Ended

Risk vs Reward.
Ability to handle volatility.

Someone with unlimited currency can easily 6-link say 100 items for 90000 fusings total (or whatever the average ends up being), and then sell them for for base price + say 1000 fusing each.

However the consumer may only have 1500 fusings, and paying 1000 is still cheaper than 1500 from the masters, and he may not want to take the risk of using the fusings himself and missing out.

So the seller is making a profit of 100 fusings per item, for taking away that risk of NOT getting a 6-link.

Corrupted items works the same way.

Btw

Real life also works the same way.

Insurance companies makes profit off you in exchanging for removing the risk of you going bankrupt if something major happens.

Property investment funds takes a commission but helps lower the risk of you losing all your money if you go through them instead of having enough money to buy just 1 property and hoping that 1 does well.

Your view of how easy it is to make money with little effort as long as you have enough money to begin with is exactly how this world works unfortunately, and why the rich get richer and the poor get poorer. (Yes i just opened up another can of worms)

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candoerfer wrote:

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dickhole_mcghee wrote:

[...] I'm pretty sure some people ITT, perhaps not even aware of the actual terms, are trying to address the concept of the Expected Utility Hypothesis

If you want to apply decision theory to this topic it basically comes down to this:
People that have enough wealth to compensate for some crafting losses are able to act accroding to expected utility. While the outcome of a few crafting projects migth yield negative returns, the expected outcome of such projects is always positive.
Players with very little wealth however are much more risk averse and are more likely to decide e.g. based on the maxmin EU. Since they lack the wealth to do many crafting projects in succession they are not able to act according to expected utility, but will conisder the minimum payoffs in a worst case scenario. Since failling a linking project can easily burn all your cuttency, purchasing the desired item directly is far more attractive for those players.

Well I DON'T want to apply decision theory or any tangential volatility reduction approaches, and I don't think ESpoiler wanted to either; my point was that the people arguing with him DO WANT TO whether they realize it or not. And that's fine, even though I believe any suboptimal-EV approach isn't practically necessary with this specific topic.

The thing being overlooked in this debate, the thing causing the arguments, is that if somebody presents a full-Kelly approach, and somebody else says that is too much volatility for them and they'd readily sacrifice expected value for volatility reduction, even going as far as a full minimax decision (assuming a minimax decision can be quantified properly in this scenario, which I'm not sure it can... but it can get close in a practical application) and giving up a sizable amount of EV... neither side is "wrong"!

ESpoiler presents the ideas for getting ALL THE EXALTS and other players feel it's too volatile, and both stances are correct mainly because there are so many mathematically unquantifiable intangibles that affect a desire for volatility reduction... Loss Aversion (http://en.wikipedia.org/wiki/Loss_aversion) really turns everything on its head.


p.s. Btw I think you meant EV and not EU in your post but I get the idea and am not disagreeing.

This game has went way from the point of playing...it's more trading than actually killing things. Sad. Moving on...

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MourningBlade wrote:

This game has went way from the point of playing...it's more trading than actually killing things. Sad. Moving on...

I'm killing things as I read the thread. I just punched a voidbearer right in the snout.

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wooli wrote:

...

Btw

Real life also works the same way.

Insurance companies makes profit off you in exchanging for removing the risk of you going bankrupt if something major happens.

Property investment funds takes a commission but helps lower the risk of you losing all your money if you go through them instead of having enough money to buy just 1 property and hoping that 1 does well.

Your view of how easy it is to make money with little effort as long as you have enough money to begin with is exactly how this world works unfortunately, and why the rich get richer and the poor get poorer. (Yes i just opened up another can of worms)

I don't want to put words into ESpoiler's mouth, but I believe his view of what constitutes "enough money" is far less than people believe.

In regards to the insurance company and property investment fund analogy, ESpoiler is saying that there's a huge market inaccuracy/flaw when almost anybody can start their own insurance company or property investment fund. It's fine to disagree but I believe that's the point and the proper analogy.

Like, in an IRL application, if somebody tried to sell you insurance and you responded with, "yeah, no thanks, I started my own insurance company in my garage with 100 BUX start-up capital, and it's going pretty well so far," it would cast some light on a huge flaw in the system.

(I know there are those infomercials talking about the things "the fat cats in washington don't want YOU to know" but in reality you can't just start a mom-and-pop insurance company in your garage)

.

Yeah i totally agree on the 5-6Linking thing, i guess most people havent read
the patch nodes, the chances for 5links went up + the Vorici Shit.

Its so ridiclous how often you get a 5link these days i get a 5link like
every 50-60 fusings so for and even 6linked 2 Items.

On Onslaught you were happy to get a 5link after like 3ex=90c=180 Fusings
and a 6link was dream, no master shit there, total rng

My way of funding my chars is finding a lot of uniques with specific methods
and that drops me coils/cloaks/bellys from time to time and i always 6soxed them
and 5linked them caus for like a really low maybe percentage of loss i get a high
chance to make even more profit and every link try has sold out for me so far

Imo it makes the game boring to see so much 5-6links and making so much
exes had made trading boring for me, caus i have all the gear i need for my chars
and people dont use uncommon things anymore or craft them like high es chests/circs

A belly for example has no worth to me, its an common item worthless imo
I once bought a wings for 2c used 2 jewelers + 4 fusings and got a 5link ...
so its worthless

imo what has a worth is something like this



That shit cost me like 250 Chaos orbs, and for me its worth a lot caus
u dont get that highes + tripple res often and theirfor noone could make
me an offer that i would accept caus it would take me i bet like 1000 more chaos orbs
to get a smiliar


just a bunch of no brainers running arround with coils/cloaks/bellys

now i have stopped doing that shit if i get a coil i sell it for 0,5-0,75ex so that
shit is out of my face and i dont have to deal with it and can focus on playing the game
not worth it imo anyway, caus what do i need more exalts for? i got enough to found my next
10 chars ...

sad thing is tho, most of the people who extimate the value wrong and get trapped those
webs are the casual gamers who i bet even havent made it to the forum once and dont know this shit, otherwise i guess noone would pay that price for the coils/cloaks/bellys shit


ah and yes as a matter of fact i stopped buying fusings caus the ratio to chaos is lulz
imo if i do a 66 map with a tiny bit of mf with 6 portals i carry out 6x full rare inventory
which is ~4alts per = total 24 alts = 12 jewelers = 3 Fusings and most of the time i find
like average 1,5chaos in pure currency which makes Fusings Chaos 2:1 for me no matter what
anyone writes in the trade chat ^^

like the real world, only calculated risk takers get ahead.

POE is very similar, you get rewarded for taken calculated risk 'over the longer run'and your pockets should be deep enough to soak up the the volatility such as a bad streak of rng

However one risk the OP didn't mention is the market liquidity risk, he is assuming players' items are quite readily bought and sold, in this context that means the extra 5l u produced while trying to 6l has to be easily sold and sought after. Hence players should really choose a liquid market.

The longer you can survive the chance of hitting jackpot infinitely gets to 1

.

Link items for 3 ex. Sell 5Ls for 2 ex.
Assuming 6L:5L odds 1:10, spend 13 ex to get 6L.
You can buy/sell that 6L for 20 ex.
7 ex profit for spending time buying jewellers/fusings/uniques and selling 10 5Ls.

Fair enough imo.

2 days of trying these, and some 5Ls later, I was happy to buy 6L for 20 ex and get back to the game from the market.

The seller immediately added another similar 6L to his shop. Good for him. I'm glad I could buy 5L early in the league and 6L late and enjoy the game.