Norrath Economic Report Now Available

Edward Castronova writes "Some months ago, Slashdot posted a note about on a survey I was doing for a report on the economy of EverQuest. The report is done and can be downloaded (Scroll down for the Document Download button). Tidbits: Norrath's GDP per capita is higher than that of China and India; its currency sells for about a penny per platinum piece, which makes it more valuable in $US than the yen; a typical person can make about US$3.50 an hour working there by farming the bots and selling the loot; the deflation rate is almost 30 percent annually. There's also some microeconomic analysis and an overview of the MMORPG market. Comments and reactions appreciated. Thanks, Edward Castronova, Associate Professor of Economics, Cal State Fullerton."

Comments

Exchange Rate?

[Pentagram]

So when are we going to be able to exchange platinum pieces in bureaux de change? And has anyone got a page showing the currency against the dollar/Euro?

But the idea of these virtual economies is quite interesting. How about using them to experiment with possible economic models? Why not set up a modern-day game with different shards representing economic models and see which one works best? The US government or the EU could fund it. Players could play for free and the government could see how they'd react to e.g. different interest rates.

OK, it's a bit stupid, but it would be a cool experiment.

Trade barriers

[CaptainAlbert]

What I'm wondering is whether a "real world" economy and a virtual economy are strongly coupled. So, if the virtual economy collapsed, would it affect GDP of real countries? In this case, no, because the amounts we're talking about are tiny. But if the "Entropia" project mentioned towards the end of the report were to succeed in its aims, perhaps it would.

Would economic trends in the real world influence the virtual one? In this case yes, to some degree; if people can't pay their subscriptions, they can't exist in the virtual world and production will fall. Consider this quote:

> It is important to stress that the external
> market for Norrathian goods is
> underground. Sony has stated that Norrathian
> items are its intellectual property
> (Sandoval, 2001). Trading these items for US
> currency is considered theft. Nonetheless,
> trade goes on.

Scary, no? Enforcing such a law would be equivalent to forcing the devaluation of the virtual currency. So, the virtual world economy would continue to function, but with its ties to the real world (partially) severed.

Does that bode well for Entropia? If the virtual items and currencies are the (intellectual) property of one individual, or corporation, or government, then can virtual economies be any use at all?

Or, to turn that on its head, can EverQuest be used as a model for the distribution of intellectual assets in the real world?

Having read that last sentence, I'm sure I've had too much coffee. :)

What have horses done to this?

[johnburton]

An interesting question would be how has the introduction of horses affected the economy.

For those that don't know, the latest upgrade (Shadows of Luclin) introduced horses to the game. You can buy a horse which lets you travel fasters. (And look cool).

The thing is, they are *very* expensive. The cheapest one is about 10000 platium for a slow horse going up to well over 100,000platinum for a fast one.

Even the cheapest one is more than the vast majority of players can afford and the expensive ones only a few people can affort at the moment.

I'd be interested to see how this affects the economy.

Obviously it's a huge money sink, which should reduce the prices of things. (If people have spent all their money, they won't pay so much when they want to buy things)

But also, it means that many people have got all the old junk they had in the bank and started selling it. So does this reduce prices as there are more for sale, and people want whatever they can get, or does it increase prices because people want the money to buy a horse and so are unwilling to part with items for a bargain price.

It's interesting. But I have no answers.