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blankseplocked A brief lecture on opportunity cost, or, "That stuff ain't free, bub"
 
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Caldari Citizen20090217
Posted - 2010.06.27 12:39:00 - [31]
 

People will value the stuff at less than the time/market says its worth. Its more about how much effort/attention/risk something takes. Reasons why people sell below a sensible price:

They are noobs and 1 unit of their time produces less than 1 unit of a "vet".
They aquire the stuff semi afk eg alt mining while mission running on a main.
They run a macro and are genuinely afk, as any income cost them zero effort.
They are hauling 1months worth of product and selling all at once.
They need the money or are selling for impatient corpies/alliance mates.
They are undercutting everyone to gain market control in some way.
They are thick ie they genuinely believe the minerals mined are free.
Their john doe is borked Twisted Evil

Scout Ops
Red Federation
Posted - 2010.06.27 16:52:00 - [32]
 

Edited by: Scout Ops on 27/06/2010 16:54:01
Originally by: Amarante Idama
Shhhh! Don't explain it to them. Just buy their stuff, recycle it and sell the minerals for a profit.



recycling T2 stuff is a sure loss.

Originally by: Amarante Idama
Opportunity cost very much does apply to Eve. See above. It doesn't necessarily have anything to do with how you spend your time. All it means is that the value of a thing remains the same regardless of what you paid for it. 200k of materials is still 200k of materials whether they were "free" or not. If you choose to sell something that costed 200k of materials to make you're effectively giving away 50k by choosing to sell the final product for 150k. You would have made more by not building anything and just selling the materials instead and you would actually have saved time. That's opportunity cost.


what if I find fun to build ships and sell to my alliance mates. I may be losing virtual currency, but I am enjoying more than you do.

many people is just obsessed with isk.

answer this question: do you think 'earning isk' is the final goal on this game?

oh well I guess you all pay by PLEX and that explains it a bit, since there are many pilots out there who are suffocated by virtual bills...

Varo Jan
Caravanserai Consulting
Posted - 2010.06.27 18:04:00 - [33]
 

Originally by: Caldari Citizen20090217
People will value the stuff at less than the time/market says its worth. Its more about how much effort/attention/risk something takes. Reasons why people sell below a sensible price:


Someone said earlier, "The only reason traders are able to make a killing is because people are stupid," thereby demonstrating his own stupidity and blind arrogance. Walk in another man's shoes before you judge him.

There are valid, sensible personal and/or economic reasons why people sell below market prices.

I buy some fuels from sell orders because I make more money using my time in other ways.
Some mission runners have said in the past they sell loot to buy orders because either they do not have the trade skills (and skills time is better spent elsewhere) or they make more money by spending their time elsewhere. That rationale presumably also applies to miners.

Traders are able to capitalise on that spread and make money. It does not make them more intelligent than anyone else, nor does it mean that trading is the bestest way to enjoy the game. Each to his own.

Auwnie Morohe
Posted - 2010.06.28 09:38:00 - [34]
 

Wrong

Opportunity cost is about choosing one thing at the exclusion of an other. The cost is of the thing you choose is the highest of the other things you didnt choose.

Example
You choose to write a post instead of paying attention to your mission. Te cost is the loss of your ogre and the extra time it took to finish the mission compared to the mission time if you had paid full attention to the mission. Or the gains you could have had by doing any other activity in the same time span.

Another example
The cost of the armor plate is not the market price it is the time it took to get it, or rather what you could have earned by choosing to do something else. In your example it is even worse because by making the rig you add more opportunity, making the rig, and sell the whole lot for less than you could have had you not spent the extra opportunity.

Una Achura
Posted - 2010.06.28 10:27:00 - [35]
 

It's so fun to see young economists learn Kahneman & Tversky the hard way. Very Happy

tl;dr: Stop expecting human economic behaviour to be economically rational, don't build a business model that depends on rational consumer behaviour but rather one to exploit the many well known biases. Journal of Consumer Behaviour may offer a few tips. Cool

Gabriel Virtus
hirr
Posted - 2010.06.28 11:15:00 - [36]
 

You are assuming people's work is easily changed, but it is not. How else is a miner going to make isk for his time?

Overall, oppurtunity costs are a good thing to think about, but you must remember the stickiness of prefessions in Eve. A miner or many other professions are stuck, at least in the short term, to do what they are currently doing.

-GV

Adunh Slavy
Ammatar Trade Syndicate
Posted - 2010.06.28 17:47:00 - [37]
 

So, go mine some rocks for 3 hours, 20 mil ISK. Or go flip burgers for minimum wage, about $7 an hour for three hours and buy a plex and sell it for ISK and make 300 mil ISK ...

Not playing Eve is the best way to make money in Eve.

/cynic

Corcyrus Endymion
Caldari
Elder Tribes
Posted - 2010.06.28 19:42:00 - [38]
 

Originally by: Adunh Slavy
So, go mine some rocks for 3 hours, 20 mil ISK. Or go flip burgers for minimum wage, about $7 an hour for three hours and buy a plex and sell it for ISK and make 300 mil ISK ...

Not playing Eve is the best way to make money in Eve.

/cynic


That's not cynic, it's true. It just doesn't apply to the MD since we are all here to play virtual tycoons. And cheating at that with Plex is only fooling yourself, since let's face it the only one that's going to be impressed by your amassed wealth is you. Well perhaps you mother if you ask her.

Thrasymachus TheSophist
Posted - 2010.06.29 00:25:00 - [39]
 

Originally by: Adunh Slavy
Not playing Eve is the best way to make money in Eve.


This.

Which is why any metric that assumes profit maximization as the solitary goal misses ... the ... point.

Adunh Slavy
Ammatar Trade Syndicate
Posted - 2010.06.29 12:03:00 - [40]
 

Originally by: Corcyrus Endymion

Originally by: Adunh Slavy

/cynic



That's not cynic, it's true. It just doesn't apply to the MD since we are all here to play virtual tycoons. And cheating at that with Plex is only fooling yourself, since let's face it the only one that's going to be impressed by your amassed wealth is you. Well perhaps you mother if you ask her.


Nah she would not be impressed. The point of the cynical comment was that it is indeed a game. Who gives a crap how much money anyone has or how you make it. If you're having fun playing a game, then you win. If you look at it like a job, then why even be here.


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