

Why virtual economies defy the rules of your old college textbooks - gursikh
http://venturebeat.com/2009/10/30/why-virtual-economies-defy-the-rules-of-your-old-college-textbooks/

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nazgulnarsil
lol, basic econ fail. life is not zero sum. WHEN will people get it through
their damn head?

there are "sources" and "sinks" in the real world too. people constantly
produce wealth, then consume it.

there is also artificial scarcity in real life: government backed labor unions
(AMA, Lawyers, Teacher's Union etc), as well as regulation preventing
competition in certain fields (medical insurance, banking, food and drug
certification, DMV to a limited extent _Pennsylvania has a privatized DMV_ ,
legal arbitration). I'm sure there's much more.

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cma
> I'm sure there's much more.

There is, and most of it has nothing to do with the types of government
regulation you talked about. Most is to do with positional externalities (
<http://en.wikipedia.org/wiki/Positional_good> ).

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nazgulnarsil
this is a great point. status does tend toward zero sum, and so people will
always simulate it by seeking out goods that approximate zero sum.

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NikkiA
_Imagine if Wal-Mart tried to offer one-half of its customers one price and
the other half a different price. Or even if they tried to change the price
for a week to see what would happen._

Uh, they do exactly those things. 1) Wal-mart, Sam's Club and ASDA often sell
identical items, but for different prices - different demographics, different
prices.

2) Not all 'offers' are to drive stock levels down, many are a case of 'trying
a different price point for a short period to see what happens', granted
_raising_ prices this way is hard, but again, wal-mart have done it in the
past, which is why we so often see those 'Regular price $4.99, Now: $6.99'
entries on Failblog and DailyWTF.

Also, the author misses out one of the most important reasons why _NO_ MMO
manages to adhere to real-world economics rules, even the economic focused
MMOs like Eve, Goonzu, SL, Entropia, etc, and that is, people don't have the
same 'value' to their in-game money, they know they can walk away from
activities that are money sinks for small periods if they run out of currency
to fund those activities. Overspending and then not paying your rent for a
month or two, or not being able to afford to buy food, tends not to work so
well in the real world.

So because there is far less risk involved, people treat in-game currency with
less of a seriousness, and are willing to do things that economics and common
sense forbid in real world economies.

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selven
"Imagine if Wal-Mart tried to offer one-half of its customers one price and
the other half a different price. Or even if they tried to change the price
for a week to see what would happen."

Someone from the first group would set up a retail store and outcompete
Walmart for the second group. Just like what would happen (but much more
efficiently since there's no cost inherent in moving stuff around) in a
virtual world that allows trade.

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eru
The transaction costs in the real world are quite high.

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amalcon
Perhaps virtual economies defy the rules of my old college textbooks because,
so do real economies? One thing that's become abundantly clear is that, if
economists know how economies work, they're not demonstrating that knowledge.

This being said, if one uses a post-Keynesian model, it matches most video
games very well. According to such a model, in the real world, any payment or
loan by the government is simply a "source", and any payment (i.e.
taxes/interest) or loan to the government is simply a "sink". From here, if
your only goal is to stabilize inflation at a particular level, you need to
reduce sources or increase sinks until such time as inflation reaches that
level. This idea gets into trouble in the real world when you have competing
goals, but it's probably fine for an MMO.

Post-Keynesian theory has its share of problems, but to its credit, it doesn't
start by assuming that the amount of money in play is fixed. That makes it as
close as we have to ideal for modeling videogame economies.

~~~
billswift
A real economy is the most complex system there is. Even with most of the
simple rules known (and I don't think we are quite at this point yet), most of
the economy will NOT be predictable.

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henning
You have to remember that most MMOs are not economic sims, they have an
economy minigame where people act silly with their virtual currency because
it's not real life. Any steps to manage the in-game economy take away from
designing more fun stuff that players may care about more.

Furthermore, I bet the only reason non-gamers pay attention to this stuff is
because of third parties selling virtual currency and goods for real currency,
which nearly all MMOs forbid.

