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Role Playing (Games) The Almighty Buck

A Chat with EVE's Economist 94

Earlier this month Dr. Eyjólfur "Eyjo" Guðmundsson, the newly hired EVE Online economist, released his first market report looking at the mining and trade of minerals within CCP's massively multiplayer online game. I had a chance to speak to Dr. Guðmundsson at GDC Austin, to further understand why it is that an online game needs an econ professor on staff. We discussed his work on the mineral information, future plans, the reality of trust in an inherently hostile world and why that makes for a bad banking environment, and a few words on player communication from CCP CEO Hilmar Petursson. Read on for the full interview.
Slashdot: Just so we can understand a little bit of the background here, how did you get hooked up with the CCP folks, and what is your interest in EVE Online?

Dr. Guðmundsson: Originally I was hooked up with the CCP group through a conference on experimental economics where we were looking at how to use experiments on how to improve natural resource management. What does that have to do with CCP? They showed up at the conference, and introduced the game to researchers as a potential platform for testing and tracking social trend. I fell for the concept. What I fell for was the single server concept. Everyone in the game world is participating in the same experience. As the game grows the complexity and the fun of it grows exponentially. You can actually see shortages of goods, scarcities of goods in the game world. If you want some material, you need to take steps to go out and get it; you can mine it, you can refine it, but there is a time element involved in obtaining it. There's an element of effort involved. You can also lose things, if you make poor decisions, if you go into an area where you can't defend yourself you can actually lose what you've been building. All of these components are build into the world, and when you make decisions in the game you're making many of the same decisions you make in your daily life. It looked to me like a perfect world to do research on.

Slashdot: I know your first blog report was on mineral prices; what other areas of the economy are you finding interesting? What elements of the economy are we likely to see written up in the future?

Dr. Guðmundsson: Well, the whole macroeconomics of EVE are very interesting. Trying to figure out inflation, trying to figure out the monetary supply, trying to figure out the overall trade patterns ... all of these macroeconomic trends are of interest and we'll be working on those over the next few months. I also find it interesting to look at these resources, to think about how corporations and alliances are run. We can see how different corporate cultures have helped in obtaining different goods.

Slashdot: In previous interviews you've spoken of economics as a source of entertainment. I'm wondering why you see people viewing economic information as amusement. Isn't this kind of dry stuff?

Dr. Guðmundsson: I think it's entertainment for people because it helps to put things into context, and it helps to put yourself in a place within that context. You can identify where you are economically. You need the information to make decisions about your own life, but you also want to know things on a broader scale. "Oh, this guy or that guy gained a billion dollars on the stock market, or he lost a billion dollars on the stock market." It's just news, and we can say that it will interest people who are generally curious, and also for personal gain.

Slashdot: Beyond the blog entries, you're going to be doing quarterly reports, correct?

Dr. Guðmundsson: We'll be doing quarterly reports, and we'll have annual synopsis. The first report is due out before fanfest, by late October. Fan Fest is in early November. That one will focus on the macro environment, try to set the stage for future computations. We see it happening that way; in the first one we give sort of general indicators, and in the ones to follow we update the information that we have and we imagine it has the potential to grow quite a bit over time.

Slashdot: Obviously you can't go into details, but are there already any surprising trends that you've found in your research? Anything you weren't expecting?

Dr. Guðmundsson: Well what I've been looking at in terms of the mineral market, what has been really interesting to see, is how efficient the market is at disseminating information. If something happens in the game you see in the market numbers very soon. We do not participate in that market, it's a completely player-driven market. That makes it even more interesting, to see how effective and efficient a market it is. It has all the same laws that any market has in real life. From what I've seen so far, I find it very interesting to see how effective the market is, and I'm looking forward to seeing how other markets compare to this one.

Slashdot: This may be a good question to include Hilmar in. What is it about EVE that makes those communications so efficient, that allows market information to travel as quickly as it does?

Hilmar Petursson: I would say there is a fundamental difference to the EVE economy, something you don't see in the economies of other games. People are making purchase decisions in a matter of life-and-death environment. You are trying to outsmart your competitor by making an informed logistics and market-based decision, and the more data you have the more efficient your decision-making is. Currently we have offered price trends for items, as well as volume and those sorts of statistics, people have been using this to make purchase decisions on items. As the economy has grown larger, though, there is more of a need for macro-level understanding of economic data. Just as when you have a relatively small country, you can get by with having the market provide the microeconomic data, when the scale increases you need to see the macroeconomic data so that people can see the overarching trends. Consumer confidence, interest rates, money supply, these factors become more and more important as EVE Online grows and the market becomes more efficient.

That's really what the game stands on, the whole thing is tied together by the market system. We have various disconnected systems like mining, manufacturing, corporations, and combat, but they all tie in at the bottom with the market system. We initially spent a lot of time when the game was first made, making sure that we had an abstract, efficient, accurate market system. We made many difficult decisions where we sacrificed 'correctness' for simplicity or ease of use. It is a fairly complex thing, but it has allowed us to evolve the game quite rapidly up to this point. That said, we have been seeing more and more of a need to get professional insight into what is happening on the macro level. We've seen immediately how responsive the player base is to it. They've been looking for these kinds of insights for some time now.

Dr. Guðmundsson: I would like to add that the fact that the information is distributed so quickly makes it a great model for other market systems. You have smart players trying to outsmart each other, which sort of means that as soon as information is available someone is using it to try to gain the upper hand. We can say it's also due to the smart play styles of the playerbase.

Slashdot: Has the response been fairly favorable to the first report?

Dr. Guðmundsson: It has been most favorable. Many people have thanked us, and like to see the trend data that we have. I think most of the players would like to see more in-depth analysis, and I think that's going to be the most beneficial work we can do. The only thing is, it will take time before we can provide them with the kind of analysis we'd like to see. Then there are all the people who would like to get advice about what they specifically should do. As with any other economic advice, though, if I knew what a specific player should do I would know everything. This isn't that kind of advice. This is for people to make their own smart decisions about what to do. We can't tell people what they should do, but we can say what happened and why it happened.

Slashdot: I have read that other research groups have an interest in the game along these lines, and I was wondering if you've had any contact with other groups about studying EVE for other subjects. If you have, what areas of study will these groups be looking into?

Dr. Guðmundsson: I think generally there's a number of academic groups interested in research inside of gaming worlds. I think this is a very new phenomenon, but the potential for research in many fields is very great. People have talked on the web about looking into EVE from political, sociological perspectives, science research, looking at the democratic elements of the game ... it all boils down to the point that within the game world, because of its design, people are behaving in a way that is interesting to the world we live in. Research done there could be used to better understand how people behave in the real world, within certain environments.

Slashdot: Earlier you spoke of how PvP is a driving force in the economy because of the requirement to make smart decisions, and the drain on resources from combat. What are some other effects on the game's economy that result from phenomenon?

Dr. Guðmundsson: Well, PvP is essentially the way that resources are consumed in EVE. In order to operate a fleet, to outsmart your opponent, you need a lot of resources. In order to get these resources you get them in the most intelligent, efficient way possible. You need to get people to mine for you, you need people to make the right weapons for you, in as short a period of time in the right quantities. Specialization among the players is almost a requirement in order to get the best use out of time and resources in games. We have whole corporations in game that focus on mining and shipping, and there are individual traders who think they know what demand will be for in the near future; they do arbitrage trading all over Alliance space to the alliances and corporations.

Slashdot: Another element you've spoken on previously is the lack of trust players have with each other, and the problems that presents when trying to form something like a bank. What's your opinion of setting up a trusted bank from the CCP side?

Dr. Guðmundsson: From my perspective a CCP-run bank doesn't really matter; what really matters is what does the playerbase think. What kind of services do they want? We see players trying to fulfill those services, within a limited framework in terms of the trust. Because they're doing it, there's obviously an interest there. If we were to do it we'd have to examine how to go about that the right way. That's really how the banking system was established in our world, and that took a couple hundred years to develop before we had a system people could trust. What we need to do is come up with a system that's supportive of gameplay, that can survive the problems of many users.

Slashdot: Since you began examining the economy, have there been any issues or problems you've discovered in the marketplace?

Dr. Guðmundsson: At this point we haven't come across any issues that are serious problems for the gameplay. As I said before, we want to have hands off on the economy as much as we can. When we look at the issues that are potential problems, any treatment we would do is very very slow, and very very light. Up to this time, since I've been with the company, there have been no issues that really impacted the gameplay. The market is incredibly player-driven. It's an incredible state of affairs to see.

Slashdot: Looking at the different styles of gameplay (trading, mining, PvP), which is most efficient in economic terms?

Dr. Guðmundsson: Well, you can never really say beforehand which type of playstyle is more profitable, because it changes all the time. In order for you to understand which is most profitable you'd have to make your own predictions as to what is going to happen in the future. Profitability of a certain industry is based on expectations of future performance. If you knew that there is an upcoming war between Alliances in a certain area of the galaxy, that would tell you that it would be profitable to become a trader in that sector for the near future. If they are in need of a lot of supplies for a short period of time, that will put a squeeze on resources in that particular area. Then you'd have to follow what's going on and keep track of what's happening on the internet very closely.

Slashdot: Do you have much of an interest in actually playing the game, or is the research side of things mostly what interests you? What is your preferred style of play?

Dr. Guðmundsson: Oh absolutely. By necessity I will always take a low profile, try to just understand the gameplay as much as I can. I greatly enjoy talking to people about the game a lot, listening to peoples experiences about how they perceive the game is quite interesting. We talk a lot about the gameplay at CCP too, of course, long into the night. It's sometimes said that in Iceland there are 300,000 people, and there are 300,001 opinions. From our EVE community of 200,000 people, it certainly seems like there are 200,001 opinions on exactly what is happening. That's really fun to be able to interact with.

Basically I'm just trying to understand all aspects of the game, but of course I find the trade and marketing aspects of the game most interesting. It's also fun to go out there and shoot at somebody, of course.

Slashdot: Is there anything in specific about your research that you'd like to share with EVE players?

Dr. Guðmundsson: Generally speaking I'd like to get the message to our playerbase that I really enjoy all comments that have been put forward. I come from an academic community, and criticism is really the driving energy behind doing something new. So, I'd say just let the comments flow. Let me know what you like and dislike about the research, what you'd like me to do in the future. We are still in the early stages of understanding the economy, though, so over the next couple of months we will be putting forward mostly historical information to set the stage for future projects. I really like them though; please keep them coming.

Dr. Guðmundsson: Thank you sir, very much, for your time.
This discussion has been archived. No new comments can be posted.

A Chat with EVE's Economist

Comments Filter:
  • It could, but (Score:3, Interesting)

    by everphilski ( 877346 ) on Thursday September 13, 2007 @01:12PM (#20590617) Journal
    Uhm, wouldn't a multiple-server environment actually be more useful as far as science was concerned? For things like control groups and stuff?

    It could. But looking at a game I'm familiar with (EQ), the price of platinum and items in-game is about constant across the board. Notable exception being (1) the PvP server and (2) the 'combine' server [which is a server that opened not long ago, starting with the first expansion. New expansions are unlocked as milestones are met. They are about 3/4 of the way through...]. The only way then to really get some interesting data is to start varying things - change drop rates, only try to enforce anti-farming and anti-platinum sales on certain servers, etc. People will figure this out and move. Which, I guess, could be research in itself (most of it being no-duh as to what people want) but would wreck your control groups.
  • by khallow ( 566160 ) on Thursday September 13, 2007 @01:17PM (#20590695)

    The bit near the end about trading opportunities between regions was interesting. The rest wasn't that interesting due to the lack of context. We weren't given many details about what major changes occured that could have triggered the changes in mineral prices. In all, I didn't find it that helpful or engaging.

    In the future, I think there's one area worthy of interest that this economist can cover. Namely, with the resources of CCP at his disposal, he can collect economic information that is difficult or impossible for players in the game to collect. For example, GDP of regions (there are somewhere around 50-60 regions in the Eve universe). Even a large network of players couldn't calculate that. What regions create economic value and what regions destroy it (in wars usually)? What regions generate the most insurance claims? That sort of thing. Look at the sort of economic figures a real country generates.

    Many players spend all their time in a single type of region (eg, "high security" where killing other players is harshly punished versus "0.0" where anything goes). The economic differences between regions (market data like prices, volatility, volume, etc) can be figured out by players, but it's usually a lot of hard work (unless Eve's API helps out here, I don't know). In any case, tell us stuff we can't figure out easily for ourselves.

  • Immortality (Score:3, Interesting)

    by khasim ( 1285 ) <brandioch.conner@gmail.com> on Thursday September 13, 2007 @01:31PM (#20590919)
    Don't forget the other key feature.

    You are, effectively, immortal. You can keep coming back. That changes the economics. Instead of a single run (life), you can have multiple runs. Without the tedious childhood and learning parts.

    Don't forget:
    http://video-games.listings.ebay.com/Internet-Games_Eve-Online_W0QQsacatZ85809QQsocmdZListingItemList [ebay.com]
  • by juuri ( 7678 ) on Thursday September 13, 2007 @02:50PM (#20592391) Homepage
    After reading the report it is surprising that this would be interesting to someone who specialized in economics. In fact EVE's single universe is what contributes to the simplicity of their market. The report makes a great deal of todo about the information spreading extremely rapidly and causing price effect changes over the vast universe in near synergy... uh duh? It's a game universe with instant communications that has very little barriers to trading across loyalities or "factions". EVE's market is simple and the macro report provided backs this up easily.

    As bad as the typical WoW market is, it's much more interesting. There are two factions who have limited ability to share things between each other without extra cost and time investment. In addition these faction markets are often vastly different in size/resources so one has a huge trade advantage (think US/China). The markets have "peaks" that are broken with major patches or content, think of them as a revolutionary tech or invention that shatters current markets (50 new points of skills or what have you == automobile/electricity). Each server can have a very distinct economy somewhat based on the overall player progression and server creation date (intelligence/connectedness of the average player). Finally many servers have economies that are driven largely by two or three individuals... while some are missing these power players. The vast difference in each server's economy seems to me, like it would be much more interesting and have much more information/knowledge to impart.

  • by jd ( 1658 ) <imipak@@@yahoo...com> on Thursday September 13, 2007 @03:43PM (#20593405) Homepage Journal
    Well, single servers with varying rates of intra-server communication should be nearly identical to multiple servers with varying rates of inter-server communication, except the modeling will be much more complex on the multiple servers. If you're unsure if the tools you are using are even going to work at all, of course you are going to want to validate them against the simpler case.

    Anyone can produce graphs, but what do you produce graphs OF? If there are N variables in the system, you can produce N(N+1)/2 graphs to describe the system. Do you go for something obvious, or by examining what is modeled, can you infer more promising areas to dig?

    In the graphs, the curve defining the number of subscribers roughly mirrored the curve defining the value of the trade, except for some scaling which allowed the ratio between the two to approach 1:1. Knowing how those two interact is going to be important in understanding inflation, supply/demand, etc. Knowing the graphs alone doesn't tell you any of this, it is in knowing why the graphs are the way they are and what will happen next that is important. The raw numbers are vital to knowing what is next, the same way you need a rising agent when baking a cake, but the rising agent alone will never give you a cake, no matter how you cook the numbers.

    The other thing to consider is that "economics" is not a single, unified field. You have people worshiping the god of Adam Smith, there are equally feverent devotees of Econophysics and Thermoeconomics. Game theorists tend to listen more to John Nash's work and are likely to have encyclopedic knowledge of John von Neumann, and so on. There is no Grand Unified Theory, there is no real attempt at producing one, and most economists you will read about or hear will assume that theirs is the One True Discipline, the rest being products of the infidels who must be destroyed by corporate jihad.

    Well, economics is the study of money, right? Wrong. To quote Wikipedia: "Biophysical economics is a system of economic thought based not on money but on laws of energy and material transformations and empirical assessments of these and their relation to money." It tells you about money, sure, but it makes money the dependent variable of the equation, reversing the conventional line of thinking entirely.

    Herein lies the problem with an economic study of EVE. It would be quite impossible for a single economist to study the system using the multitude of theories and models that exist. Most are "good enough" to get better-than-chance results a better-than-chance number of times under any system which has bounded resources and bounded latencies, or nobody would bother with them. Nobody is going to waste time using a system that is inferior to tossing a coin. Coins are cheap, degrees are expensive.

    Not only, then, does this economist not know whether the real-world tools will work, but he doesn't even know how the tools will differ in quality when placed in a virtual environment. What is "good enough" in the real world may be a disaster in a virtual one, or vice versa. All we know for certain is that his conclusions can be no more correct than the methodology he applies.

  • by I Like Pudding ( 323363 ) on Thursday September 13, 2007 @04:29PM (#20594321)
    Having played both WoW and EVE, I can say with 100% certainty that you're full of shit.

    > uh duh? It's a game universe with instant communications that has very little barriers to trading across loyalities or "factions".

    Are you high? You DO NOT SHARE INFORMATION outside of your own corp or alliance. Sometimes you don't even share it with them, because it can kill your profits. I don't know where you get your idea that there are no trading barriers either - the game is one enormous trading barrier.

    > There are two factions who have limited ability to share things between each other without extra cost and time investment. In addition these faction markets are often vastly different in size/resources so one has a huge trade advantage (think US/China).

    There are 2 markets in WoW. There is a market in every station in every solar system in EVE, and where you decide to sell will make or break you. I can make millions off buying cheap skills from a nearby university, transporting them 4 jumps to a trade or mission-running hub, and marking them up 1000%. People will buy them just to avoid spending time on the 8 jump round trip because shit does not magically end up in your mailbox.

    > In addition these faction markets are often vastly different in size/resources so one has a huge trade advantage

    It's the same way in EVE except, again, you have thousands of markets to choose from with varying levels of accessibility.

    > The markets have "peaks" that are broken with major patches or content, think of them as a revolutionary tech or invention that shatters current markets (50 new points of skills or what have you == automobile/electricity)

    Eve introduced advanced Tech II items that require player-run multi-billion ISK moon harvesting stations to be set up in PVP space. These bases require resources to run, are PVP targets, and will become defenseless when they run out of fuel. Wow bumps up the max skill level and requires you to harvest 6 dastardly vorpal leather of the kings over the course of 3 hours by repeatedly farming the same mob and use the Awl of Madness located conveniently at the bottom of Dark Thundercrotch Citadel to actually construct an item. Eve can get repetitive and stupid as well, but it's got metagame out the ass.

    > Finally many servers have economies that are driven largely by two or three individuals... while some are missing these power players

    Individuals can do a lot in EVE, but the world is just too dangerous and HUGE for this sort of thing to happen. You might be a bigshot in your home town, but nobody's ever heard of you in Lichtenstein.

As of next Tuesday, C will be flushed in favor of COBOL. Please update your programs.