investments.
Just like the warehouse that buys cheaper vegetables in the autumn because they have the money and storage space. Yet not everyone has the storage space or affords the money to stock cheap vegetables at autumn.
Does this make them stupid because in theory they could plan in advance and pay a lower price?
If I need to pay my rent and don't have the money, I'd likely (using carpentry as an example) do three jobs on the cheap to get a quick influx of cash rather than pray to be hired at my normal rates.
It's less stupid to only work at the maximum profit level and risk being evicted?
He's not saying there's no a mathematical loss of profit on one side when a high profit is made on the other.
He's saying maximumizing profits over the long term is not always the chief concern.
"There are no good reasons here. One reason is simply being unable to calculate odds. The other one is simple cowardice (unable to stand unsure situations), that's mental weakness (stupidity). The third one is being unable to survive if the investment goes down, that's lack of safety-money which is the result of previous stupid moves."
I agree with you if we're strictly speaking about wow economics and investments, where the worst-case loss is wow gold. With that said, this is the line of thought that brought down LTCM in the late 90's and all the street power houses (including lehman) since Q3 2007. Cowboy up! We have the quantitative calibre and capital to withstand calculated risks! We certainly know where our VaR is!
Now days, all the shops that took upon ultra conservative investment policies during the MBS glory days are looking like super stars... were they mentally weak and cowardly?
Ok, it's pretty obvious now that you have a limited grasp of economics. What it boils down to, basically, is that you are assuming, quite possily intentionally, since you're not stupid, that all actors on the market inntend to maximise their profits, in gold, and not their preferences. Now this might be a good rethorical move within the narrow context of teaching people how to maximise their income in WoW. However if you use the same arguments to how people interact in the market as a whole you will end up at incorrect canclusions about the rationality of the choices actors in the market make.
Making the investments you do does entail work, primarily in the form of research. That research comes at a cost. Less time to enjoy the other aspects of the game. What Death Knight blacksmiths to be quite often did, one can safely assume, is that they spent their resources on immediate satisfaction of their wants. I.e., they raided or PvPed instead of sat around the auction house or farmed materials. That was, most likely, often the rational choice for them to make. They could safely assume that other actors in the market would satisfy their future need for cheap materials for leveling tradeskills.
Also, one of your issues is that you assume that people act irrationally when they don't maximise their monetary profits, based on the flawed assumption that profit maximisation in itself is a rational choice. It really isn't. It's just another subjective preference that you find appealing. That is why you think it's a lack of impulse control when someone values a small profit today in favour of a larger one tomorrow when in fact, for them, waiting comes at a larger cost since they have to pay by being bored. In the real world it is also quite often the fact that pepole have to get access to liquidity today, to pay debts or daily costs of living
I think part of your problem here is that you seem to adopt some form of marxist labour theory of value, when you should instead look at subjective value theories, of the kind originating from the Austrian school of economics. As all rational people know the latter is the correct way to look at economics. Labour doesn't create value. Only the subjective preference for a certain product or service in limited supply creates value in said service or product.
Shamaa, in what way is the economy in WoW mercantilist? I'm eager for that explanation. Now the WoW economy differs from a real world in many ways, but mercantilsit? I think not.
What about seeing the zero sum action like that :
You buy item X from a vendor at price Y. Then you resall this X item to another player at price Z. For this beeing profitable you should be sure that Z > Y. Then you said : no work, income, then I stole from morrons.
I'm not quite sure there is no work, there is work to me, and work some don't want to do (and pay for it) or can't do (and then pay for it). I can't repair my car, but I can fixe a lot of computer problems. So if I want my car fixed, I just go to a garage shop. If I want money I just sell my computeur skills.
The AH is the same. You were the one that bought the X item. Your client is not necessary a morron. Some times I just don't have time to buy plants, look for the cheapest, collect all theses plus the vails, call an alchemist and get my pots or the night. I just bought this time to someone who sell the pots right now. I know I loose money, but I can't aford being late and not having my pots, so I just buy.
My point is, not everyone can do what you do, at least at this scale. I can buy enchanting mats, or buy items that will give me mats. I can buy a BoE epic from my guild banc fro 50% of its AH price when the RL said he whishes to sell it. But I can't do this in all the AH fields. So I just buy from others, and I know I'll loose some gold, but I can pay them for the work.
buying then selling is work, then you should get money for it (and looking for the good client is a job too).
@people with "preferences": of course people could set up goals and by setting them up, they abandon other goals. For example by becoming scribe, I've abandoned the possible profit from blacksmithing. This way someone can say "I just PvP for fun so I don't need any professions". I cannot call this person stupid.
However if he CHOOSES to be blacksmith he has to maximize the utility of his limited time for this aim. He has to buy materials some time to reach HIS goal. If he rather buy it expensive than cheap, he is stupid (unless he uses his current money for something more profitable than the price difference of metals. This case he is remiliking)
So while you can choose your goals, you can NOT choose the ways to these goals as they are set by the market. If you use a sub-optimal way, you are losing and someone else wins.
@Jong: Lehman was NOT risky. Risky is something that can go bad, but also good. Playing Russian roulette for a million dollars with one bullet is risky. Playing it with SIX bullets is NOT risky. It's suicide. Lehman produced nothing. Lehman did not milk individual people. The fall of Lehman (and many others who did similar things) was inevitable. Lehman was the perfect example for being stupid. Note: "Lehman" being stupid does not mean "Lehman employees" being stupid. Doing that nonsense for 6 figures is quite rational move: they were milking the Lehman stockholders (they were stupid beyond measure).
@Catalin: nice example of rationalization (finding excuses for stupid moves). My office is quiet and nice and have desk and computer so it's a perfect place for negotiating business. Even better than a 5 star hotel restaurant as you don't have to reserve table and dress up nicely. You can talk without disturbing the other guests. There is no rational reason for such restaurant except: it does magic with stupid people.
@Anonymous: if you need to pay your rent fast, taking 3 cheap jobs is rational move. However if you got yourself into the position where you have to take cheap jobs to pay the rent you were quite stupid at some point.
@sometime: your question refers to the "meaning of life". I don't try to answer it in a comment :-)
"One reason is simply being unable to calculate odds. The other one is simple cowardice (unable to stand unsure situations), that's mental weakness (stupidity). The third one is being unable to survive if the investment goes down, that's lack of safety-money which is the result of previous stupid moves."
Gevlon, you're taking a very simple view of things which isn't entirely correct.
Taking a RL example: do you buy insurance? I'd assume you do because most people have to.
Insurance always has a net expected value higher than the event it protects against. That's how insurance companies make money. So, why would you ever buy insurance?
It is because you can afford to pay the amortized insurance fee but paying for the disaster in one lump sum would wipe you out.
The insurance company can afford to make money on the insurance claims because the distribution becomes more reliable for them the more customers they have & they have deep pockets. A run of bad luck will not wipe them out. This is covered mathematically by utility theory (which I think you'd find quite interesting).
Now, here is my point: we're effectively a small group of players in a certain niche. Most WoW players are not really interested in making gold so much as having the maintenance costs for their game lifestyle. In other words: we have very different utility functions.
As a result, they're perfectly happy to try and make a quick short term gain to cover their immediate wants without fretting over the gold they could have made long term.
Now, here's the work performed by goblins with their deep pockets and cash demanding utility function: smoothing demand and supply and buying for resale.
Buying for resale: without this, average market prices rapidly crash to the previous "quick buck" level and then below. As a result, farmers stop producing the material and it becomes scarce for an extended period of time (then the price increases again and so forth). A goblin is doing this for his own profit - but it's still beneficial to the overall market.
demand and supply smoothing:
When do you sell raidables? Wednesdays
When do you buy raidables? Weekends
Why? Because we know weekends tend to be very high supply due to many more people having free time, leading to absurd undercutting by quick buck makers, and Wednesdays are the first day of the raiding week. Simple but for people who aren't able to log in other than weekends - absolutely useless.
The AH is zero sum with regards to gold - but not with respect to utility. I suspect that's what Nils is talking about.
@Criven: NO, I don't buy insurance. I rather have fire supression system, enforced door and handgun to welcome burglars and my car is shamefully cheap exactly to decrease the losses in an accident.
And again: just because they are not interested in making money, they still do, by farming. The "different interest" can be applied to someone who just chats and fishes all day having no expenses. If you have expenses, make money and make it in an ineffective way: you are stupid.
Finding out when to buy resources requires work. Work wich consumes the ultimate scarce resource, time. People who choose to not make that time investment into research instead invest said time into something they prefer to do while choosing to take the risk that they don't minimise the cost of leveling blacksmithing. That is not stupidity. It's just a different valuation of how to invest time in the game to derive the maximum preference maximation. You have to realise that the value of a currency, be it WoW gold or US dollars, is wholly subjective. The same doller will buy you a varying amount of a good or service depending on how much the seller values his time or property. To say that there is only one proper way to maximise a profession a player has choosen you have to ignore that the players place different values on the gold they have to spend. A guild leader in some powerhouse guild, who has made 100k gold through sell runs and the like, will probably not care much about wether he pays 3000 G or 3500 G to max out the flavour of the week min/max profession. A fresh level 80 with 10 G left after buying their epic flying skill will be much more studious. Neither is right or wrong. They just place different value on gold and their time. You look at a player who spends their time dancing on postboxes in a capital city instead of studying the AH fluctuations and conclude that they are stupid when they pay 10% more for a commodity they need because they didn't put in the work you did to find out the patterns of the AH. However if they had done that research they would have been bored and their game time would have been wasted to achieve an end which they, evidently, didn't care much about. Just as you would have wasted time by dancing on post boxes instead of doing what appeals to you.
Just because you take an interest in maximising your in game wealth, which is just as worthless or worthwhile as any other in game activity, that doesn't mean there is any inherent value in maximising said wealth. It is just a means to an end. The end is individual satisfaction.
@Criven
Exactly what I'm getting at. And thanks for providing the insurance example regarding risk aversion and risk neutrality, so I don't have to.:)
According to my WoW statistics, I apparently make 300g a day doing things that have nothing much to do with making money. And I'm apparently able to do everything in the game that I want to while still watching my gold go up. Why would I bother learning to make optimal money in this situation? Gold has nothing to do with my goals. While I wouldn't say this, some might even say you're "stupid" to waste time on rational gold decisions when the rest of us are overflowed in cash, and you even ritualistically fill the AH with glyphs and bags for them!
You and the "stupids" are just playing different games. Why expect rational behavior under two different measures of success?
@Gevlon, hmmm. So you're lucky enough to live in a country with good free health care and no mandatory car insurance? Weird. What's the downside?
I could go into it further but it's not the damage to your car you should worry about but that time you hit a BMW/generic expensive car and are at fault.
Seriously, while it's obviously your choice, consider some insurance - otherwise you're exposing yourself to some serious risks for the sake of a minor saving.
As far as farming goes, for some of them it's a byproduct of leveling or doing quests. Grabbing saronite, skinning, or herbing, for example, are all easy "opportunity knocks" ways to pay for your upkeep.
It's inefficient from a pure making max gold perspective but reasonably efficient from a "do I have the 100 gold I need to cover my raiding this week?" concern.
Sure, they can do it better - but there's insufficient incentive for them to do so. The time cost of the buy-in is going to be expensive for them. Gold making on the WoW AH doesn't really start becoming efficient until you have a 5k slush fund or more anyhow. Up to that it's somewhat luck dependent.
I would counter that stupidity is relative. People who waste time and effort doing something they don't care about and has no intrinsic value to them, are stupid. I note Nils is saying something similar.
@Nils, NP. It's the obvious classic example.
It's also a nice parallel to the AH world - like the insurance company or a casino, you can afford to take a hit when your stack of Saronite ore prospects to just greens because you have the deep pockets and spread out risk.
I cannot decide if the tendency you have to think of yourself as the bright businessman scamming the morons is a roleplay goblinish thing or if you are really such a sad creepy guy.
"Just because you take an interest in maximising your in game wealth, which is just as worthless or worthwhile as any other in game activity, that doesn't mean there is any inherent value in maximising said wealth. It is just a means to an end. The end is individual satisfaction."
This !
TL;DR comments
Irrational or stupid bottom line is:
"A fool and his money soon part ways"
@Criven:
So you're lucky enough to live in a country with good free health care and no mandatory car insurance? Weird. What's the downside? The grass is always greener, even on the other side of the ocean!
@Gevlon
I have to agree with the first anonymous poster with the definition of stupidity. (Especially where ice cream is concerned. LOL) You could put romance and love on the same scale. When in this state we act irrationally. But is loving another person an act of stupidity?
Sometimes, when we act irrationally we are taking a calculated risk. We hope the other person won't leave us or that one bowl of ice cream will not do too much damage. Just as in investing or dealing with money where people take calculated risks.
I think it's interesting how different you and I make gold Gevlon. I like to lurk behind the scenes and post just enough goods that they will sell and be gone vs trying to control markets.
Love the post btw, it's an old saying in poker as well :)
One sort of off-topic point--why, Gevlon, do you have to be such a relentless moralizer? You claim to be a rational businessman, with no extravagant, irrational things like vanity mounts or pets. Yet at every available opportunity you decry those can't/won't play the AH as you do as idiots.
Perhaps some of them are. But how do you know? And more importantly, why does it matter?
Poker actually is a zero sum game though, in the sense that a winner at the poker table necessarily has to derive his winnings from the money other players put into the pot.
However that is just the internal perspective on the end result of the game in itself.
If you look at gambling as a phenomenon in society however the picture is different. The fact that gambling exists at all is the result of two things.
1. People can't calculate odds and overestimate their chance of winning. Can be described as ignorance or stupidity.
2. Many people derive pleasure from risk. They are actually risk seeking. In this case value is created through their subjective appreciation of the gambling in itself. The fact that they often lose is part of the enjoyment. They pay for the service of being allowed to risk and lose money under exciting circumstances. To many of us this is a strange way of spending money, but it really isn't any different from spending money on any other form of pleasurable activity that won't leave you with anything but memories, once the experience is concluded, be it skiing, eating at a fancy restaurant, riding a rollercoaster or whatever you enjoy doing. The main difference is that in the case of gambling it, for irrational reasons, is seen as immoral.
So, Gevlon, the renowned Capitalist, resurrects the classical/marxist LTV.
> Imagine a society where no one works and everyone buys and trades! It would obviously collapse in weeks.
With the same logic, we can conclude: "A society without food producers would collapse in weeks. So farming is the only activity that generates value".
Not to mention "No True Scotsman / No True Work" or the failure to see that value is not an objetive property of goods, but a subjective one.
Nils is right, this is basic economics. Even if you don't take into account marginalism (the theory of value that triggers the birth of modern economics, the neoclassical framework), a speculator can still generate utility to the society (see David Ricardo's writings on the subject)
Recommended link.
I'm gonna throw in my 2cents in this conversation. The dispute here is not about who is right(because both Gevlon and Nils are right in their respective ways) but which are the right premises to draw these conclusions.
Everyone has a specific and self defined utility function. That is obvious. However, I believe that having money(gold, or wealth in general) is a component of everyone's utility. It might not be in the same proportion but it is still there - dare to contradict me and I'll call you a buddhist monk.
So, from the statement above, we deduct that everyone is interested in making gold. It's really a decent assumption considering that in game there are fixed expenses any character has to make (training , riding skill) as well as other costs related to progression ( repairs, enchants, gems etc). Therefore EVERYONE HAS TO MAKE MONEY.
Now it all boils down to whether you prefer one way of making money or the other. Because, yes, Nils, playing the AH takes time. However it takes less time (but more brains) than say, grinding elementals.
Therefore by the amount of gold owned in respect to the amount of gold needed (needed as in sufficient to cover the costs mentioned above) we distinguish 2 types of players (ofc):
a) those that have enough and
b) those that dont have enough.
Now, among a) we have (imo) 3 categories of players:
a-1) Goblins.
a-2) People that get sufficient gold from quests and selling residual materials gathered while questing. These are usually no lifers who spend their entire day-time in game.
a-3) People who farm like hell to get enough quantities of gold to cover their expenses. I'm talking about the guys who post 1000 stacks of saronite ore on the AH at one time undercutting everyone because of their need for money.
As for the second category:
b-1) People who play a lot but just go making gold whenever there's the need for a new purchase. Usually they have less than 100g on them at one time, and spend all their money on the first thing they like/need on the AH
b-2) People with a limited amount of play (like only during the weekend) who cant spend that much time farming nor analizing the AH because of their low interest in the game.
b-3) 1g plz : mentally retarded kids.
PLEASE CONTRIBUTE TO THE LIST IF YOU FEEL I SKIPPED ANYTHING
Let's analize the utility of these 6 categories.
a-1) obviously their utility is to make gold. no more need said.
We'll call this type of utility Gold Positive (Gold+)
a-2) these ppl dont have much utility in gold making as they have enough and with time being no problem they usually dont mind overspending on AH. They are Gold Neutral (Gold=)
a-3) The first type of moron. They value gold time but still find an inefficient way to get it. So Gold+
This is the first category a goblin likes.
b-1) other simple minded people. They are certainly Gold+.
"Omg gief 5k for mount". But stupid enough not to spend a minimal amount of time to think about how to make it efficiently. They are the types of people that never rationalize their expenses. They would like having money just to spend it so in the long run end up broke. Gobling likes.
b-2) These ppl usually play the game to chat at a really slow pace because they cannot afford the time to invest more time in it. So not only are they gold neutral they are Wow neutral as well. So Gold=. They will spend irationally because of their limits. Not morons but Goblin likes.
b-3) Obviously the worst case of idiocy. Gold+ (ofc). However these are the guys with no gems or enchants on the quest greens they wear. Not the best buyers but Goblin likes these too because eventually they will buy from him.
Therefore:
a-1) Gold+
a-2) Gold=
a-3) Gold+
b-1) Gold+
b-2) Gold=
b-3) Gold+
As you can see, no Gold- here as stated before the analisys plus a big majority of Gold+ categories.
To sum up. I believe Gevlon is right in the sense that everyone who plays this game, sooner or later wants to make gold in a short amount of time. Nils' point is valid when saying that ppl have different utility functions, however in this game, I believe the majority of players are Gold+.
The more I read Gevlon's analogies and relative explanations of stupidity based on human behavior within WoW, the more I succomb to the conclusion Gevlon is an idiot himself.
Then again, if he wasn't so convicted there would be no discussions and ppl trying to rise above Gevlon's intellect (or lack there of) to prove him wrong or to justify his points.
Gevlon, you do make me laugh. Yes, you can make money as do many others. Your joy in WoW is making money whereas others don't try bc it doesn't provide the fulfillment. Based on your logic, these ppl who care less about fake currency within a video game and don't want to spend extra time to save 10g here and 10g there are Stupid/Morons/Idiots.
The big flaw in this post is that feeling good isn't "useless". I hope this is just meant to inflame the social people, and is not actually your worldview, Gevlon. Have some fun that doesn't involve making uselessly large sums of money by taking advantage of the stupidity of others! :)
People keep saying that you are the stupid one, but I don't think you are at all. I just think you have a dangerous worldview. Your economics are sound enough, but your endgoal for the economics seems to be to produce more and more and more. Why do you want to increase production? Or more to the point, what is your final motivation for whatever it is you want? What is the ultimate goal?
For me, the ultimate answer at the end is human happiness, or to simplify, my own happiness, in a very broad sense. So if increasing production will make humans happier, great. If being slaves to ever-increasing economic pressures to produce makes us unhappy, then economics is no longer serving us and we need to make a change. These rules exist to serve our needs, humans are too great a race to be slaves to them needlessly.
You completely ignore the time component of your strategies. You call it "no work" because all you do is walk between the AH, the mailbox, and the bank. But there's plenty of work (and time) required to do what you do.
You need to learn the AH addons (I'm sure you'll agree that the default is unusable in our world), scan regularly, know the trends in prices, and know the expected *future* value based on data-mined info from the PTR's, analysis of blue posts about future changes, etc.
That's a lot of time. A *LOT* of time. I know this because I keep myself fully researched in 2 submarkets: Paladin gear (so I can efficiently spend my DKP maximizing my gear) and the ore->gems->dust market.
The latter is plenty to pay for the former, plus all my vanity purchases ("conspicuous leisure", I think the phrase was?). I'll probably get the "Insane" title the cheapest way anyone has ever done it, but I'll still be insane.
As insane as I am, I won't master other markets. If a lockbox has some herbs in it, I don't know what the future value will be, nor do I care to spend enough time trying to learn it. I'll sell it at current undercutting AH prices, give up potential future profit (a gold? Yawn) and enjoy my time outside of the game.
Gevlon -- your real life examples about stupidity/idiocy/morons are sometimes so flawed and wrong that I can't tell if you are serious or just trying to provoke discussion through dissension.
$500 dinners -- dependent on tax laws, the real burden of this cost often is passed off to the tax payers through business deductions or at least a share of it.
Also, some clients who might be interested in paying you thousands/millions for your service/goods might have the expectation of some type of payback through wining/dining.
All depends on the scope of the deal on how big of a 'gift' they expect, but the premise is the same. I'm giving you something, you better give me something back or at least make an effort to show me that a I'm a valued customer.
A real goblin knows there are other non-documented costs of doing business.
Nils is exactly right, and Gevlon is missing some really core economic concepts.
Value capture, time value of money, risk, inflation, utility curves, etc...
That being said, it's hard to argue with Gevlon's success -- so even if I know his reasons are completely wrong, his success is obvious. Many people in this world are highly successful based on false premises.
I just hope you're as successful IRL as in game Gevlon and thanks for the fun reads ;)
Stockpiling materials when they are cheap to sell later -- in a real sense, you're providing 'warehouses' (bag/bank space) as a service. So buyers there aren't neccessarily losers.
@Anonymous
Success is all relevant. If I wanted to cap out on WoW gold then I would put forth my effort in that. The fact that there is such range of players from 10-50 yrs old that you cannot just profile player A (13 yrs old) to be stupid/idiot/moron/slacker compared to someone that has studied business/economics/finance.
The gear on my main is 90% ilvl 226+, so does that make me more successful than Gevlon who isn't even close (assumption based on his xfer into a guild that is going to carry him through all the content). Or is it that Gevlon is more successful in spending this time to make gold and then later being carried through the content.
All relative imo. He doesn't desire the feeling of success in downing a boss after raiding for hours/days/weeks. He sees that as a waste of time and essentially something that can be bought. For me to say he is a slacker with that mentality is essentially the same as him calling everyone that buys a glyph or flask last minute as slacker/moron/stupid/idiot.
As far as his success in RL, I seriously doubt he is successful. I get paid $180k a year and live in manhattan but I don't consider myself successful at all. Some may, but I do not. I am what Gevlon would consider to be a M&S since I'm not running my own consulting company making what the partners are making. Then again, a virtual world with unlimited resources is relatively much easier to make wealth than real life...
Honestly, everything I have read of value here I have already applied and intuitive to know on your own, but I'm sure it's of great value for people that aren't business savvy or just do not think in those terms.
Hello Gevlon,
I've been reading your blog for a while now and i like the way of separating the goals (getting gear, gold, achievements etc) from the human / social side of the game. It's fine for a game.
What i actually wanted to comment on was the ice cream metaphor.
While it's not essential for your health it does provide a degree of happiness like you said. Which you call irrational.
What happiness is rational though?
Lets compare this to love like someone else mentioned.
I know you got a girlfriend / wife but i'm not sure if you have children. But lets assume you don't.
Up untill the point that you want children having a girlfriend / wife is completely unnecessary. She will only cost time / money which you could spend in a better way. You could learn something or do some extra work.
My point is although you don't need these things(ice cream, love or any other non essential thing) directly it does provide happiness.
Happiness being certain chemicals in your brain which in turn affect the way you think.
Going back to the ice cream. You can eat it after a hard day of work and relax. During a break while doing homework. Or just while walking down the beach with miss goblin.
Look at it like recharging a battery for when you have to go back to work again.
Relating this back to WoW it's all those little things you don't need but just want for their fun value. Like a chopper to ride around with a friend (and throw him down the dalaran sewers). Or a little cute rare pet to show to your friends.
I think if we just played the game and forgot about the social aspect it wouldn't half as fun as it is now.
Besides, you reached the gold cap and now you're just giving away your gold to see some content that won't be really that challenging when you get to see it.
Or putting it in your terms. Is the gold(and time spent to acquire it) really worth what you get from that guild right now?
Anyway, i'm not saying you're wrong or you should play the game differently. It's all up to you of course but i suggest you equip one of those choppers and drive around with your gf :)
"Lehman was NOT risky. Risky is something that can go bad, but also good. Playing Russian roulette for a million dollars with one bullet is risky. Playing it with SIX bullets is NOT risky. It's suicide."
Investment hind sight is always 20/20, isn't it? They were playing Russian roulette with six bullets--it's crystal clear NOW.
I assure you, at the time of engagement, the collapse of Prime MBS market was a 23 standard deviation event... the probability associated with 23 sigma is something like the probability of Gevlon getting milked by morons.
Fascinating, simply fascinating. I am amazed by the simplicity of Gelvon's method (so much so that I am putting it to the ultimate test, the Earthen Ring Auction House) His political opinions are worth the read, although Ayn Rand would find them a bit extreme.
@Nils:
"I think part of your problem here is that you seem to adopt some form of marxist labour theory of value, when you should instead look at subjective value theories, of the kind originating from the Austrian school of economics...."
I think you're completely misinterpreting his point about the need for commodities. If no one farmed for herbs or food or whatever, then eventually the price for goods that require those commodities would rise to the point that it would be more profitable to farm (and sell the excess on the market) than it would be to buy commodities on the market and make the goods. It's not Marxism, it's common sense.
Your earlier post claimed that DKs who bought ore at a premium weren't being "stupid" by buying ore because they valued their time while leveling more than their money. However, the only way to decide whether an action is "stupid" or not is to figure out what would happen if everyone did that action.
The problem with your viewpoint is that if everyone acted the way the DKs did, then eventually the market would break down and you would have ridiculously irrational pricing for goods, so clearly the DKs are being stupid and they are paying a premium for that stupidity. Which is okay as the economy can adjust to stupidity and the invisible hand still works.
@Nils (again):
"As all rational people know the latter is the correct way to look at economics. Labour doesn't create value. Only the subjective preference for a certain product or service in limited supply creates value in said service or product."
I don't think all rational people (or economists) would agree that the Austrian model works in all cases, let alone in a fictional economy. Especially since, if you look at your definition of value can be broken down pretty easily. Say, for example, fruit bat guano. If, for some irrational reason, a large segment of the population suddenly woke up and decided they wanted to spend money on bat guano, then, by your view, the bat guano has instantly gained an inherent value increase even though it was the same guano that it was yesterday before the "guano craze" hit.
There has to be some point where the "perceived value" meets up with rationality or the market will breakdown. Labor (at least, profitably applied labor) is one way to measure this though obviously not the only way, otherwise a pile of dirt would be made more valuable simply because it took alot of time to move it from one corner of a room to another.
@Catalin
"On the restaurant analogy - in principle you are correct if you take into account solely the nutritional value of the food itself. By doing so you deliberately ignore the complete picture to support your theory."
I think his point was that people often act irrationally if their sole goal is to maximize profit. There are good reasons why people choose to have a business lunch at a 4-star restaurant as opposed to McDonalds. These reasons, however, are all social ones: namely that showing you can afford to be there gives the impression that your company is strong and can be a good business partner. Also, as you said, it is probably easier to converse (though not 100 times easier as would be reflected in the premium price).
Gevlon's point is that, in a more rational world, your business proposal would stand on its own merits and wouldn't need to be helped along with social cues. It's essentially the difference between the Wall Street broker luncheon and the Silicon Valley sushi dinner.
@Nils (last one for now I think):
"Just because you take an interest in maximising your in game wealth, which is just as worthless or worthwhile as any other in game activity, that doesn't mean there is any inherent value in maximising said wealth. It is just a means to an end. The end is individual satisfaction."
I find this to be more troubling than your earlier statements because it equates a stupid action with a rational actions simply because they give both individuals equal "satisfaction". This is all well and good until you apply that action to the entire society.
If everyone spent their time dancing naked on mailboxes instead of making gold, or mining, or doing raids/pvp then the game would completely suck. Just like if everyone sat on their porch and stared at the road eventually society would simply break down.
There is a reason why certain actions are rewarded (with money or gold or whatever) while others are not rewarded (or are punished), and it is because society needs those actions to be performed in order to function. WoW Gold, or real life money, may only be electrons or small green pieces of paper, but they serve as a proxy measure of value. Society needs some sort of proxy in order to work, otherwise we would need to go back to some kind of tribalism with a barter economy (or worse, anarchy).
I can't believe that this many people actually read that whole post. Yawn
Post a Comment