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The Almighty Buck Games

Learning About Real-World Economies Through Game Economies 178

Reuters has a report about research being done on the in-game economies of MMOs like EverQuest II and World of Warcraft to better understand much larger economic situations in the real world. The games are used as case studies where researchers can do controlled experiments that they couldn't necessarily attempt if real money or goods were involved. "After studying 314 million transactions within the fantasy world of Norrath in EverQuest II, including trading in-game goods like armor, shields, leather, herbs and food, the researchers were able to calculate the GDP of one of the game servers (the back-end computer that hosts thousands of players in one world). As more people opened accounts and flocked to Norrath, spending money on new items, researchers saw inflation spike more than 50 percent in five months. 'We have seen that kind of volatility during times of war and in developing nations in the real world,' said [Dmitri Williams, assistant professor at the USC Annenberg School for Communication]. 'Our own economy has turned out to be less stable than we'd all assumed.'"
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Learning About Real-World Economies Through Game Economies

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  • Games too simple (Score:5, Insightful)

    by Manip ( 656104 ) on Sunday October 04, 2009 @12:24PM (#29635767)

    While I myself enjoy playing the MMO economy micro-game, they are far too simple to really map anything close to the real world. Or at least I should say WoW's is. Some of the less popular MMO's have very realistic economies involving business entities, more niche goods, and even a kind of country proxy.

    The examples of what the researchers have discovered also strike me as academically uninteresting (even obvious) and make me wonder if this is an excuse to play some games at work....

  • No, it can't work (Score:4, Informative)

    by line-bundle ( 235965 ) on Sunday October 04, 2009 @12:32PM (#29635847) Homepage Journal

    The problem with that idea is that the game economy is built with assumptions in mind. These assumptions will generally be based on theoretical economic models. So generally all you achieve with such experiments is confirm your built in beliefs. Chicken, egg anyone?

    A similar claim was made about SimCity when it was big, that it would teach about urban planning, but it had so many assumptions built in to be worse than useless.

    • by Jahava ( 946858 ) on Sunday October 04, 2009 @01:08PM (#29636121)

      I agree with your point; on one hand, there are a lot of data that can be collected from the economies of video games. The challenge, as you mentioned, is making that data relevant outside of the realm of that video game (or of video games, in general). I agree that the games probably can't be valid models of real economies (or cities, etc.).

      That said, I'd not be surprised if they could extract useful behavioral information out of the data. Not information about how the economy works, but rather how people act when faced with various economic events and circumstances. Players could probably be mapped to social and regional demographics by qualities such as their characters' net values, activity, and primary sources of income. Patches, updates, and expansions can be mapped to technological breakthroughs and innovations, and resource scarcity and overfarming can be mapped to depressions or natural disasters.

      There are plenty of real-world economic events that might be mapped and studied to research how the players in various "classes" react, such as:

      • Willingness to purchase (and purchase at risk) given stable versus inflated economies
      • Price fixing behaviors between autonomous sellers
      • Purchasing behaviors of players when faced with the forced obsoleteness of their assets (*cough* Blizzard *cough)
      • General life cycles and paths that any given item takes between creation and final acquisition
      • Distribution of wealth versus playtime, and how it varies under game circumstance
      • etc.

      To me, the practice seems legit (if done carefully), although I doubt any results are particularly useful by themselves.

      • Re: (Score:3, Insightful)

        by line-bundle ( 235965 )

        I would think that even the behavioral information out of the data is especially tainted. People react to situations partly based on how they understand the system. The more they play with it the more they are able to game the system. It's going to take some very sophisticated analysis to be able to differentiate between gaming the system subject to the constraints they are given, and how people would otherwise react in real life.

        Also, another critical problem is that the people who play these games are sel

    • by fermion ( 181285 )
      Absolutely, Any computer program is based on models, and those models are based on assumptions. While something like a physics engine can work because the assumptions in physics preclude most superstitions, the same cannot be said for economics.

      Economics often, for instance, still talks about the invisible hand and the rational deterministic consumer. Economics still insists that there is one or a very small number of persons that can be successful, and therefore this one or very small number of people

    • EXACTLY!!!

      The only assumption should be (should one ever wish to exist in a true economic democracy) that neither the State, nor the Corporate Fascist State, can ever monopolize land and capital.

      Think of how that would solve soooooo many of the world's problems, and America's obsession with Empire.....

    • by tmosley ( 996283 )
      Economics is different, as in this case, it is REAL PEOPLE making decisions, rather than what a computer model would assume that people would decide. You can administer a MMO in many different ways and achieve many different effects, which would create any number of economic situations. In general, since the games are marketed toward players, free markets tend to reign, as that is the only way that each player can maximize their fun (rather than being subjected to the imbalances created by central plannin
  • Limited Use (Score:5, Interesting)

    by Laminan ( 1625947 ) on Sunday October 04, 2009 @12:43PM (#29635933)

    These experiments are not as useful nor controlled as you may think. Let me break down into some experiment design principles here:

    #1 You can only generalize to the population studied

    --Thus your demographics will be that of a more computer savvy user, with leisure time. This is NOT a representative sample of a normal population. When using regression methods you will get a homogenous result only from 'game performers'. These experiments are not valid unless you can prove that there is no purposeful difference between this population and the general population.

    --It still can provide interesting insights, but any quantified data must be taken with a grain of salt

    --The population may have one net effect, but perhaps a different type of agent/actor would have an OPPOSITE or equalizing effect (games are an artificial setting)

    #2 Process defined by agency

    --Here the markets are designed by an all-seeing game developer. I don't know about you, but many MMO's I have participated in had lackluster markets due to poor UI or the mere fact that it is a new market.

    --Product innovations are limited or non existent, and users cannot refine markets based on their experiences. These days the most interesting economic studies are looking at PROCESS which is understood much less than outcome. Neo-classical economic theory does a great job at explaining outcome, but is horrid at process. That is why many market failures are not forecasted, but instead studied post-mortem.

    • by routerl ( 976394 )
      Good points, though I doubt those issues would escape people whose day-job involves economic analysis. To me, this entire trend of studying MMO economies to somehow derive real-world conclusions smells of professional self-doubt regarding the status of economics as a science.

      I know that some economists have, over the past decade or so, started performing little experiments, in the hope that this would lend more empirical credibility to their field. Of course, the main problem is scale, since getting a f
    • Re: (Score:2, Insightful)

      by dusqi ( 933717 )

      #1 You can only generalize to the population studied

      Is there any reason why a computer savvy person will act so differently than someone who does not use a computer? We're talking about making decisions based on many fundamental human drives such as self-interest, reciprocity, emotions, etc. These go all the way back through evolution.

      Anyway, currently economics spends most of its time making sweeping assumptions about the whole of humanity based on the most simple theories about what drives behaviour - so any attempt to study real people is a step in the ri

      • by lawpoop ( 604919 )

        Is there any reason why a computer savvy person will act so differently than someone who does not use a computer?

        Asperger's syndrome and the Autism spectrum.

    • by Sapphon ( 214287 )
      Mod parent up! He's like some academic type or something.. with understanding of statistics, economics and stuff.
    • While you raise some good points, I think you overestimate the need to be computer savvy to play MMO games. I've met a number of people that use their computers almost exclusively to play EverQuest--I had to walk one through the process of copying and pasting text in Notepad, for example.

    • by ukyoCE ( 106879 )

      many MMO's I have participated in had lackluster markets due to poor UI

      It's funny you say that -- I would actually say the opposite from playing WOW. The auction house in WOW is effectively a *single* source of all items non-NPC-purchaseable items.

      Real life has a MUCH worse UI. I have to check Best Buy, then Newegg, then Amazon, and who knows if a place 1 mile away from me actually has a better price! The game also lets me (through addons) see historical prices, price averages, and let's me trivially undercut competitors when selling goods.

      I don't think anyone is claiming t

    • #1 You can only generalize to the population studied

      Take WoW as an example, and you will have a really broad spectrum of population. I mean, very broad.

  • by Anonymous Coward

    And the ridiculous idea that every Orc has a right to a home is what lead to this bubble.

  • Monopoly (Score:4, Funny)

    by gblackwo ( 1087063 ) on Sunday October 04, 2009 @12:56PM (#29636023) Homepage
    You can learn tons from games. Yesterday was explaining that when the taxes get rolled into the free parking kitty, money doesn't leave the system- it only gets redistrubuted leading to massive inflation from passing go. Also was explaining dice statistics and why it was better to build a house on this square versus that square based on the two people 5-7 spaces away.
  • I suspect we could learn more if the game used real money rather than monopoly money.
  • Economics is as much a real science as MMOs have real economies.

    As someone else said, many of the basics of those in-game economies are designed by economists and mathematicians. Of course they'll reflect economic theory.

    • Up to a point. They may design the rules, the central banks, the inflation/anti-inflation schemes, incentives against cheating and farming, a big lot of stuff.

      But they can't design player behaviour. If players don't act as they think they do, those economist designers won't achieve their goals. It should be a very educational experience, designing an entire economic system and seeing if it behaves as you think it will.

  • 'Our own economy has turned out to be less stable than we'd all assumed.'

    Who the hell is we, and who is listening to someone so clueless in the first place?

  • In MMOs, everyone is "employed" or capable to make money (not to get rich, but still to participate actively in the economy) by themselves. Things like food or where to live are not big problems, neither is maintaining a family usually. And there aren't laws (like patents) giving individuals virtual monopolies.

    But still there is commerce there, sharing several of the rules of with the real world one and behaving in good part like it.
    • This isn't universally true... some games have virtual monopolies (this actually used to be a HUGE problem in EVE Online, where a small number of people used to control the blueprints to make some of the most valuable ships) and while everybody has *some* ability to make money in all of these games, it amounts to what a kid could make cutting neighbors' lawns - irrelevant compared to what people who've actually made opportunities for themselves have.

      Honestly, EVE's in-game economy is a better simulator of r

  • by Sapphon ( 214287 ) on Sunday October 04, 2009 @02:30PM (#29636855) Journal
    "As real as real? Macroeconomic behavior in a large-scale virtual world" [] (links to the abstract with option to download)
  • by durrr ( 1316311 ) on Sunday October 04, 2009 @02:31PM (#29636865)
    Why not look at the Eve online economy? The Eve system is a lot more flexible, largely player driven and a LOT more players involved. This should more accurately model real economies.
    Then of course, eve have already had a lot of attention for this reason, so perhaps they wanted to do a more novel study.
    • Re: (Score:2, Funny)

      by Anonymous Coward

      ***you have entered Dodixie local***
      Mr. Economy> I'm doing a study on game economy, would anyone like to participate?
      NiNjA_RaTtEr!1> I'll participate in taking your stuff
      XxxDoom_PEENxxX> Invite me to your gang and I'll teach you about teh economies
      L4_Superman> Go study WoWtard economy, noob
      Uber_Allison> Here, the

  • by h00manist ( 800926 ) on Sunday October 04, 2009 @02:46PM (#29637023) Journal
    the thing I don't understand about money is, why don't more people make it? there's no law against creation of local currencies. [] some cities do have them. fortaleza, brazil, has a community with a currency called "palma" [], switzerland has the WIR bank [], ithaca has the hour []... it's problably the best way for a community to change, develop and become self-sustained. economically, ecologically, and in other ways. money is, in reality, just a contract, a document - shows that if you help someone, give something, someone else will help you, give to you. as long as the contract works... who cares who filled it out, printed the form, bill, wrote the software, or if it's electronic, paper, or just a paper ledger []. the only hard part is creating a community that realizes it's in their best interest to run their own economic system. open-source software could perhaps benefit from adoping something similar for rewarding programmers more.
    • Re: (Score:3, Informative)

      by Sj0 ( 472011 )

      I think in the United States, it's illegal for anyone but congress to create legal tender.

      The purpose of creating a federal government was to standardize trade between the states, and the creation of a common form of currency was one of those standardizations. It's a power given to the congress directly by the constitution, rather than the later programs which are given by loopholes in section 8.

      • by tmosley ( 996283 )
        States can't make currency other than silver and gold (if only they would...). The constitution does not restrict the rights of individuals to issue their own currency. If it did, things like "Disneybucks" would be illegal.

        The Constitution would have done better to mandate that ALL government issued currency be in silver and/or gold to prevent the meltdown we are now seeing.
      • I actually think that any entity (Your group of friends, your city, your county, your state) can print it's own money. However, if you are selling goods to the public you must ALSO accept United States Currency and must be able to trade between the two freely back and forth as long as the money is backed by the dollar.

        At least one Massachusettes town (Southern Berkshire) prints and circulates its own money. It supposedly helps local business flourish in a way I don't understand. Basically you go to the

      • by TheLink ( 130905 )
        Is it illegal? Don't US casinos issue casino chips? There are also places that issue coupons and tokens.

        <matrix>Your mind makes it real</matrix>
    • The problem is that all currencies have to be backed by something. I can create my own currency and tell people to give me money for pieces of paper with my face on it, but who is going to accept it? The US currency is basically backed by the reputation of the US saying that it will be worth something in the future. Other countries may tied their currency to a mineral or to another currency. But, in the end it has to be backed by something, and it will then be at the whim of whatever backs it. Be that
      • 'backing' is needed only if you're looking for a long-term value deposit. if you're looking for a currency useful for everyday trading, all that matters is that you can spend that currency on something you need. so if there's a few local stores that accept the currency, you're set. but of course, not just anyone can print the currency. it doesn't even actually have to be printed, in fact, but some places do.
  • What about EVE? (Score:2, Interesting)

    by spedrosa ( 44674 )

    Any researcher worth its salt will have to first and foremost look at EVE Online's economy. The game is driven by its economy, not the other way around.

    They you can look at toys like WoW or Everquest, if you want a simpler model.

    • Re: (Score:3, Insightful)

      They ignored EVE because it's nearly as complicated as the real world and just as messed up. They obviously didn't want the hassle of studying anything of true significance.
  • The study would be useful, only if we printed our money without any regard to the amount of it. That is the basic problem there, there can be no lack of credit in virtual economies, while we know there can be one in the real world.
    Next, you have to transform most entities in the virtual world into entities in real one. Because, you will never have a raw diamond more expensive, than a well crafted diamond jewel in real life. Yet, in WoW it is usual to have items that are found raw more expensive, than thos
  • ... of Russian Roulette.

    In Soviet Russia, economy plays you!

  • I very much doubt that online games can ever provide any decent economic modelling. The things that make most people risk-averse in the real world are largely mitigated online.

    It may be terrible to lose your character or his equipment in the MMORPG universe, but you'd have to be pretty far gone in order to feel the same way about that as you would about losing your job / house / car.

No problem is so large it can't be fit in somewhere.