tag:blogger.com,1999:blog-4935547461251083572.post519068004125994916..comments2022-11-11T10:12:34.497-05:00Comments on Player Vs Auction House: Sunk Costs & InvestmentAzurielhttp://www.blogger.com/profile/16581263347888757710noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4935547461251083572.post-20781929544195159192011-03-03T23:30:07.510-05:002011-03-03T23:30:07.510-05:00@Brent: First, my apologies for the confusion. I f...@Brent: First, my apologies for the confusion. I felt even as I was writing the post that I was not quite expressing the idea as clearly as I would like. Hopefully this attempt will be a bit better.<br /><br />The first part is that I am genuinely curious as to how other people would look at this sort of scenario, e.g. buying cheap herbs and making mana potions out of them, then finding out herb prices went way up the next day.<br /><br />The answer you gave - the cost being set when you make the potion - makes intellectual sense to me, but I find myself almost never operating under that mind-set. What I routinely find myself operating under is the "IRL gasoline" pricing model. <br /><br />Two weeks ago, I saw the price of gas in my town literally increase $0.30/gallon overnight. Did the cost of drilling oil out of the ground go up overnight? I'm guessing no, but I could be wrong. What probably happened is that people were suddenly willing to pay more for oil, which would in turn make restocking gasoline more expensive. The cost of turning the oil into gasoline was already sunk, but we see gas prices pegged at fluctuating oil prices all the time.<br /><br />Obviously the Whiptail::Mana Potion relationship is not directly analogous to Oil::Gasoline for various reasons, but hopefully it makes a bit more sense as to how/why a person could view a Mana Pot's profit as being pegged to daily herb values.<br /><br />As for the point of it all... there isn't one <i>per se</i>. I wanted to provoke some thoughts and kind of work out through words my own thought process, which is somewhat contradictory if you haven't noticed. :P I "solve" the discrepancy between what I know intellectually and how I feel emotionally by going a third way, which... I could have probably left out of the post since it's not particularly relevant to anything, and confusing besides.Azurielhttps://www.blogger.com/profile/16581263347888757710noreply@blogger.comtag:blogger.com,1999:blog-4935547461251083572.post-85463751750904302682011-03-03T21:24:18.664-05:002011-03-03T21:24:18.664-05:00Hey Azuriel,
Awesome job, love the blog!
My comm...Hey Azuriel,<br /><br />Awesome job, love the blog!<br /><br />My comments on today's post, food for thought:<br />http://wowmidas.com/2011/03/03/is-profit-a-moving-target/WoWMidashttp://wowmidas.comnoreply@blogger.comtag:blogger.com,1999:blog-4935547461251083572.post-67542073123286278412011-03-03T11:59:24.352-05:002011-03-03T11:59:24.352-05:00I dont really get what you are trying to say here....I dont really get what you are trying to say here. Maybe I am just not reading what you are saying correctly but if you have bought your items and turned them into Mana potions....you have your cost of mana potions. Your profit will be what you will realize when you sell them. Regardless if you sell them today or tomorrow. If you leave them as herbs...then your issue is what gets you the most value for your mats. Its a different question. It doesnt change your profit from mana potions but it may mean it is better to resell the herbs than it is to make mana pots.<br /><br /><br />Anything else is dealing with an assessment of net worth given fluctuating market conditions. No different than the stock market. <br /><br />As to say your point on Obsidium Ore. If it sold for 75g 2 weeks ago the question today is what is happening with supply. Did something happen to bring the price down permanently or is it just a temporary decline. Obsidium ore should have a floor price of 54gold. People still sell it for 40g a stack on my server. At times it will sell for 100gold a stack. It is just a function of supply and demand. I buy when it is low and sell it when it is higher. My profit will not materialize until I sell it or transform it into another item that I sell.<br /><br />This is all crystal clear to me as my background is accounting. I know what you are getting at but I think I get lost in your post some where as to the point. Many people do not understand the concepts of sunk costs, net worth today, and realized net worth.Brentnoreply@blogger.comtag:blogger.com,1999:blog-4935547461251083572.post-44774577802721543962011-03-03T10:35:10.075-05:002011-03-03T10:35:10.075-05:00Some great points here, Azuriel. In the wikipedia ...Some great points here, Azuriel. In the wikipedia article, when they were talking about a pharmaceutical company spending money on R&D, powerleveling a profession immediately came to my mind.<br /><br />I suppose a more accurate view of wealth would include both liquid gold and current market value of all available assets. If you have a guild bank full of whiptail and the price drops one day, your wealth takes a hit. If the prices comes back up, great. If you turn that whiptail into something that has more value, great.<br /><br />The view of investing within the game should likely look something like this: If you spend 1K on something at 50% of its current market value, you might have 1K less liquid gold, but you have something worth 2K, so you actually gained 1K in your overall wealth.<br /><br />Also, I believe that the "Big Picture" addon does precisely this - totals your liquid gold, your inventory, and the sum of all the auctions you have up. Maybe I will go grab it tonight....<br /><br />Thanks again for such an excellent post.Anonymousnoreply@blogger.com