Rares prices.... (27,000+ views)

[bedman]

Yeah, its crazy.

 

 

 

Seems a bit fishy. Yesterday they were like the lowest in 1.5 years, and now 12 hours later or so, they rebounced back to their original (read: aftar the GE/duel arena crash, but before they started totally crashing, red 220m, yellow 172 etc...) position.

 

 

 

Well yeah, good I kept my red one. I could have gained about 40m though if I would have played it smart...

[Talset65]

Yay for my White Phat losing 100m in a week.

 

 

 

ANYWAY, I sersiously doubt rares will be untradable, but we shall see.

 

Either way, it's inevitable that rares will rise again, as they become rarer and rarer, etc.

[quitthegame]

I could have known that you would come up with the Tulip affaire again, which shows how little understanding you have of what rares are and why they are so expensive - and I'm not going to waste my time arguing it.

 

 

 

That's coming dangerously close to ad hominem. I'm not sure what you would argue anyways, I only mentioned it because it was funny that someone was jailed for eating a tulip bulb after mistaking it for an onion. What would you argue? That it wasn't funny? Do you always argue with people's humorous remarks? That must be a hit at parties. In any event, I vaguely remember your remarks about the tulip affair, but I've looked into it more since then and was not impressed by the economic analysis that determined that the pricing was not irrational. Feel free to go into it if you want, I'd be happy to learn more on the subject, although I doubt you'll convince me that my use of the tulip affair didn't achieve my stated objective, an "example of a bubble in something as silly as party hats".

 

 

 

I stated in one paragraph that things may or may not be different indeed - in which I was referring to long-term effects. In the other I was stating that there is so much panic around currently that it is the most likely that they'll probably hit rock bottom at some point - which is a short-term effect. Do I really need to go point that out in every sentence I write?

 

 

 

I don't care what your motivations are for contradicting yourself Dukey old boy, the point is that when I quote and respond to something you say, and you quote something else that you said (not even directed at me) which contradicts the first thing and deduce from that that I can't read, that's both insulting and dishonest. I really couldn't care less what you point out in every sentence that you write, just don't do that again. If you want my advice though, I would say "yes, you should include 'most likely' in every sentence that requires that qualifier, but only when the other side is merely arguing that something is possible and you are arguing it's 100% not possible". This discussion, right now, happens to be one of those discussions. If you think that there's even a 1% chance that rares are currently in a price-bubble, then you and I have no substantive difference in opinion and are merely arguing over semantics. Again. So yes, including "most likely" when applicable is important, it's probably the reason we keep arguing for pages when I don't think our positions are really very dissimilar.

 

 

 

I'm sure you realize that there is a huge difference between the requirement of an external event or the fact that external events may speed up the death-blow of a bubble. Real bubbles do not require external events and would crash under their own weight sooner or later even under consistent economic factors. That would have happened with the Florida real estate example you gave as well.

 

 

 

In fact, economics can easily proof that real bubbles will crash on their own sooner or later, because the size of endless bubbles would, at some point, outgrow the economy which is obviously impossible.

 

 

 

Or the bubble could just reach a point of where it stops growing and becomes quite volatile, until it finally oscillates out of control and crashes. That's what happened in the 1929 crash. Anyway, this discussion is growing pointless, because you've imagined up this thing about bubbles "requiring" an external event to trigger the end. Here's where that word came up first:

 

 

 

 

Most bubbles' end is triggered by an actual event that fundamentally changes the market.

 

 

 

If it requires an external event to end the "bubble" it is certainly not completely a bubble at the very least. The whole point of a real bubble is that it would end sooner or later without any external events causing it, simply because the excesses would be unmaintable.

 

 

 

See, you're the one who originally used the word 'required', and it's not really applicable to what I said. After doing more research, I would change "most" to "many" in my statement, also. (See how I was careful to avoid stating my argument absolutely and you changed it to an absolute wording? This is exactly what I was talking about!) So, no one thinks external events are required to end bubbles, and you don't need to keep arguing the point, against no one.

 

 

 

I gave that some thought before I wrote it down already. One example could be a detection system that checks whether the executable of a certain game has the correct file size that it should have (in order to detect altered (cracked) executables). Hurts no genuine people who will always have the right file size and works as security measurement against cracked executables (yeah I know, they are probably be able to get around that again, but we know that's not the point here).

 

 

 

Mm, actually I've heard of a lot of stories where authentication like that goes wrong and renders people's copies of games unplayable. Remember the big to-do about purchasing Bioshock through Steam and the authentication issues a few months back? I'm not sure that was this exact mechanism in that case, but that is the typical issue with measures against cheaters in online games, false positives. If you do the detection simply, you will either make it very easy to get around, or give a lot of false positives, if you do a huge complex system, it slows the game down for everyone(and makes it more expensive). The system with minimal impact on users, small and few false positives and a small amount of slowdown/increased file size, also typically has minimal impact on cheaters, so I don't think that really counts as a good example for you, does it? Here's the thing... the reason why I made the statement using always, is that there are two possibilities.

 

 

 

1. The thing that they implement to hurt miscreants also hurts innocents.

 

 

 

This is the scenario that commonly happens.

 

 

 

2. The thing that they implement to hurt miscreants also has unmitigated benefits to innocents.

 

 

 

I.e., a change they make to car design makes carjacking harder, but also makes the car safer, cheaper to build even after including the increased cost of design factored into the per unit production, etc. Better in every way. But then, if there's no tradeoff, the car should have been made that way in the first place, the initial design was faulty, and the fact that the change was made with the intent of hurting miscreants is purely due to human error and not from some exception to my principle.

 

 

 

Do you see my point? The reason why I could use 'always' is that my statement boils down to a tautology: "If you make a tradeoff between security and convenience, then you always have to lose something and gain something." , via the addition of the implied statement "Assume that a plan which is superior with no negative side effects will always have been chosen when available", which is necessary for a reasonable discussion about the effects of unrelated or arbitrary new initiatives.

 

 

 

Ok well at least you are consistent then and I can agree with this line of thought, except that you are forgetting too easily that Jagex ignored the (what you guys consider to be) "discontinued items problem" for over 5 years. There is/was no indication that they would do anything about it. The best time that they could solve the "issue" for once and for all (during the dupe) they consciously choose not to remove them and actually advised people to not panic and sell their rares too low!

 

 

 

Hey don't lump us together on this issue, Qeltar hates rares way more than I do. I just think they encourage RWT, as through time they've concentrated wealth in the holders which tempts them to sell gold... and I'm not fundamentally against RWT, although I wouldn't do it in a game that prohibits it.

 

 

 

p.s. -- Imagine that tomorrow people wake up and a lot of them decide that rares simply aren't worth much to them, that their lack of utility or aesthetic value makes them worth 200k, not 200m, their rarity notwithstanding. I think in our earlier discussions I felt that this kind of change of opinion would mean that rares had been in a price bubble. I'm not sure I still think that to be true. If many people decided living outside was preferable to living inside, due to some persuasive new religion or something, then real estate prices would certainly go down, but I wouldn't agree that that would imply that the previous real estate prices had been a bubble. So in that respect you have convinced me, I'm just not sure of what. I mean, if rares go down 90% tomorrow, without a relevant update by jagex, we're still going to call that evidence that their price had been in a bubble...I think I'm running into a category error somewhere in the common conception of mass behavior, perhaps I'll figure it out eventually.

[emmanuel1233]

oh wow i haven't been on for a couple weeks.. i didn't know about this at all...

 

i hope rares don't become untradible.. im waiting for the perfect time to sell my red phat hopefully before the new year \ \

[hippomchippo]

So...Should i keep or sell my santa? =|

[agamemnus]

 

Huh? Where do you get this stuff from? Bubbles can go on for VERY long periods of time, and can be notoriously difficult to predict.

 

 

 

 

I think what Duke Freedom was trying to say is that, given no change in gameplay mechanics, the possibility that there was a bubble decreases over time, and over such a long timespan (in RS terms), it was not a bubble. Of course, we have to agree what a bubble is in the first place. I will define it as such: an interval of time throughout which the value of an item is largely based on the demand of those who want it solely because of its value (speculators). It's a recursive definition.

 

 

 

Once confidence in the value of the item decreases, those who demand it solely for its value will start demanding it less and less, and the item's value becomes equal to that sans our speculators. The bubble "bursts".

 

 

 

The first question is, how easy is it to burst the confidence of this bubble. The price (all other things equal-- gameplay mechanics, player base, etc.) apparently going down one day X percent, as happens in a normal market trading fluctuations might trigger player N to sell, lowering the price. If the price falls below X+Y percent, it triggers player N+1 to sell. It becomes a snowball once the price falls some percent in a certain interval. Duke Freedom's argument is therefore quite logical: the longer a price trades with normal price fluctuations (the fluctuation is a normal distribution), the more likely it is that an "unusual" day will occur that will trigger a bubble bursting. Since it hasn't for so long, it means that it is not likely (but not impossible) it will occur in the future.

 

 

 

Your argument I think is a bit different, qeltar. Since a lot of players are constantly quitting for whom the intrinsic value (showing off) of a party hat is quite high (ironically, perhaps older, more mature players), the intrinsic value declines on average over time. Thus, the rares market becomes more and more of a bubble market over time.

 

 

 

On the other hand, there are many other factors at work. Here's an example: fewer and fewer party hats and other rares are traded with each day. (Some people _do_ quit with rares and not just "gold" -- why would EVERYONE bother selling all their items when they quit?) That increases the intrinsic value of rares -- fewer people have them, so the "wow" factor of showing them off increases.

 

 

 

In summary, it's mathematically valid that a bubble becomes less and less likely ceteris paribus, but on the other hand the system mechanics show that rares becomes more and more of a bubble over time. On the other other hand, for those players for whom rares are a method of "showing off", their value of rares goes up constantly. On the other other other hand, if rares become untradable or unwearable or deleted, then all this becomes a rather moot point. :XD:

[JordanGM]

I doubt rares will be removed. They're perfect long-term goals that anyone can set. If they're removed or become untradeable, MANY more people will obviouisly quit. Skillers and mains still haven't got a really good reason to quit (like the pkers do), so why give them one?

[quitthegame]

 

I think what Duke Freedom was trying to say is that, given no change in gameplay mechanics, the possibility that there was a bubble decreases over time, and over such a long timespan (in RS terms), it was not a bubble. Of course, we have to agree what a bubble is in the first place. I will define it as such: an interval of time throughout which the value of an item is largely based on the demand of those who want it solely because of its value (speculators). It's a recursive definition.

 

 

 

I don't accept that definition. If you refer back to my earlier posts, you see that I reference findings in which bubble-type activity was generated in experimental simulations without the influence of speculative interest. I'll give the citation here: Lei, Vivian, Charles N. Noussair, and Charles R. Plott. 2001. "Nonspeculative Bubbles in Experimental Asset Markets: Lack of Common Knowledge of Rationality Vs. Actual Irrationality." Econometrica 69:831

 

 

 

I'm not aware of what significance the 'probability' of there being a bubble has to this discussion. I'm not trying to estimate the probability, I'm just saying it is nonzero. The way that people talk about rares' future value, makes me 'feel' that the market is prone for a crash-- at least that was true until recently-- but I certainly wouldn't say that it's a 100% chance that it is ... I've repeatedly referenced the fact that RS2 won't last forever, and when Jagex announces that it's ending in say 3 months, there's a very good chance that the value of rares will plummet, but I'd be hard pressed to argue that that would prove that the rares market had been a bubble. There's a lot of room for interpretation, which is why I've always argued against absolutism in this field, although as DF has noted, not in every field. (Which would paradoxically be absolutist, eh?)

 

 

 

One last point-- Consider the possibility that the rares market became overheated, their value overshot the intrinsic mathematical value, for a period of time. Then, certain events over the past 2 years held the prices down, even as rares continued to leave the game driving up their scarcity, and the money supply continued to increase over time. It's not beyond the realms of possibility that rares were an a large bubble 2 years ago, but as their price held steady or trended down slightly, that their mathematically inherent value continued to go up to match their market value, ending the bubble peacefully. I'm not saying I think that's the case either, but's it certainly possible.

[swordwarior]

So...Should i keep or sell my santa? =|

 

 

 

I would say keep, but if you plan on selling it in the next few weeks sell now. I believe they will raise again, but depending on summoning it might take another hit in price till summoning gets worked into the game.

 

 

 

Waits to get told off by the few convinced rares are doomed forever... :lol:

[Thus]

I think people should just stop selling their rares; it is bringing the prices down.

[solarraider]

i've always had a feeling that jagex are extremely anti-rare nowadays. so... they could always lower the prices gradually and say it's a 'natural decrease due to demand in the market' after January. i mean, the only ones who are going to suffer are all the players with rares, most of which are extremely rich players or players who have stopped playing. by doing this jagex can actually 'stabilize the wealth differences in the player population'? (regardless of the difference between f2p and p2p)

[Hoopster211]

Rares will plummet in price. Think about it:

 

 

 

How many people actually buy rares just for the look? Probably like 60% or so. So this means that 40% of the people trading rares now want to sell them immediately because they can't profit off them anymore. THen the prices will go down, and every one who owns one will try to get out fast, making the price drop even further.

[Adam007]

Rares will plummet in price. Think about it:

 

 

 

How many people actually buy rares just for the look? Probably like 60% or so. So this means that 40% of the people trading rares now want to sell them immediately because they can't profit off them anymore. THen the prices will go down, and every one who owns one will try to get out fast, making the price drop even further.

 

That's a faulty assumption, based on an even more faulty assumption. We don't know what reasons people own rares percentagewise, and why do you think that you can't profit off rares anymore? That's just plain wrong. If anything, people would be unloading now because of all the hats sold for cash at once from people jumping ship at the same time, and now people are unloading rares for cash. There are people selling now thinking prices might hit rock bottom soon, but there's no reason one shouldn't be able to profit off of rares anymore. A 5% range on expensive rares is still enough to make a huge profit.

[Duke_Freedom]

If you think that there's even a 1% chance that rares are currently in a price-bubble, then you and I have no substantive difference in opinion and are merely arguing over semantics. Again. So yes, including "most likely" when applicable is important, it's probably the reason we keep arguing for pages when I don't think our positions are really very dissimilar.

 

 

 

I currently don't want to make any definite statements on the long-term, because we simply do not have enough information to draw any conclusions in my opinion. However, for as much as I can guess what is going to happen I think we'll be seeing more instability on the short-term, but in general the long-term picture still looks relatively ok, so in that sense I would indeed state that there is indeed no price bubble. I don't think getting into a gray area of "chances on price bubbles" is very wise in this case - because it more or less indirectly implies that external factors are required for the price bubble to become relevant. Something is a price bubble or it is not, there is nothing inbetween in my opinion.

 

 

 

However, if we go back in time then I would be well willing to defend that there was no chance of them being a bubble during the same period that I defended that they'll always go up on the long-term (under the relevant assumptions I make for that statement). I think you and qeltar would have still argued that rares are a price bubble during the past years as well, something I consider invalid and something you now seem to back down on a bit as well.

 

 

 

Bottom line on my part is that rares would not have imploded on theirself in the past years or any future extension of the situation of the past years, assuming that there would have been no fundamental changes to the game or to the assumptions, hence them not being a price bubble. This statement is theoretically defendable under the assumptions that are made and thus I don't believe there is anything to discuss about it - even though we have been writing pages of text about it here.

 

 

 

p.s. -- Imagine that tomorrow people wake up and a lot of them decide that rares simply aren't worth much to them, that their lack of utility or aesthetic value makes them worth 200k, not 200m, their rarity notwithstanding. I think in our earlier discussions I felt that this kind of change of opinion would mean that rares had been in a price bubble.

 

 

 

Indeed, before you would have argued that such a "sudden" change in people's utility valuation of rares would still imply that they had been a price bubble. Although, I have to say I find this one a bit tricky (since you can somewhat say the same of when people "suddenly" decide that the stock markets are overheated - which has certainly happened in the past and definately caused market crashes, which were still price bubbles anyway).

 

 

 

I think this issue there comes from the fact that people don't just "suddenly" decide that something is worth less, but there has to be an external factor that lead to that. In the example you give below here, it is a "new set of living standards" (which means there is an external cause that resulted in a price crash, but which clearly does not mean it was price bubble before the new living ideology) versus "a longer realization that the stock markets were actually a price bubble" which "suddenly" (but actually not, since people (unconsciously?) knew about it if they didn't ignore many of the signals that were there) expresses itself in a panic selling on the market, hence it still being a price bubble.

 

 

 

I'm not sure I still think that to be true. If many people decided living outside was preferable to living inside, due to some persuasive new religion or something, then real estate prices would certainly go down, but I wouldn't agree that that would imply that the previous real estate prices had been a bubble.

 

 

 

Anyway, I am very glad you now seem to realize that can happen to anything, which would hence make everything a price bubble, something that is obviously not true.

 

 

 

So to conclude, it is very important what external factor is causing a "sudden" crash: was it or was it not related to a possible price bubble.

 

 

 

So in that respect you have convinced me, I'm just not sure of what.

 

 

 

I think I convinced you that if an external and unrelated change is required for a certain item to crash in price, then that does not imply it has always been a price bubble (or that it had been a price bubble at all). Hence my hammering on the invalidity of concluding that an item had a price bubble if a certain change causes its price to crash. To be complete: on the other hand we generally can't completely exclude it was not a price bubble before the change either.

 

 

 

I mean, if rares go down 90% tomorrow, without a relevant update by jagex, we're still going to call that evidence that their price had been in a bubble

 

 

 

If rares go down 90% tomorrow then I expect that a dupe happened :P, but ok, yes if that would happen that would currently still imply that they were a price bubble - it's not going to happen anyway. :P

 

 

 

I think I'm running into a category error somewhere in the common conception of mass behavior, perhaps I'll figure it out eventually.

 

 

 

Well I personally think the error lies in the wrong causal conclusion of the effect of a possible update.

[anonymouse_]

Made 50M+ in 1 day; so much for merching being dead :roll:

[no_way2go]

All those players selling their santas were just stupid... if every santa owner hold on to it till january the GE price wouldn't have changed and they would still be 22.5M...

 

If you got a santa hold on to it or sell it ABOVE the market price so prices go up again... there is no reason to sell for any lower.

 

Summoning isn't going to be an expensive skill (told by Jagex) so cash for it shouldn't be a big problem.

[pamzheng]

This is for two main reasons, first off, the balanced trades that will come in January will heavily slow down the pace of the rising prices for rares, partially lowering their value. Secondly, it's just Christmas, and Santa Hats have started dropping after the rise they got these times before Christmas, and that influences the rare market aswell.

[Umega]

I think they have gone down in price mostly because they are no longer popular anymore. Many people now want the new, more useful and uncommon items, like many TT items and God Wars items. Another big factor would of course be the GE. It's sad to see rares not being popluar anymore. :(

 

 

 

I'm personally holding on to my rares.

[quitthegame]

 

I currently don't want to make any definite statements on the long-term, because we simply do not have enough information to draw any conclusions in my opinion. However, for as much as I can guess what is going to happen I think we'll be seeing more instability on the short-term, but in general the long-term picture still looks relatively ok, so in that sense I would indeed state that there is indeed no price bubble. I don't think getting into a gray area of "chances on price bubbles" is very wise in this case - because it more or less indirectly implies that external factors are required for the price bubble to become relevant. Something is a price bubble or it is not, there is nothing inbetween in my opinion.

 

 

 

That's not what I mean... I'm not saying that a price bubble is a quantum effect, where the probabilities don't resolve until we take a measurement and collapse the waveform-- although I'm not denying that either. I'm approaching it with the idea that it's too complicated for us to fully understand, so I can temporarily grant your statement that something is either a price bubble or not, and still estimate the uncertainty in our specific evaluation, right? I don't see that as getting into a gray area, in that in my mind as soon as we start talking about phenomena so complex that we have yet to fully understand them, we're already in the gray area. Seriously, do you think your evaluation is 100% accurate, even though the market clearly exhibits chaotic behaviors?

 

 

 

I think I convinced you that if an external and unrelated change is required for a certain item to crash in price, then that does not imply it has always been a price bubble (or that it had been a price bubble at all).

 

 

 

I thought we were done with the "required". For any specific instance, how could one prove that the an external change was "required", not just a catalyst for a preexisting readiness to crash? Again, you're right back in the gray area of subjective evaluation.

[agamemnus]

 

I think what Duke Freedom was trying to say is that, given no change in gameplay mechanics, the possibility that there was a bubble decreases over time, and over such a long timespan (in RS terms), it was not a bubble. Of course, we have to agree what a bubble is in the first place. I will define it as such: an interval of time throughout which the value of an item is largely based on the demand of those who want it solely because of its value (speculators). It's a recursive definition.

 

 

 

I don't accept that definition. If you refer back to my earlier posts, you see that I reference findings in which bubble-type activity was generated in experimental simulations without the influence of speculative interest. I'll give the citation here: Lei, Vivian, Charles N. Noussair, and Charles R. Plott. 2001. "Nonspeculative Bubbles in Experimental Asset Markets: Lack of Common Knowledge of Rationality Vs. Actual Irrationality." Econometrica 69:831

 

Well, that very same paper defines bubbles as "trade in high volumes at prices considerably at variance from intrinsic values." I couldn't find King's paper on JSTOR, google, or anywhere else, so I can't really say anything with 100% certainty on this, but: the "intrinsic" value is too broad a definition. Intrinsic value could simply be defined as the current market value, assuming market is efficient, so clearly there has to be some definition of what the difference between intrinsic values and market values is, and how it is caused. This is why my definition makes a lot more sense when trying to explain what a bubble is. And clearly, there are speculators: anyone who will sell the item above the price of the intrinsic value is a speculator.

 

 

 

 

 

 

I'm not aware of what significance the 'probability' of there being a bubble has to this discussion.

 

In summary, I said that the longer a potential bubble goes on, the likelier it doesn't exist.

 

 

 

 

 

 

I'm not trying to estimate the probability, I'm just saying it is nonzero.

 

 

I am not saying it is zero or trying to force you to estimate anything... :-k

 

 

 

 

The way that people talk about rares' future value, makes me 'feel' that the market is prone for a crash-- at least that was true until recently-- but I certainly wouldn't say that it's a 100% chance that it is ...

 

Again, the two factors I cited: the intrinsic value due to increasing "immature little children" in the market being persuaded down, the intrinsic value due to decreasing supply being persuaded up.

 

 

 

 

 

 

I've repeatedly referenced the fact that RS2 won't last forever, and when Jagex announces that it's ending in say 3 months, there's a very good chance that the value of rares will plummet, but I'd be hard pressed to argue that that would prove that the rares market had been a bubble.

 

 

I agree, but you didn't say why, so I'll help. I suppose more people will want to have the super-expensive weapons to try them out instead of having rares that basically do nothing, so the rares price will plummet upon such an announcement. I also agree that it says nothing about whether there was a bubble -- the intrinsic price would simply fall way down in this case.

 

 

 

 

 

 

One last point-- Consider the possibility that the rares market became overheated, their value overshot the intrinsic mathematical value, for a period of time. Then, certain events over the past 2 years held the prices down, even as rares continued to leave the game driving up their scarcity, and the money supply continued to increase over time. It's not beyond the realms of possibility that rares were an a large bubble 2 years ago, but as their price held steady or trended down slightly, that their mathematically inherent value continued to go up to match their market value, ending the bubble peacefully. I'm not saying I think that's the case either, but's it certainly possible.

 

Yes, it's possible and I would say probable if Jagex had released very good and very rare items (weapons/armor/etc.), as few people would have traded their rares even as prices fluctuated (at the time when the rares shot up), so basically the market was controlled by a few people who had been trading most of the rares that were in play.

 

 

 

If, however, a lot of people had tried selling the rares at the same time (trying to get that extra special weapon), they would not have found buyers. It was almost a ridiculous exercise to trade rares on the forums, and world 2 offered a large buy/sell price difference. Lack of liquidity in a market is the first sign of a bubble bursting, but it didn't get so far because the intrinsic value was very high for a lot of players.

 

 

 

Again, I think what was fueling the price rise was the fact that at the time the rares shot up, there was very little alternative to spending your cash on anything remotely as good. As my theory goes, now there are many things one can do with 300M instead of buying phats, but at the same time there are a lot fewer phats on the market, so still no bubble.

[aglips]

I think they have gone down in price mostly because they are no longer popular anymore. Many people now want the new, more useful and uncommon items, like many TT items and God Wars items. Another big factor would of course be the GE. It's sad to see rares not being popluar anymore. :(

 

 

 

I don't know how you can say that rares are not popular anymore. With the drop in prices, more people are able to afford them now.

[Beaumonde]

No. In January the unbalenced trade update will go into effect. So, I'm assuming since no one can merchant them in the near future, merchants have gave up with rares, thus, causing them to "crash" in price.

 

 

 

They will still be worth allot, they just wont be merchantable for more than 3k a trade now so merchants have given up trying to merchant them so now only the people who want them are buying and the demand has gone down. Simple supply and demand.

[Conan1001]

No. In January the unbalenced trade update will go into effect. So, I'm assuming since no one can merchant them in the near future, merchants have gave up with rares, thus, causing them to "crash" in price.

 

 

 

They will still be worth allot, they just wont be merchantable for more than 3k a trade now so merchants have given up trying to merchant them so now only the people who want them are buying and the demand has gone down. Simple supply and demand.

 

 

 

I never said they won't be worth a lot. What I was implying was that since less people are trying to buy rares, there's less demand for them.

[Adam007]

No. In January the unbalenced trade update will go into effect. So, I'm assuming since no one can merchant them in the near future, merchants have gave up with rares, thus, causing them to "crash" in price.

 

 

 

They will still be worth allot, they just wont be merchantable for more than 3k a trade now so merchants have given up trying to merchant them so now only the people who want them are buying and the demand has gone down. Simple supply and demand.

 

Using the GE some items like blue party hats for example will have up to 50mil price ranges, so I don't get why people think you won't be able to merchant rares anymore.

[quitthegame]

 

Well, that very same paper defines bubbles as "trade in high volumes at prices considerably at variance from intrinsic values." I couldn't find King's paper on JSTOR, google, or anywhere else, so I can't really say anything with 100% certainty on this, but: the "intrinsic" value is too broad a definition. Intrinsic value could simply be defined as the current market value, assuming market is efficient, so clearly there has to be some definition of what the difference between intrinsic values and market values is, and how it is caused. This is why my definition makes a lot more sense when trying to explain what a bubble is. And clearly, there are speculators: anyone who will sell the item above the price of the intrinsic value is a speculator.

 

 

 

If we assume market efficiency, so that market value = intrinsic value, then aren't we saying that bubbles are impossible? That's why people that argue under theories of efficient markets always disclaim that there are rare exceptions... because bubbles are historical fact. So since we're currently discussing bubbles, it would be most unwise to use a theory that specifically disclaims that it doesn't apply to them. In experimental markets such as the one in that paper, intrinsic value is a calculation based on future earning potential. Obviously, that isn't useful for phats, but the point is that if a bubble can form absent speculation in a market where the intrinsic value is well-known, then clearly in a market where the intrinsic value is a murky concept based on rarity, a bubble can form similarly, absent speculation. That makes your definition unacceptable. It's a good definition for a certain type of bubble, though it's clearly incomplete, but I'll concede you could conduct a useful discussion of that type of bubbles using it. If you were trying to really understand bubbles though, that definition would be a bit circular, it would presuppose too much. You couldn't objectively discover all the causes of bubbles, if your definition presupposes one specific cause, right? It would at least hinder your effort.

 

 

 

I agree, but you didn't say why, so I'll help. I suppose more people will want to have the super-expensive weapons to try them out instead of having rares that basically do nothing, so the rares price will plummet upon such an announcement. I also agree that it says nothing about whether there was a bubble -- the intrinsic price would simply fall way down in this case.

 

 

 

I had this in mind and also a general kind of panic, it's interesting to think upon what would happen if no such expensive weapons existed... and what the rares market would look like currently if no such expensive weapons/armor existed. I'm not sure the rare prices would go down after all solely based on panic, on second thought.

 

 

 

If, however, a lot of people had tried selling the rares at the same time (trying to get that extra special weapon), they would not have found buyers. It was almost a ridiculous exercise to trade rares on the forums, and world 2 offered a large buy/sell price difference. Lack of liquidity in a market is the first sign of a bubble bursting, but it didn't get so far because the intrinsic value was very high for a lot of players.

 

 

 

This brings to mind the common objection against the GE's slow updating, that it would impede liquidity. The question is would artificial limits to liquidity make price crashes more common, or is that not the way the causation goes? Not that I'm really against GE features causing prices to periodically crash, sounds more fun to me :P