tag:blogger.com,1999:blog-1461700565722278823.post7127988948255193..comments2024-02-27T14:44:07.868+01:00Comments on Greedy goblin: Lemonade or loanGevlonhttp://www.blogger.com/profile/07072766785893313616noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-1461700565722278823.post-83827669884350241192012-03-02T16:25:26.315+01:002012-03-02T16:25:26.315+01:00Boxington here:
Two responses to Gevelon’s excell...Boxington here:<br /><br />Two responses to Gevelon’s excellent post today. First, my main point was that one would need to further specify why the Plex->Isk conversion was not desirable, and Gevlon provided that by saying it would correlate with making stupid investment decisions because it was more capital than the player had the skill to invest properly. While others in this comment thread suggested that is not a legitimate rationale, Gevlon has now provided a testable/falsifiable assertion, and so makes Gevlon’s statement both cogent and interesting. <br /><br />Secondly, my take on if Gevlon’s assumption is a good one or not is that it depends on whether the “risk is properly priced.” Risk analysis, and the identification of risk premia, is a huge topic in economics and debatably related to the origin of the great recession. Gevlon’s statement that the plex->isk converter is likely going to make a stupid investment, if we convert it to traditional economic terms, is basically saying that the Risk Premium associated with giving a large venture capital investment to a new player is too large to justify the investment (i.e. the venture capital would be better invested in someone with a lower risk premium, even if they had a lower average expected ROI).<br /><br />But the catch to all of this in the plex->isk case is that the venture capital investor is the same player as the user of the investment. This makes analysis somewhat complex because now the supply and demand of credit collapse into one firm’s decision process. But in other ways, it makes it simplified, because now the utility maximizing rule becomes simply “Invest in project A if the risk adjusted, discounted value of the ROI on A is less than the opportunity cost of BOTH the investments’ next best use AND the opportunity cost of what the player could have done with the time it would take to generate a similar sized sum of capital with the next most profitable venture.” That’s a mouthful, but it summarizes to the dictum: “You are rational to convert plex->isk if your ability to earn Dollars/Euros is greater than your ability to earn ISK directly once risk and discount rate (the time preferences of “I want it now”) have been properly accounted for.” Gevlon is basically saying that the risk premium is too high and that a person would not be rational to convert IRL currency to ISK, but again, this is a testable/falsifiable statement, and it would dramatically depend on what the IRL income of the player is. <br /><br />Throughout this analysis, though, is the assumption that we do not lose utility directly from the conversion of IRL currency to In-Game currency. That assumption doesn’t hold for me personally, why is why I have never actually bought a plex. It would ruin the game for me, but this has nothing to do with the traditional economic analysis of risk, and is just a violation of the assumption of rationality an economist typically makes (excluding behavioral economists etc.).Boxingtonnoreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-35974487771648152392012-03-02T07:23:45.222+01:002012-03-02T07:23:45.222+01:00The ".com" comparison doesn't work f...The ".com" comparison doesn't work for the reasons that Azuriel has stated. At the time (and yes, I was there) no one had the slightest notion what was a crazy idea and what would make a lot of money, but either way it doesn't make a good analogy for what your discussing, they didn't fail because of a lack of business experience.chewynoreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-42658075610716997842012-03-01T20:51:48.313+01:002012-03-01T20:51:48.313+01:00@Goodmongo: I made 256M on the top of the gifts.@Goodmongo: I made 256M on the top of the gifts.Gevlonhttps://www.blogger.com/profile/07072766785893313616noreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-46976381330162213912012-03-01T20:31:05.205+01:002012-03-01T20:31:05.205+01:00Did that 400M in gifts help? Does every new playe...Did that 400M in gifts help? Does every new player get 400M in gifts? Then I don't think your statement that every new player can get to play for free fits.Goodmongohttps://www.blogger.com/profile/10116895654322387056noreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-38503864120365001042012-03-01T19:46:39.517+01:002012-03-01T19:46:39.517+01:00Part of the issue is that with the way Eve is set ...Part of the issue is that with the way Eve is set up, you're only a newbie once, as you generally only have a single character.<br /><br />So when you could use the monetary boost of a venture capital, you don't have the knowledge necessary to make full use of it.<br /><br />However, when you've acquired the knowledge necessary to use the venture capital successfully, you've probably also acquired enough ISK so you don't actually need to obtain more.Rohanhttps://www.blogger.com/profile/09090769681887119989noreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-14610628847568666472012-03-01T19:33:40.321+01:002012-03-01T19:33:40.321+01:00Confirming that having more money than brains is b...Confirming that having more money than brains is bad, mmkay? It can do bad things to you, like this:<br /><br />http://eve-kill.net/?a=kill_detail&kll_id=12600344Steel H.https://www.blogger.com/profile/02051764931456770746noreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-15729151388527130822012-03-01T16:26:51.411+01:002012-03-01T16:26:51.411+01:00But Gevlon, just because those who buy PLEX might ...But Gevlon, just because those who buy PLEX might make larger mistakes with their business does not mean they will not learn from them, just like you are. Sure, they might lose a PLEX or two initially, but then they figure out where they went wrong, and their next PLEX would be invested more wisely.<br /><br />You also ignore those players who care nothing for trading and only care for battle. There is zero experience for them to gain in the business side, because they want nothing to do with that side. They want to blow up ships.Eaten by a Gruehttps://www.blogger.com/profile/01741777795065029482noreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-9036801303675946812012-03-01T16:18:50.528+01:002012-03-01T16:18:50.528+01:00@Caramael "The largest part of the US tech in...@Caramael "The largest part of the US tech industry is backed by venture capital, and it seems very successful. How would you explain that?"<br /><br />Capitalism has the good old darwinistic "survival of the fittest" engine at his core. You notice only the survivors because they are still around. The corpses of those who failed get scavenged very soon.<br /><br />In the US Tech industry you notice only the successful companies. The countless startups which are born and die in a blink tend to fall under the radar.<br /><br />This doesn't make the industry not successful: this darwinistic side of capitalism allows for many different ideas and approaches to be put to the test. What works goes on, what doesn't work is food for the scavengers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-20039982992833827332012-03-01T15:46:07.337+01:002012-03-01T15:46:07.337+01:00That's exactly why I made it 100mil. Enough fo...That's exactly why I made it 100mil. Enough for the statement, not enough to influence the experience too much. <br /><br />EvE can be 'real money cheated' though, convert PLEX to ISK and use it to buy a characted on the Bazaar. All perfectly legal.Seganoreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-42409518863563518472012-03-01T14:18:32.783+01:002012-03-01T14:18:32.783+01:00Personally, i was thinking at throwing a pair of b...Personally, i was thinking at throwing a pair of billions your way.<br />I thought it'd water down your experience, though.<br />If you want some ISK for a specific project which you can't afford, feel free to ask me on AureoBroker - joint ventures can be pretty good.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-46072023591924760272012-03-01T12:30:28.939+01:002012-03-01T12:30:28.939+01:00Azuriel, how about DuckDuckGo? Certainly looks lik...Azuriel, how about <a href="http://en.wikipedia.org/wiki/DuckDuckGo" rel="nofollow">DuckDuckGo</a>? Certainly looks like "lemonade way in search engines" to me, so "of course not" is not warranted. Obviously, "survival bias" and all, but there are many ways things can work, not all of them big, even now.Shalckerhttps://www.blogger.com/profile/04929708411856414654noreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-67117156250596741922012-03-01T12:12:09.369+01:002012-03-01T12:12:09.369+01:00The largest part of the US tech industry is backed...The largest part of the US tech industry is backed by venture capital, and it seems very successful. How would you explain that?<br /><br /><br />I bought two PLEX (better deal than 1) to buy me a proper level 4 mission ship and fit. I already had the knowledge, skills and standings, and I didn't want to grind level 2's and 3's to get the required amount of ISK to buy the assets required to do level 4's.<br />And now I'm making more than enough ISK to buy back both PLEX and use them to pay for two months of subscription.Caramaelnoreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-44481584089648097712012-03-01T08:40:58.241+01:002012-03-01T08:40:58.241+01:00These companies weren't scams or daydreaming i...<i>These companies weren't scams or daydreaming idiocies.</i><br /><br />Yes, most of them were. The business model was that they would not be selling anything, but rather buying up advertising to eventually get large enough <i>to</i> sell something later. In some cases it worked, like with Google and eBay and Amazon, etc. In the vast majority of other cases it failed miserably.<br /><br />And the irony in all this is that none of those companies would have made it the lemonade way. Can you start a lemonade-sized search engine these days? Of course not.<br /><br />Should a brand new player drop $1000 in EVE and fly the newbie zones in a Titan? Of course not. But if a person is already savvy enough to know not to blow his entire liquid assets on a 10% time-intensive return, there is no reason to start small if he doesn't have to.<br /><br />You probably borrow money for a car to get you to a job that makes you more than enough to offset the interest payments, right? It is the same principal here.Azurielhttp://inanage.comnoreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-39339916472741058102012-03-01T08:21:59.223+01:002012-03-01T08:21:59.223+01:00But does it matter? Eve is the only game I know th...But does it matter? Eve is the only game I know that the size of you ISK wallet has no influence on that a newbie capsuleer can do. Did I buy a plex? Yes. I did it so I don't have to worry about ISK. There is no way I can spend the ISK to make myself better in Eve. It is impossible because I don't have the skills to fly big, shiny ships. But I can buy 100 frigates and have A LOT of fun in null/low sec.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1461700565722278823.post-47998453869885406872012-03-01T08:11:14.229+01:002012-03-01T08:11:14.229+01:00Both ways can provide you experience you can use l...Both ways can provide you experience you can use later.The only thing that changes is the scale of the mistakes you are able to do as you already saying in the post.Also that means that risk-reward is greater.<br /><br />So with a loan you can and most probably will make big mistakes that will make you risk the original investment and leave you helpless in debt.The start small way doesnt have that risk because you dont have anything to lose while accumulating experience.<br /><br />I believe that both ways are viable.Each one's success just depends on the person that uses them.Tivadarhttps://www.blogger.com/profile/00512283594696506998noreply@blogger.com