Ok since I didnt finish school and im not very high on econmics and stuff I have a question that you people probably have the answer to and I dont. I asked this once on EP in the ask MA/Marco thread but it didnt get answered. They say PE is a real economy right? But in a real economy you cant just “add money” right? So what really happnes when someone deposits 100 usd? Loots get worse? Maybe its a dumbass question, but hey, im a dumbass 
First off… NO! You are not a dumbass! :smash:
Secondly, in a real life economy governments can and do “add” money… this affects inflation of course and the value of the currency… long econ discussion so I’ll bypass it for now 
Third- equate depositing as not “adding” money out of nowhere, but rather as spending money… obviously the difference between PE and irl here is that PE is not providing the jobs that enable ppl to earn money in game and thus put money back into the economy. On the contrary, PE gets to reap the rewards of an outside source paying its gamers (ie employers) and then the gamers depositing into PE… kind of like a gift donation if you will :laugh: So, in the end, PE is similar to a retailer rather than a treasury.
does this make sense?
I suspect that amount of money added is aboutnthe same as amount of money withdrawn and given to MA.
Actually, I had this conspiracy thought, that the PE economy and the deposits - exist separately. Like, loot pool is stable, never changes, etc.
And the deposits - MindArk just puts into their account, clean cash, not affecting the game in any way. The game loot and peds are always there in the first place… just a theory.
Anyway, what my question about economy was, the following:
In real economy, people pay more for less, and less for more.
Like, say, Costco Wholesale. They try to sell you more to get rid of their stock, so the price for more is less.
However, in PE it’s the opposite. People choose to pay more for more, and less for less. Why is that so?
[QUOTE=maniac]
Actually, I had this conspiracy thought, that the PE economy and the deposits - exist separately. Like, loot pool is stable, never changes, etc.
And the deposits - MindArk just puts into their account, clean cash, not affecting the game in any way. The game loot and peds are always there in the first place… just a theory.
[/QUOTE]
i believe this, i think. the money we deposit does go in to a MA bank account. it doesn’t go in to the “game”. well, it does, but only from the 1s and 0s standpoint. PE is not a bank. your ped is a representation of your real world deposit, but it isn’t your deposit.
make sense.
sorry, i just realized this was off topic.
knoop, good question. i’d like to hear more answers.
Svetlana, can you elaborate on the retailer/treasury analogy?
(hehe…i got back on topic!)
imo, and others i chat to…
All deposits go straight to MA
All ammo burn, decay etc i.e everything ‘spent’ goes to MA
MA then decide how much ‘loot’ to put back into the ‘pool’
As far as the economy goes, it is managed by MA as above. ie number of items in game, BP drops, Ore etc
If comparing to IRL, then MA are more like the ‘Bank’ rather than the Government, as the Banks control everything
I liken MA to Central Banks in Europe, eg the Bank of England. Or in the US they will be the Federal Reserve. Their job is to ensure that the economy functions as it should. Whats perhaps more interesting is that MA is also the de facto “government” of PE, so they do a dual role.
In some ways depositing into MA is like depositing into your current account. You then have a debit card (namely the CC) to go and spend it. Yes we have the PEDs to spend with, but if MA are being like a bank then it would be investing that money into something, as well as paying the bills.
If we take what MA says, they dont consider to own your deposits until you lose them.
I guess we have this kind of system:
MA -(1)- PE’s ecosystem -(2)- Player’s Avatar -(3)- Player
And events when money move there are:
(1) MA takes certain % of decay
(2) Avatar loses money (in any event where money leaves avatars control)
(3) Player deposits
And of course there’s according events to other direction.
I dont understand why it wouldnt compare to real economy as no real economy seen by humans is a completely closed system. Irl what happens when someone for example discovers new resources? Or when people’s work becomes real objects?
[QUOTE=Kalashi]
If comparing to IRL, then MA are more like the ‘Bank’ rather than the Government, as the Banks control everything
[/QUOTE]
if only PE was run by a bank - imaging finding out how much you had saved rather than how much you have spent :wise:
[QUOTE=Essi]
If we take what MA says, they dont consider to own your deposits until you lose them.
I guess we have this kind of system:
MA -(1)- PE’s ecosystem -(2)- Player’s Avatar -(3)- Player
And events when money move there are:
(1) MA takes certain % of decay
(2) Avatar loses money (in any event where money leaves avatars control)
(3) Player deposits
And of course there’s according events to other direction.
I dont understand why it wouldnt compare to real economy as no real economy seen by humans is a completely closed system. Irl what happens when someone for example discovers new resources? Or when people’s work becomes real objects?
[/QUOTE]
Resources found dont affect irl economies…
Economy managed by Banks/multibanks ie. the large backbones that run the countries/governments.
Oil prices vary based on wars affecting availability from that region, but that is purely managed by the markets/companies themselves not by the actual availabity of said resource.
EG. The price of Gold in the US is set by the banks. The value of the us$ is set to the price of Gold by the government.
Recently in Turkey a large(i mean uber!) Gold deposit was discovered, this didnt in anyway affect the gold price because the Bank which manages the Gold international value simply didnt let it.
The same with Diamonds, they really dont have any value, as there are thousands of tons of them in varies places, which De bers(sp?) simply control/limit the supply of thereby managing the international market and setting the price.
All deposits into PE go into one big pile ie. MA’s Bank account.
They then set the current amount of Loot/deposits of ore (also taking into account the Oil at rig etc) in game.
The same X amount of PEDs, value of items etc in game probably stays very close to a set figure and has done for a long time. ie. 20kus$ or whatever.
ie. its the same amount of us$ value flying around in game no matter the deposits.
To believe MA have 2 accounts. 1. PE and 2. MA
all deposits go into 1. PE and the only time any money goes into 2. MA is when we decay items is imo very, very naive
1 Like
[QUOTE=Kalashi]
all deposits go into 1. PE and the only time any money goes into 2. MA is when we decay items is imo very, very naive
[/QUOTE]
Its what they say. Of course there’s those conspiracy theorists then. :rolleyes:
MA dont need to let money sit down, they can have it invested with low risk somewhere to get some % for example. I said MA dont consider to own our deposits before we have spent them in decay. I dont think they put your deposit into ecosystem and available to loots right away. It could be potentially very hazardous as MA would be then giving away money they dont actually own.
About comparing to irl economy I meant that irl economies do get more resources and more goods - ie. the total value of everything in economy can raise or drop (especially “TT” value - not measured in currencies). Deposits+withdraws+MA’s share do same thing in PE economy.
Hmm while we working with a Currency whos Changeable in RL Currency i would say we have a “RL” Economic but they follow the Laws of its unique Virtual Enviroment. You can’t Compare PE Economics with RL Economics because the Factors who define the Economics work are completly Different.
In Rl we have Facts like Ressources , Goverments , Enviroment, Political Relations, Education and manny others we can not or little less (Or have simply not interessted in) influence.
In Project Entropia we have a Limited Free Marked whos Controlled by the Global Monopoly “Federal Empire” aka MA They Pay out the Loots supply Repair and Ammo and Controll how mutch Loot / Minerals dropped. They even Affect the Drop of Every Single Known Item in PE. If they want it rain Fluffy Bunnys from Heaven it will!
In Fact one Organisation have the Total Influence on everything. Maybe they can’t determine the Price exact on the Single pec but they can set Trends where the Prices goes and they love to Play with it to keep the Marked Feeling high. Sometimes Ressources stop dropping or dropping less or plenty altering the Prices Player charge from Player for it. It dosn’t Affect MA at all because they have always only to pay the TT Price for it. And thats it why it works. This make Player aviable to Generate Profit on Other Players. Even with all the HOFs and good Loots and ÜBER Skills the Payout is never as High as the Costs to get it. The Free Marked is a Important Aspect of PE giving you the Chance aside from Luck to make Profit or Compensate your Loses by Selling Stuff for Higher TT Value like Miners do.
Thats why i say we have Real Cash Economics but not a Real Life Economics in Projekt Entropia.
Think of it as a casino. You pay the guy at the roulette table for some chips, just as you deposit for peds. These chips/peds don’t have a value until you pay for them, which means there’s no fixed amount of peds or something like that.
The casino / Mindark then has a percentage of how much that should go back to the player (payout rate) which in turn sets the odds for everything you do ingame (hunting, mining etc). And of course, the odds are in the casinos / Mindarks favor.
The economics between avatars in the game is completely separate from this and has nothing to do with it just as Fiona says in the post above.
I like the casino analogy. Thats the way i think of MA. Its very much like a casino. We put in cash, they give us a pay out every now and then.
The amount of peds we put in have nothing to do with the economy. They come up with the payouts much like a slot machine.
They control the economy by taking things in and out of the game. For example, sweating via trapping was keeping the value of sweat to about 1.2 ped per 100 sweat. They take out the possiblility of trapping and sweat increases by a ped or more per 100.
MA has the say in the end of how the economy is effected in the game. It really has nothing to do with what we put in. Therefore the statement that this is a REAL economy is true and false. Yes, it is a game that pays out cash if you are lucky, and it is an economy as far as supply and demand. But they control the supply and demand and how it is dished out.
I guess what i am trying to say is MA are the gods of this world and if they want us to have, we will. If they want to squelch this and make it favor them (they do) we dont. To say it is a game with a REAL world economy would say that its totally random and people make the difference. In this game people have an impact but the programming makes the real difference.
Whew… sorry for the long post. Hope it makes sense.
Suicide
One of my thoughts is that I don’t think you can completely seperate the casino and the player based economy.
The two are interlinked. Its one reason why I have trouble with the typical whining thread off “This game is a casino and I lose money.” Because they are neglecting the fact that in a RL casino, you can’t set up your own games and business inside and make your own money (Most likely you’ll get the boot in by some large unfriendly people if you tried).
The big interlinking is that people are using items as an investment and are depositing accordingly, something you again can’t do with your Casino Chips.
. As soon as you have that mentality then the dynamics change.
The second thing is that you have quite a substantial underground economy. With items or currency being traded through Paypal and other out game currencies. For example I keep a “Foreign Reserve” so too speak in Paypal and other investment channels outgame.
You also have a hybrid issue with regards to pay outs. Somebody hunts, they work within the “casino” system. They get loot that they sell on the markets, where the prices fluctuate based on current market sentiment. In that sense the only time you are playing a pure casino game of chance is when all you do is hunt and then sell everything to TT.
Very interesting so far. I was thinking about all this, too, over the last weeks still starting to play PE.
What I found out as another variable, though, is that the economy in PE is inherently broken - sadly. MA has made soime issues which make it very bad as a long term avenue - unless they fix it:
1: they take too large a percentage and do not move the money often enough. Basically the PE’'s doe imho not circulate often enough, and this is to the negative of the crafters. Repairs and ammunition should be something provided by crafters - maybe using some ressources that needs to be bought from MA. But having crafters supply ammunition would finally mean a mass market item for crafters.
2: they have no permanent decay. This severely limits the market for crafters and will, long term, lead to a game where items are in ample supply. Besides some skilling weapons that you so to say keep with you all the time, if you get a better weapon, the old one is ready for the market. Any crafted weapon stays around forever. This means a market is ojnly existent as long as there is an influx of new players - there is no market to refresh items. APermanent decay is imho a must to stabilize the economy long term.
3: they really were naive in terms of organizing sales. The whole auction thing seriously sucks for raw and processed materials. What would be needed is what happens in reall live - an exchange market where you trade defined sizes (like TT value 25 PED). This would mean that I, as a trader, could go out and buy ressources without dealing with whatever size people put up on the auction.
Besides this I have made some number games and IMHO the coupling of real cash to in game cash limits the game fun a little. The fact is that most players will be users (in game). This is necessarsy to keep the world going (MA needs to be paid), but it limits the fun. Basically the char can not grow without me making omney or paying in all the time.
Maybe a hybrid model would have been better. Something along two currencies - one that is exchangable with real cash and gets consumed, one that is “artificial” (but can be traded for the other one). Sure the first one would need to be “explained away” - like being some kind of medicine or whatever, and you “get it” when you pay money in, or buy it from other players. I see this as a problem - basically right now the in-game economy is totally simulational, which severely hampers the game aspect, but it is mostly a game.
Possible economic models
There are two likely scenarios on how MA manage participant deposits and withdrawals in their RL bookkeeping:
- The representative model
-Each deposit is booked as a short term debt. (Effectively a loan from the participant at 0% interest
-At regular intervals, MA sums up their earnings inside PE. The exact model for how they determine this ‘take’ is entirely up to them and unknown to us, but it can be assumed that this largely is a percentage, or all, of the item decay.
In the IRL bookkeeping, this amount would then be deducted from the total debt, and booked as income.
-Any participant withdrawals, would simply be counted as repayment of the debt, and would not affect booked earnings.
In the above model, there would be funds reserved (at least from a bookkeeping point of view) to cover all participants equity (TT value of all owned items, and PED on card). Still as MA is not a bank, and really has no legal obligations towards the participant, this is no guarantee that you will be able to withdraw your PEDs if things go sour. If MA goes bankrupt, the debt will treated as all other debt in the bankruptcy)
If MA want to show a better solidity, and take more advantage of the fact that a lot of PEDs never are withdrawn (Players that leave without bothering (attempting:)) to withdraw etc.) they could use the model below instead:
- The likely model
-Each deposit is directly booked as income.
-Each withdrawal is booked as an expenditure if and when it happens.
Using this model, it is entirely up to MA to approve the expenditure to honor your request to withdraw. Of course, as long as they intend to keep the operations going, it would be in their interest to do so, in order to maintain goodwill and credibility towards the participant community.
Then about the virtual economy inside PE
With the risk of stating the obvious and reciting previous posters, the following facts apply:
-Deposits add to the total amount of PED in the economy.
-Withdrawals and MAs ‘take’ reduce the amount of PED.
-Transactions between players (@ TT+ or not) do not affect the PE economy as a whole, as it is only a redistribution of wealth between participants.
Hence, the PE economy can only grow as long as the total deposits exceed the withdrawals and and MAs share. This is nothing strange, and not necessarily evil, but PE is dependant on continous new deposits!
Equally self evident is the fact that, on average, participant return (loot, ores, craftable items…) in TT value will always be less than what is spent on those activities. There are numerous theories on how this is regulated (Through ‘loot-pools’ or other means), but the exact mechanism is really irrelevant.
As long as there is a sufficient spread in (PE) skills among the active participants, and a sufficient spread in market prices, some participants will of course be able to profit through clever actions. And luck is ofcourse always an option, although it seldom is reliable in the long run
This is where rebalancing efforts, and market regulation from MA comes into play.
Thats a big topic by itself, and this post is too long already so here it ends
/Guleth
[QUOTE=Knoop]
Ok since I didnt finish school and im not very high on econmics and stuff I have a question that you people probably have the answer to and I dont. I asked this once on EP in the ask MA/Marco thread but it didnt get answered. They say PE is a real economy right? But in a real economy you cant just “add money” right? So what really happnes when someone deposits 100 usd? Loots get worse? Maybe its a dumbass question, but hey, im a dumbass
[/QUOTE]
i read post #15 and thought, “what the hell was this thread about?”.
to answer knoop’s question, i’d say: it depends on what is done with the $100 that is deposited.
if you just put the ped in storage, it has little impact on the game.
if you bought 1,000 ped worth of FAP 5s and didn’t use them, again, no impact.
if you use it to buy a full set of angel, a lot of the value is retained in the new equipment (some by TT value and some by market value).
if you spend it all on ammo and go on a mass hunting spree, well, that’s a different story. and probably closer to the answer you are looking for. but, without knowing how MA “makes” money, or how the loot system gets funded, there really is not an answer that can be provided.
to me, a lot of the economics is simply transferring value around. PEDs are as real as the TT value on my mkII, both are just code. if i have 50 PED on my card or an mkII worth 50 PED, either way, i have $5 worth of stuff.
when you factor in market values and the supply/demand that drives them, value becomes somewhat fluid based on the community needs and what MA provides to the community in the way of loots or successful crafts.
*edit: didn’t see Guleth’s post until after mine. well said Guleth! i think we are conveying the same thing about the transfering of wealth.
Supply and Demand…the basis for any economy :wise:
[QUOTE=Svetlana]
Secondly, in a real life economy governments can and do “add” money… this affects inflation of course and the value of the currency… long econ discussion so I’ll bypass it for now
(clipped)
… On the contrary, PE gets to reap the rewards of an outside source paying its gamers (ie employers) and then the gamers depositing into PE… kind of like a gift donation if you will :laugh: So, in the end, PE is similar to a retailer rather than a treasury.
[/QUOTE]
Actually, a better way to look at it is that the PLAYER is the employer and the AVATAR is the employee. When you deposit, you, an off-world employer, are paying your on-world employee (or providing an expense account, if you will) in exchange for certain services (namely, entertainment).
Likewise, the Trade Terminal represents a trading conglomerate that buys from Calypso residents at a fixed price and resells off-world to another trading conglomerate (named MindArk).
Very long, in-depth economics & business
Good question. The reason it doesn’t make sense is because you’re leaving a lot out of the equation.
First of all, in a real economy, supply and demand determine market prices. This is very true in Entropia. If people weren’t willing to pay larger percentages for large quantities, the prices would drop. It’s as simple as that.
Now, as to why? That’s where this becomes a really good question. The situation in Entropia would be mirrored in the real world if similar circumstances existed.
In order to understand the difference, you need to look at the means of production, and basic business models.
In the case of items purchased at Costco, you are dealing with mass-produced products. In the case of Entropia items, you are dealing with individually produced products. This makes a very big difference in the market behaviour of the products.
In any business model, there are certain costs that are costs per unit, and certain costs that are costs per time period (let’s use per week here). These are called ‘variable’ costs and ‘fixed’ costs. Let’s say you have a production facility that costs you $500/week in rent, utilities, insurance, and other overhead. That is a fixed cost. In this facility, you produce an item that costs $10 per item in raw materials. That is a variable cost. (Note that i’m not including labor costs in this example).
Let’s say that you made one item per week in this facility. When you add your fixed costs and your variable costs ($500/week + $10/item), you have spent a total of $510 to produce the item, therefore you must sell it for at least $510 just to break even. But if you made two items per week, you have now spent ($500/week + ($10/item x 2 items)) = $520 to make two items, so you can sell them for $260 each and still break even. If you get to ten items per week you are now at ($500/week + ($10/item x 10 items)) = $600 for all ten, which drops your break-even price to $60. Great! I’ll sell my product for $100 each and make $400/week profit!
Now let’s add in labor costs. Suppose 10 items/week is the most that one person could produce. You decide that you don’t want to do any manufacturing, so you’re going to hire someone to make the product for you, at a rate of $200/week. Now, your fixed costs are $700/week. So making 10 items per week brings your total cost to $800 per 10 items, or $80/item. At that $100 price, that is now $200/week profit. Hardly seems worth it, right?
Where it really gets interesting is when you add other employees. Let’s hire someone else to build our product, so now we can double our output to 20 items/week. Fixed costs are now $900, plus $200 in variable costs, total of $1100 for 20 items. That equates to a cost of $55 per item. I also have twice as much product, so now, I’m making $900/week profit!
If we take that up to 5 employees, we have fixed costs of $1500, producing 50 items = $500, for a total cost of $2000 to make 100 items, or a break-even level of $20 per item. You know, I think I’ll drop my price if people buy in large quantity - I’ll give them a 10% discount, so it’s only $90 per item. My profit is now $7000 per week! ($90 retail - $20 cost = $70/item x 100 items) As long as there is demand for my product in large quantity, I can drop the price and make even more money.
Just as a side note, very often you aren’t getting the deal you think you are. Have you ever actually compared the price per unit on those bulk buys? Often, it’s actually cheaper to buy multiples of the smaller unit - the sellers just have you conditioned to buy the bulk items.
The Entropia economy eliminates fixed costs, which is where bulk savings comes into play. Now, the variable costs stay about the same per unit,(based on averages of the costs involved in mining/hunting/etc.) but without fixed costs, the variable cost is all there is. It takes much more effort and investment to accumulate 5,000 oil than to accumulate 200 oil, so the asking price for the larger quantity actually becomes higher than the asking price for the smaller quantity. A crafter who wanted 5,000 oil could go around buying it 100-200 at a time for a lower price, and save a good amount of money - at the expense of his lablr. If he wanted to save himself that labor, he would have to pay the higher price for the larger quantity - basically, he is paying for convenience, to have someone else do work he could do if he chose to.
WOW :eek: That was long! Hope it clarified something - or at least brings on some good discussion.