MMORPG Economies Explored in Depth

Obscure Economist writes "The Social Science Research Network (SSRN, http://www.ssrn.com) has just posted a free download of "On Virtual Economies," a new broad-focused study of the market for MMORPGs. Think of it as a less descriptive, but more predictive, follow-up to my paper on the EverQuest economy of last spring. The link, for those interested: http://papers.ssrn.com/sol3/papers.cfm?abstract_id =338500. Comments and criticism appreciated. Edward Castronova, Associate Professor of Economics, Cal State Fullerton"

Comments

So much simpler than the real thing

[Anonymous Coward]

If you could do an in depth study that was actually insightful about the actual economy, you would be hailed as a genius (you might even win a Nobel prize). As it is, you're simply a geek with way too much time on his hands.

MMORPGs are fantasy. They are artificially created by game makers and players are bound by the limitations that the game makers put in. If fake money is always created and never destroyed, then there is essentially an infinite amount of fake money and any item can eventually be attained. If there is a scarcity of money, then the game would be uninteresting because newer players would always be at a disadvantage to older players who have amassed more wealth and can thus buy more powerful stuff.

It's just a game. Play it for fun. Repeat until it sinks in.

Re:So much simpler than the real thing

[Ryan Amos]

I think you miss the point.. Yeah, MMORPGS are geeky (and a waste of time IMO) but consider it a small-scale model for the real world economy and how the real economy might be under different circumstances. No, it's not the same as the real economy by any means, but it's an interesting sociological "experiment" (though more of an observation.) Besides, not everything needs to have a practical application. Some people just enjoy this kind of stuff. :)

Re:So much simpler than the real thing

[infornogr]

But people do pay real money for virtual goods, money, and characters (though, admittedly, illegally). If this were common enough a currency exchange factor would emmerge. The money has some worth to some people. If MMORPGs become more dominant and widespread in the future, virtual money might be worth something to a lot of people.

Re:So much simpler than the real thing

[TGK]

Interestingly enough, US Banks have the power to create and destroy money.

The way it works is this. MyBank (insured FDIC) has a certain amount of money on deposit with its local Federal Reserve Bank (NY, Phillie, Whatnot). The Federal Reserve then sets a multiplier, allowing MyBank to loan out Z*Deposit where Z is a number chosen between 1 and however many Cherios Allen Greenspan ate for breakfast this morning.

MyBank then lends you that money. It just up and lends it to you. It didn't have the money to lend, but the Fed said it could so it does.

The key to the entire system is the ASSUMPTION that money is scarce. Or rather, that money has inherent value.

In the case of a MMORPG money is created (typicaly) by killing stuff. This killing of stuff is work, and requires the player (or a cleverly written bot) to spend time persuing this activity.

This time is equivilent to work. As long as people feel that they have to work to get money and that money in turn can be used to get someone else to work for them (or something else) the economy will keep going.

So in essence, as long as the player can not randomly create money (but can work for it), it really is just as valid as any other national currency (except perhaps the old Lira, which was so worthless as to require several million to buy a mellon)

Re:So much simpler than the real thing

[nurightshu]

The key to the entire system is the ASSUMPTION that money is scarce.

Unfortunately, that assumption, when taken to its logical end (i.e., that a national or world economy is a zero-sum game), is responsible for a great deal of the childish and dangerous class hatred in the world.

My monetary success does not mean somebody else has to fail so I can continue to make money. Likewise, my monetary failure does not guarantee that someone has succeeded where I should have. Or, to paraphrase P.J. O'Rourke, people assume that an economy is a pizza and, if you have too many slices, I have to eat the box.

And regarding the Lira, a couple years back one of the local radio stations here in Omaha had a game: "Who Wants to Be an Italian Millionaire?" If you answered three questions right (or something like that), then you got that day's equivalent of IL1,000,000, which if I remember correctly worked out to about forty or fifty dollars when you performed the "neon-bumwad --> real actual money" conversion.

Re:So much simpler than the real thing

[0x0d0a]

I suppose you'd also consider game theory, at first developed around simple "I help/hurt you, you help/hurt me" to be done by people with "too much time on their hands?"

Since e-cash is, at some point, going to become a reality, and MMORPGs are small scale models representing this, this is an important area.

Besides, where else can an economist find as interesting a research area?

Re:So much simpler than the real thing

[Isle]

I think you missed the fact that one of the most important cources in academic economy is game theory.

No, it is not about games as we know them, but about simplistic economic models and how people responds to them and how they develop.. As such MMORPG are excelent speciments, especially because they through ebay and such now has an exchange-rate between real and virtual money.

Re:So much simpler than the real thing

[orkysoft]

Wouldn't it actually be worth USD 400 to 500, instead of 40 to 50?

Re:So much simpler than the real thing

[Anonymous Coward]

"how the real economy might be under different circumstances."

As in if half the population could suddenly cast spells and the other half got really good with swords.

Re:So much simpler than the real thing

[nurightshu]

Like I said, I couldn't remember the exchange rate off the top of my head. However, it wouldn't surprise me if I were wrong by an order of magnitude. Probably was USD400 or 500.

MMORPGH realties

[Anonymous Coward]

MMORPHG's are excellent devices to model real world problems around. Here at the Fui Institute in Japan, we have used several MMORPGH's worldwide to map several social issues.

For example, the interaction between human beings are very nicely mapped in a MMORPGH. It's true, the newbies usually play the games as a game, but after a while they fall into place and build a sense of reality. When this happens, they try to model the MMORPGH based on their real world. This is very interesting no?

Unlike the Sims, MMORPGH's actually put you in the place of the character, thus you are more attacched to your character than with Sims. You tend to be a lot more emotional and a lot more envolved. We have done several research among Sims vs MMORPGH. It would be interesting when the new Sims MMORPGH game comes out.

Thank you.

Dr. Thakiro Nagoobalhu.

Re:MMORPGH realties

[netsharc]

Heh, a troll. I bet he's gonna get modded to interesting as well.. Fui Insitute? A Japanese named Nagoobalhu? There's no L in (native) Japanese, idiot.

Re:MMORPGH realties

[Anonymous Coward]

Hello American investor.

Our spirits is very fine spirits. Authentic punk fashion on streets of London.

Amusement Cabin--get the Pearls' coins!

Every day I go home and polish my revolver. Shoot myself in the head like a Rockstar.

Sincerely,
Dr. Chimpo Yarou

Re:MMORPGH realties

[Mac Degger]

Baka right back at ya...and remember, everyone is baka somewhere.

Hawaii

[GaLupo]

MMRPG's at my school are a way of life for some ppl. Helped my roomate last year go to Hawaii by sellign soem everquest accounts.

In case you missed it the first time around...

[flogger]

there is this /. article. that showcases someone's ideas about how to unbalance a game with exploits in the economy.

Re:In case you missed it the first time around...

[Slashdotess]

Of course, inflation exists too as noted by this recent article.

These games are very rentable

[Espectr0]

Since they are subscription based and need servers, piracy is cut down , almost all of it. What i don't approve is that the games cost full price like every offline game plus the subscription, which is not cheap at all.

At least anarchy online allows you to test the game for free

Re:These games are very rentable

[rogueuk]

a lot of times, a while after the game has come out, there's a huge discount to get a lot of new players into the game. I remember seeing asheron's call about 6-8 months ago for 10 bucks plus 2 months free subscription...at a cost of 10 bucks a month..

so you end up with a net surplus of 10 dollars in your wallet for those 2 months.
it's a pretty decent deal if you like those games.

Re:These games are very rentable

[Dirtside]

What i don't approve is that the games cost full price like every offline game plus the subscription, which is not cheap at all.

The cost of purchasing the game box is there to offset the development costs of the game -- i.e. all the money spent paying the programmers, artists, designers, and managers who develop the game to begin with. For a modern, first-tier computer game, this process can take two to four years; all that money is invested in the project before the company gets a single dime from customers.

Now for a regular game, once the game launches, there's some followup (patches, fixes, etc.) but the amount of effort is small compared to the amount of effort that went into creating the original game. But with an MMO, once the game launches, the company is also providing servers for you to play on. Providing that service is an ongoing cost; you have to pay people to admin and maintain the servers, pay for new or replacement hardware, pay for bandwidth, electricity, etc. It's a significant chunk of change, which is why there's the ongoing fee. In addition, MMOs tend to have additional (free) content introduced down the line; the monthly fee pays for this as well (although full expansions are usually Sold Separately, and the development costs for the content in those expansions are paid for by the box cost... in theory).

AO allows a download of the client to test out the game, but if you want to play the game, you still need to buy a game box (in order to receive a registration key). Most MMOs don't have this option, since downloading a 1 gig+ client just to test would be an additional huge load on their bandwidth.

There is a reason for the up-front cost plus the ongoing monthly cost; it's just odd that so few people seem to understand that running servers that can handle thousands of simultaneous players for months at a time is an expensive thing to do.

Re:These games are very rentable

[mindstrm]

I have to BUY my cellular phone, but then I have to pay to USE it too? That's not fair.

Re:These games are very rentable

[Hott of the World]

And yet somewhere, somehow, people manage to do it at no cost to the users. Thats just insane! I mean, with all the costs associated with running BATTLE.NET, I'm surprised that Blizzard is not bankrupt...

Re:These games are very rentable

[Anonymous Coward]

Meridian 59 doesn't require a box purchase. Damn fun game without the hype. Great PvP too.

Re:These games are very rentable

[mewsenews]

There is a reason for the up-front cost plus the ongoing monthly cost; it's just odd that so few people seem to understand that running servers that can handle thousands of simultaneous players for months at a time is an expensive thing to do.

I disagree. I think developers need to decide whether they are selling a product or a service - and not both. I wouldn't mind the subscription fees as much if the client was free but I feel it's unfair to play both ends.

Re:These games are very rentable

[shweazel]

not true... anarchy online doesnt require a game box at all.

when you start the free trial they take your CC number, and if you don't cancel before the trial ends they start billing your card monthly.

Re:These games are very rentable

[Anonymous Coward]

Battle.Net is hardly a reliable server. In fact, until recently it went through phases of near unusability (WC3 sales seem to have fixed that).

Re:These games are very rentable

[wasteve]

BATTLE.NET is probably way cheeper to run than any MMORPG server. For an MMORPG every client has to communicate with the server where all the game information is actually stored. For BATTLE.NET the only communication that is needed is for the server to tell the clients to connect to each other.

Re:These games are very rentable

[sedmonds]

Somehow free clinics manage to stay afloat too. That doesn't mean that a hospital doesn't have a different, and higher set of fixed and dynamic costs.

The service provided by BATTLE.NET can't really be compared to the service provided by the everquest server farms, AO, DAoC, or any other MMORPG. They're completely different services, with completely different needs.

Re:These games are very rentable

[nelsonal]

And the first month they charge you $20 for the game and "free" month. I wish I'd known I would have picked up a clearance one in the store for a paper manual. I think they had a map as well. The game is pretty fun though.

Re:These games are very rentable

[Silvers]

Not true. While Warcraft 3 uses a peer to peer model with all data merely passing through battle.net between teams (it does some verification too), Diablo 2 was run *entirely* from the servers.

So, while true, WC3 is not much of a server load, and only marginal bandwidth load, Diablo2 is both a large bandwidth load AND a large server load.

Re:These games are very rentable

[Anonymous Coward]

You my friend are a fuckin idiot. You think that thousands of people on the SAME server is the same as thousands of people on THEIR SERVERS with most of 8 people per map? You think that fuckin blizzard games, which you can play on a 14.4 modem use the same amount of bandwidth as a full 3d world? Like I said, you my friend are a fuckin idiot.

Re:These games are very rentable

[GooberToo]

I think developers need to decide whether they are selling a product or a service - and not both.

Why can't they do both. I the real world, this is very common. You sale a product and then have a services arm ready to service that product for your customer. This seems like it exactly parallels that. It makes tons of sense if you stop and think of it. You have a product, you sale your product. People need to have the product serviced, so you sale the services.

If they didn't charge for the product, the service rates would have to go up. It's not like you're looking at saving money by not having one or the other. Likewise, if they didn't have a service rate (monthly charge), the product cost would be through the roof as it would more than likely be hundreds of dollars per copy. Not to mention you'd probably have to constantly buy upgrades...something which is already included in your monthly service fee.

Re:These games are very rentable

[flatrock]

Asheron's Call, Dark Majesty (which is the full game) costs $20 with a $20 mail in rebate. It includes one month of service. Basicly they need to charge something for it so the retailer can take a cut and will stock the game on the shelf. By the time you get the rebate, Microsoft/Turbine is actuall paying out money to get you to try the game.

Now that they're finally going to start banning combat macroers next month, it's even worth trying out.

Re:These games are very rentable

[Anonymous Coward]

Not only does battle.net simply act as a chat server and directly connect people, but the small fee to host this server is eliminated because it's AT&T, who, because they like to skimp on things (namely when my neighborhood expanded they split the phonelines for everyone, giving me an average of a 26.6 connection), some larger games have limits of the gross amount of units.

Re:These games are very rentable

[Anonymous Coward]

These types of games cost X amount of dollars to develop and distribute, and Y amount of dollars to maintain bandwidth and resources to host servers. It is not that the subscription fee covers Y and the cost of the game covers X. No! It is simply that they need to be profitable off the sum of subcriptions plus the profit from the sell of the game. They _could_ chose to give away the game for free.. there is nothing preventing them from doing so. They would just need to compensate by increasing the monthly subscriptions. This is no good though because a large percentage of players quit after the first month or two, it would make the monthly subscription costs outrageous. What you need is a BALANCE between the cost of the game and the cost of the subsription.

Re:These games are very rentable

[Dirtside]

No, Diablo II was not run entirely from the servers. You had the option to play on their "closed" servers, which meant that all character data was stored on Blizzard's servers (and the game processing was done server side) -- this is akin to the way actual MMOs like EQ or DAOC do it. However you could also have "open" servers, where the character data was stored locally -- these were the peer-to-peer setups, where the game was actually hosted on one of the players' computers.

Nonetheless, Blizzard's closed servers require a lot less maintenance than, say, EQ does -- for one thing, a single server box could probably host a few dozen separate D2 games at once, at the very least. Second, with EQ, a single world server is actually comprised of around 40 boxes, and each box has *different* code on it (each box hosts 1-5 zones). With D2, all Blizzard needs is a single instance of the server code which can be duplicated multiple times.

Yeah, it still costs money, but battle.net is a loss-leader, something which attracts more players to buy the game, whether or not they take advantage of the online service.

Re:These games are very rentable

[Dirtside]

I think developers need to decide whether they are selling a product or a service - and not both.

The "product" and the "service" are two parts of the same thing. The way MMOs are designed, one without the other is useless. The product (the initial game box with all its content) cost several million dollars to produce over the course of a few years. The service (running the servers) costs a large fraction of a million dollars *per month* to run. It's a much riskier financial bargain if they give one or the other away for free, since it becomes a lot harder to break even. If they didn't charge for the game box, they'd have to charge more for the service; if they didn't charge for the service, the game would cost more. It's simple economics. There's nothing "unfair" about "playing both ends," and you're ignoring the fact that every subscription-based MMO gives you a free month (or more) of service included with the initial game. Earth & Beyond was $45, and that includes a free month of service. A month of service normally costs $12.95. That means the game was really only $32 to me, which is a pretty good price for a game like that (most first-tier games cost $50-$60 when released).

Jurisdiction of Virtual Economies

[thefinite]

Quote from abstract:

It will also raise certain constitutional issues, since it is not clear, today, exactly who has jurisdiction over these new economies.

Don't the games already dictate the control of these economies? MMORPG game makers decide the rules of the economy according to what they think makes them enjoyable. Granted, if you are selling EverQuest items on Ebay, then you are subject to U.S. economic laws, but why would any government care about the economic activities in a virtual world, except in areas that affect their own economies? There may be an answer to this I don't see. If so, what is it?

Re:Jurisdiction of Virtual Economies

[Herkum01]

The government cares because you will be in trouble when the virtually onmipotent IRS comes after your virtual ass for not including the income from selling that +10 Magic Sword of Dragon-Slaying on e-bay.

And don't even get me started on them trying to track you down for Player-Killing, malicously attempting to hurt another persons potential income. (keeping a player from earning a living selling stuff on E-bay)

not gonna happen

[dirvish]

Virtual Economies will have to expand immensely to have any real effect on real economies. Sure, people trade some EverCrack stuff on Ebay but it is a miniscule amount compared to the rest of the economy. It really has no effect on the real world. How can a virual economy ever have something that is truly valuable? I can't think of an instance and I don't see one coming about.

Re:not gonna happen

[thefinite]

That's a great point. The recent slowdown in the entire tech sector has had a relatively small impact on the economy, historically speaking. The fraction of the tech sector of which EverQuest consists would have the same effect as a bullet moving at 100mph (or however fast a bullet moves) hitting a train going 5mph. That train is not going to be moved in any significant direction.

Still, the interest governments might have in a virtual economy would have as much to do with its lobbyists as its size.

Re:not gonna happen

[raian]

How can a virtual economy ever have something that is truly valuable?

If you bothered to read any of this guy's papers, you would understand exactly how. "Value" is not an intrinsic quality of some object or idea. Things have value only because they are important for one reason or another to some group of people. But Castronova puts it better than I can:

"[E]conomists believe that it is the practical actions of people, and not abstract arguments, that determine the social value of things. One does not study the labor market because work is holy and ethical; one does it because the conditions of work mean a great deal to a large number of ordinary people. By the same reasoning, economists and other social scientists will become more interested in... virtual worlds as they realize that such places have begun to mean a great deal to large numbers of ordinary people." -- Castronova, "Virtual Worlds" p.2, 2001.

Re:not gonna happen

[Anonymous Coward]

That train will be moved if you hit the engineer.

Like everything, its where you strike, not with what.

How Scientists justify wasting time

[Drawkcab]

No, I didn't waste 1000 hours this year playing EverCrack, it was important research!

Re:How Scientists justify wasting time

[unicron]

Whenever I type /played it comes back with "don't worry about it".

Everquest Economy Threatened with Inflation

[Pave Low]

on a related note, check this out. funny stuff, art imitating life.

Re:Everquest Economy Threatened with Inflation

[microbob]

Well farkity, fark, fark.

http://cgi.fark.com/cgi/fark/users.pl?login=microb ob

That is all I have. I'm done now, no kittens killed.

Yes, I have one article posted.

No real value

[Anonymous Coward]

"It will also raise certain constitutional issues, since it is not clear, today, exactly who has jurisdiction over these new economies. "

Uh, it's pretty obvious, Sony (in the case of EQ) "owns" your gear and gold pieces, etc. There is no value to it - it's just 0's and 1's on their server, and when you sign up for an account, the licence spells this out.

Why does everyone have to take something fun (a game) and try to assign real life value to it? It makes MMPOGs less interesting when you know there are people who "cheat" by buying and selling items in real life. That's not the point of a game!

Re:No real value

[GigsVT]

Why does everyone have to take something fun (a game) and try to assign real life value to it?

Because people spend tons of real life time on the game, which is worth real money. After someone works 5 hours for an item, they expect to have some ownership of said item. That doesn't always work out, but subconsiously they feel they own it.

Re:No real value

[sonarniche]

Exactly, people feel attached and entitled. I wonder if at some point there will be attempts at politicizing and revolutionizing in game.

It may be a bit out there, but I can see enough disaffected fans trying to rally for some sort of democratic input into a game. As people get more attached to these virtual environments they are going to want more of a stake in how its run. Or perhaps at some point an MMORPG will be made with this sort of self-governing built in as its own experiment.

I think there will be an evolution of MMORPGS towards metaverse type places. Sims online is already heading in that direction. People are going to discover that they want more control over things they are paying for, even if it is billed as entertainment (hello all the arguments about copyright, DMCA, **AA, Tivo etc. etc. Movies, TV, music etc. are all entertainment that many on slashdot believe they should have more control over how they interact and use them. Content companies of MMORPGs have total control now, but I don't think that will last.) It's going to get pretty damn interesting.

Re:No real value

[orthogonal]

Why does everyone have to take something fun (a game) and try to assign real life value to it?

"Value" is simply what somebody is willing to pay for something.

Obviously, people are willing to pay to play the game. They value the enjoyment they get from playing more than they enjoy spending that money on something else (or holding on to it). So they purchase a game subscription, trading real money for access to the game.

Some people value the status (or the ease, or whatever) that comes with a more capable "avatar", more than they value having real money, so they're willing to trade real money for game money (or experience points, or "lore" or "fungi tunics")

Recently a forty year old can of an artist's excrement was bought for several thousand dollars by a museum. It was "valuable" not for its potential use as fertilizer, but as "art".

A original copy ("original copy"? An oxymoron or not?) of the American Declaration of Independence was sold for over eight million dollars, despite the fact that anyone can download the exact text -- or a photo reproduction -- for free. Are the words valuable then? Not, apparently, as much as the context they are in.

Even real money is simply a social convention: its utililty for any use other than trade (its "intrinsic value") is virtually (pun intended?) nil. Real money is useful only insofar as people will trade goods and services for it. When real money is perceived as not being as useful for trade, its value collapses, and we have the super inflation exemplified by Weimar Germany or present-day Argentina.

Which is more valuable to you, a dollar or a month of game play? What if it's your only dollar, and you're hungry? Which is more valuable, a million dollars or a month of game play? What if you could only buy cans of artists' excrement with that million? What if you know you'll be dead in a month? What is more valuable, a million dollars or the Declaration of Independence? What if it's an electronic copy? What if it's the only remaining copy (electronic or not) remaining in existance? What is more valuable, the single remaining copy of the Declaration, the single remaining copy of the Bible, the single remaining copy of Moby Dick, the single remaining sequencing of the human genome?

What's the value, to me, of the last letter you even got from your high-school sweetheart? How much money would you charge me (i.e., what's the value of it to you) to sell me that letter, if I told you I planned to burn it?

"Value" changes with circumstances, with the surplus or scarcity of what you have and what can trade for, and with your, uh, "values". "Value" is what you can get for something, less what it's worth to you not to part with something.

Re:No real value

[GigsVT]

More interestingly, the free market may rule in every way.

Imagine this, the first MMORPG that actually has it's own auction site where players are even encouraged to trade game items for real money. Of course that creates all kinds of legal hassles, but some sort of in-game escrow would be pretty trivial to implement, reducing arguments.

The way I see it, in real life, money can buy you better equipment, etc, but it can't make you a better player of the game. When these games evolve to the point where it isn't centered around equipment (and the quest to get better equipment), but rather on real game skill, then is when we will see the really big things happen.

Re:No real value

[McPants]

Actually, I disagree. My bank account is presumably stored on a server somewhere, and its just a collection of 0's and 1's. But I would be rather unimpressed if all those 0's and 1's disappeared one day. So people do place a lot of value on 0's and 1's, and in some case want to buy some of Sony's 0's and 1's.

Re:No real value

[nelsonal]

Would this be very diferent from the more skill based games at an online casino. Say a sports bookie or blackjack, as opposed to slots or roulette.

Re:No real value

[GigsVT]

There would have to be little left up to chance, or it could be ruled gambling. It does raise a whole new grey area to the law.

Re:No real value

[0x0d0a]

Actually, I disagree. My bank account is presumably stored on a server somewhere, and its just a collection of 0's and 1's. But I would be rather unimpressed if all those 0's and 1's disappeared one day.

*I'd* be impressed.

Re:No real value

[theefer]

It's called Project Entropia.

Project Entropia will be the next generation of interactive entertainment. In Project Entropia you will able to enter a whole world with amazing three-dimensional environments using a computer and the internet. It will be a massive virtual world where millions of users can interact with each other at the same time. Project Entropia will have a real economy system that allows you as a user to exchange real life money into PED (Project Entropia Dollars) and then back into a real currency again. Project Entropia will be free of charge with no monthly costs, which means that aside from the fees for your own local access to the internet while you are connected, the client software will be available with no payment to MindArk. All you need to do is get hold of the software that will be distributed in various ways, for example through the internet or on free CD's in computer magazines.

Re:No real value

[ethereal]

Except it'd be more like having a revolution against God than against the Tsar. Sony owns the universe and can adjust the economy at their will; there's no effective way to seize the means of production for the sole use of the workers, or anything like that. The only way to influence Sony is by moving on to playing more egalitarian MMORPGS; essentially revolting against an unjust universe by moving on to a better one.

Boy, it's too bad real life isn't like that; I'd like to signal my unhappiness by moving to a universe with a little less entropy, for instance. On the other hand, maybe entropy promotes a physical economy in the same sense that scarcity motivates a monetary economy. So maybe I'd be disappointed in my quest.

Economic crisis

[0ddity]

National economies are suffering now that online economies are manipulated through dubious means using real world monies. The value of the EverQuest currency currently exceeds the value of the US dollar. Other markets are experiencing similiar downfalls. One solution proposed by Microsoft Corporation is to alter the virual economies with DRM technology to facilitate fair usage of currency. RIAA sources say that they are also working on a solution but offered no details.

On art and games

[GigsVT]

people reveal that they are willing to pay money to be constrained.

This is an interesting observation. As many of us know, cheating takes all the fun out of the game for most normal people (15 year olds that crave attention and respect in an unhealthy way excepted). In art, self-imposed contraints are what makes good art. Without contraints, the games become meaningless.

I think when bugs are discovered in games that allow rampant cloning of items or free money to spread, is parallel to what would happen in society when and if we discover a way to make a "replicator" type device.

These games do make an interesting microcosm for sociologists to study. Identifing the differences is more interesting, since once we identify how it is different from the macro-society, we can use it as a model.

Re:On art and games

[Groovus]

"I think when bugs are discovered in games that allow rampant cloning of items or free money to spread, is parallel to what would happen in society when and if we discover a way to make a "replicator" type device."

Yeah I wonder what would happen if someone could make some sort of "replicator type device" that produced unlimited copies of a piece of music, or a movie, or a literary work for little to no cost and also be able to distribute them at little to no cost....oh wait a minute......

Re:On art and games

[GigsVT]

Heh, then take it a step further, all matter is just information. It's only a matter of time, as it were.

Re:On art and games

[Groovus]

Somewhat, my only point was that such a "replication" device not only exists, but we have plenty of feedback on its perceived effects (which of course is under severe debate right now). So we don't really need MMOPRG virtual worlds to see what could happen in real economies, it's already happening.

Flea Market

[ekephart]

Intuitively shouldn't the economies of games like EQ follow the rules of those for flea markets. If buying/selling/trading isn't sanctioned by SOE (which it isn't) the economy is basically a black market. Otherwise some entity would have oversight (SOE for instance) and allow people to buy/sell/trade as they please for a standard fee, like the $13.95 or whatever a month it is to play EQ.

Don't be so sure

[g00bd0g]

If you have read the Diamond Age by Neal Stephenson you know about the Metaverse. I think it's fairly likely that something like this will eventually evolve from our current internet. At that point the virtual economy may very well become big enough that it will impact local and global economies in a big way.

Re:Don't be so sure

[CVaneg]

Not to be anal, but I believe the metaverse was from Stephenson's Snow Crash.

Re:Don't be so sure

[Anonymous Coward]

snow crash had the metaverse.

and I think that it will take quite a few large jumps to turn EQ into the metaverse (as cool an idea as it is)

Re:Don't be so sure

[g00bd0g]

Thank you for corecting me, it is indeed Snow Crash, I knew that, my fingers must have slipped :) And while I agree it is a far off event, I believe it will happen eventually.

Re:Don't be so sure

[mindstrm]

The Metaverse was in Snow Crash, not the Diamond Age.

The Diamond Age was way, way after the metaverse had come and gone.

Re:Don't be so sure

[Blindman]

However this assumes that there will alsways be a real market for virtual money. As a person that doesn't play EQ I have no need for plat. Only when everyone plays on the same virtual system will such a thing occur. However, in the case of the internet the currency used is real currency. I don't see how that will change anytime soon.

Inflation

[ekephart]

There was an article on the BBC yesterday about inflation in and the economics of EQ. Here is it.

Could Inflation threaten the EverQuest economy?

[microbob]

Could Inflation threaten the EverQuest economy?

A funny read on the BBC.

I'm sure some people take this stuff waaaayyyy to seriously.

Re:Could Inflation threaten the EverQuest economy?

[KillerBob]

course people take EQ too seriously. Mudflation affects it moreso, though. In EQ you reach a point where there's nothing that can be bought that will upgrade your existing equipment. When you reach that point, the platinum just sort of collects. It's almost like they're paying interest for keeping it in your bank. In the two weeks leading up to my quitting the game (had a level 60 wizard), I accumulated close to 50,000 platinum with minimal effort. Had two options... I could sell the 50k on e-bay and make some money off some nitwit, or I could spend it in-game and outfit a level one toon with endgame gear.

That was about the time I decided that the game had lost all meaning....

Seriously, though... it's a perfect example of Mudflation. Inflation in the game happens not because there's more demand, but because there's more and more platinum being put into the game without any being removed. It would be like the US Bank kept printing 1's and 5's, but didn't destroy any. Sooner or later, $1 USD would be worth less than a cat turd.

Re:Could Inflation threaten the EverQuest economy?

[Anonymous Coward]

Some people take life way too seriously.

Don't be so sure

[g00bd0g]

If you have read the Diamond Age by Neal Stephenson you know about the Metaverse. I think it's fairly likely that something like this will eventually evolve from our current internet. At that point the virtual economy may very well become big enough that it will impact local and global economies in a big way.

p.s. I accidentally posted this elsewhere, sorry...

Think stamps/baseball cards/collectables

[Brian_Ellenberger]

EverCrack may not have an "immense effect", but there are plenty of instances of pretty much worthless things gaining value because they are rare and people want them. Look at stamps. Little pieces of scrap paper with a face value of pocket change. How about baseball cards? Just cheap cardboard. The pictures and information on both are easily duplicated. So why in the heck do people pay hundreds or thousands of dollars for them?

Heck compared to a stamp an Axe of Power or a level 99 character seems much more interesting and useful for entertainment. As long as it is sufficiently rare and useful, people will attach some sort monetary value to it.

Brian Ellenberger

Re:Think stamps/baseball cards/collectables

[0x0d0a]

As long as it is sufficiently rare and useful, people will attach some sort monetary value to it.

This is two lines after you were talking about stamps and baseball cards? How about:

"As long as it is sufficiently rare, people will attach some sort of monetary value to it."

Eh? Are these people serious?

[Jon Erikson]

Despite the expanding popularity of games like EverQuest and it's huge array of derivatives and competitors to suggest that the "economy" (and those quotes are deliberate; to suggest that any of these games has anything like a real economy is patently ludicrous) is in anyway comparable to that of real-world markets is... well, just wrong. Any Economic 101 student should be able to tell you that.

As such any talk of jurisdiction over these "new economies" is just a pipe dream by over-addicted players; there is quite simply no such new economy at all, merely players (and sad, cheap addicted ones at that) within the current economy, trading their resources for ever more ephemeral rewards.

Indeed it seems like such talk of new economies is nothing more than subliminal advertising; trying to talk up the game to make it more important than it is. After all, it certianly suits the makers of the game if it's seen to be more "real"... even this sort of "negative" publicity is good for it since the sort of person that has such a pathetic life they get addicted to online games seems to be craving a reality of sorts, preferably one where they can overcome the crippling social, mental and physical deficiencies that plague them in real life. There is no genuine MMORPG economy. There's just a fringe of people who really need to get out more, trading within the regular economy on sites like EBay.

Re:Eh? Are these people serious?

[goon america]

What makes an economy less "real"? I think you're trying to say that EverQuest is not an important economy, but it is an economy nonetheless.

We are surrounded by little microeconomies, even in your own home. Say, even in your own home, your mom specializes in making dinners (you do live with your mom, don't you?) and you specialize in taking out the garbage. If you are each have a comparative advantage in your trade, you can both gain by cooperating and trading made dinners for garbage removal.

Just because it is small does not mean that it doesn't exist.

Re:Eh? Are these people serious?

[elandal]

Despite the expanding popularity of games like EverQuest and it's huge array of derivatives and competitors to suggest that the "economy" (and those quotes are deliberate; to suggest that any of these games has anything like a real economy is patently ludicrous) is in anyway comparable to that of real-world markets is... well, just wrong. Any Economic 101 student should be able to tell you that.

However, the author of this (and other) papers about virtual world economics is a Associate Professor of Economics who probably knows a little bit more than the average Economic 101 student..

Perhaps he's researching virtual world economics partially just for the reason that current economics theories don't cover MMORPGs well and thus aren't able to predict the amount of (real) money involved in the games.

Did You read the paper? It was interesting reading, although I admit that most slashdotters probably just can't take a 44-page paper on one sitting, as even short one-page articles go unread by many posters..

Re:Eh? Are these people serious?

[Galvatron]

What, are you saying that, by virtue of being on a computer, traditional laws of supply and demand don't apply? I would say that "any Economic 101 student" should be able to tell you that economics can be applied to anything, you just have to adjust the rules. MMORPGs may have some very bizarre economic rules, like constant devaluation of formerly valuable items due to expansion packs, or an in game currency that is almost totally worthless, but that doesn't render the system impervious to economic analysis. In fact, that makes it all the more interesting. By testing our models of economic analysis on social situations very different from those that exist in the real world, we can see how flexible they are.

Re:Eh? Are these people serious?

[Anonymous Coward]

It sounds to me like you have never had the aforementioned ECON 101 class. If you had you would know that an economy can be of any size or complexity. The only thing that defines an economy is the exchange of goods or services. In my apartment we have a micro-economy. This economy has several components.
1) myself
2) my brother
3) my (other) roommate

We don't barter goods or give each other money, but there is an economy. For instance, my brother gives me a ride to school one day, so I let him use my computer to play Warcraft that evening. His car works, the ride to school is not valuable to him, my car doesn't it is valuable to me. My computer works, the time on the computer isn't valuable to me, his doesn't, it is valuable to him. So we trade. Were his computer to work, computer time would be less scarce (inflation).

Re:Eh? Are these people serious?

[nurightshu]

Only on Slashdot could we have Ricardo's Law of Comparative Advantage, dinner making, and EverQuest all rolled into one. If only you could have worked in how Adam Smith's "invisible hand" makes EverQuest more fun because he and his mother trade dinner for garbage (essentially inputs and outputs, when you think about it).

Again paraphrasing P.J. O'Rourke, I don't know whether to shit or go blind. :-)

Re:Eh? Are these people serious?

[Anonymous Coward]

Preach ON, Brother Ericsson!!! AMEN!

Very true.. except..

[Inoshiro]

A virtual economy, like any economy, must barter in scarcity. After all, it is scarcity which forces the choices of economics on people.

The most obvious object which a virtual economy could manage is time. You can't turn time into an encoded form on a computer which can be played back at any moment. By farming out your own time that you are willing to spend on some problem, you could get some credit that would be useful to negotiate time off of someone else's hands for a task you need completed by a certain time. It'll be the ultimate in specialization, where you need only know one thing well, because you can use that skill to aquire the credits that you use to buy the time of other people who specialize is some task you need completed.

If this sounds a lot like your day-to-day job life, it is. But it breaks down if you look at it from a non-time perspective. Things that are not direct people services aren't scarce in a digital world. You need to move to something else for the creation and release of digital knowledge, something like the street performer protocol. Then the goods (which, when released, are not scarce) can have the creators of those goods still benefit.

Traditional models of scarcity and resource utilization do not apply in a virtual economy. Once one copy of something is released, infinite copies may be made at any point. The only thing you, as a content producer, can do is set how much you want to release that product. This is the next step (IMO) in the evolution of economic theory because it'll allow people to make things on their own, without a big corporate body (RIAA, MPAA) taking a cut off of everything. Prices will go down, and creations will go up.

Wrong....

[raehl]

MMORPG game makers decide the rules of the economy according to what they think makes them PROFITABLE.

That is the sole motivation.

If you like virutal reality stories...

[Codifex Maximus]

then try this one:
Giant's Star

It's part of a very interesting series of novels.

Maybe in ten years we'll be seeing this on CNN...

[Doctor Sbaitso]

NASDAQ up 21.42 points
Dow down by 8.21
EverQuest SE up 1.50

"Wooden game pieces do not...immersive experience"

[Eol1]

(pg 12) ... My ass. I have never in 9 years of gaming seen people more immersed in a game that miniature strategic gaming. These are people that will play the SAME game through hundreds on meticulous through months. Remember times where it would take 9 hours to do 2 rounds. This is immersion in all its details. If anything, you are more immersed as you actually have to think as opposed to everything being handed to you on a plate. Thing with online games and MMORPG's is people don't have to think, its immersion for the masses. Its 5-minute thrill in 10-minute worlds where everything is provided to you.

Star Wars: Galaxies

[RobinH]

I've been following the development of a new MMORPG, called Star Wars: Galaxies. The designers are trying some new concepts with the economies, and they really seem interesting:

1) Raw resources only exist in a set quantity. When a resource runs out, it is replaced by a brand new one, and the old one will never be available again. All the designs and items using the old material will become rares, meaning: a) designers stay busy, and b) prospectors stay busy.

2) You only get crafting experience when an item is *used*, not when it's made. Therefore, you are naturally motivated to make things people want, not whatever increases your skills the most.

I'm really interested to see how it turns out.

EQ Platinum is a tradable commodity like any other

[raehl]

The only question is how much real money is it worth. When you get down to it, buying EQ characters or equipment on Ebay is no different than buying a movie or videogame or shelling out $40 to go to Six Flags. It's paying for entertainment. Buy powerful character, be more entertained. Selling characters and equipment is the same thing: Providing entertainment to someone who is willing to pay for it. It doesn't matter that the entertainment in question is 1's and 0's on a server somewhere, or that there's no "sink" for it (i.e., a way for money to leave the game). If more and more EQ Platinum becomes available, like any other currency, it'll just suffer rampant inflation. Sony creating lots of platinum, or players exploiting bugs to create lots of platinum, is no different than Mexico printing up lots of pesos to pay off national debt. It just makes the value of the platinum/pesos worth less in dollars.

EQ money is the same as real dollars - it represents production of a tradeable product.

When people buy EQ "Stuff", what they're REALLY buying is the TIME of the people who generated that stuff (or more accurately, they're buying the time they now don't have to spend getting the stuff themselves.)

EQ Platinum *IS* money, moreso than real platinum. Can't do anything with dollar bills, can't do anything with EQ platinum, but people will give you stuff for both because they believe other people will do the same. That's where it gets its value - not because of any useful properties, but just because people BELIEVE it's money.

One of these days, people won't play EQ anymore, and EQ money will be worthless. You'll be able to buy billions of EQ platinum pieces for $1 because no one will believe they have any value anymore.

Its exactly the same reason you can buy millions of Afghans or Lira for $1. People stopped believing the money was worth anything, so you needed a lot more of it for someone to trade you a dollar for it.

Modders and cheaters....

[StarTux]

Thanks to some bugs quite a few people used macro's to actually get a lot of money, and subsequently flooded the market with a millions of plat for relatively cheap price.

This actually caused issues to the economy in that platinum was now rather worthless...Quite interesting on how this effected the economy of EQ.

StarTux

wait, you're thinking. qjkx

[Anonymous Coward]

Shouldn't you just dismiss these as just a "game", unlike "real" money? Oh, you are thinking.

impact on real world...

[ypoint]

From the article

The impact of games How would a large emigration of work and play time to these virtual worlds affect the economy of the real world?

I might be stating the obvious, but those people who waste their lifes with these games won't have much influence on the economy of the real world. How could they have the time and dedication for starting a business or qualifying for one of the higher payed jobs? (And yes, I am forcing myself to stay away from these games.)

Value Judgements

[name_already_in_use]

i can't think of an instance and I don't see one coming about

The whole point of value is that it is subjective. What one person would pay a lot of money for another would happily throw away without a thought. Clearly then these virtual economies are presenting value, albeit in digital form, to some people and there is nothing to indicate that this phenomenom will not continue to grow.

Value and quality are interesting topics for programming geeks and engineers alike, but the best book I have ever read on the subject is Robert Pursig's 'Zen and the Art of Motorcycle Maintenance', which should be made compulsory reading for any first-year computer graduate (IMHO).

slave

[yerricde]

(except perhaps the old Lira, which was so worthless as to require several million to buy a mellon)

"Lira" was the currency of Italy until it switched to the Euro. "Melon" is either a fruit or a large female human breast. "Mellon" is either the M in CMU or the Sindarin word for 'friend' (pl. "mellyn") and is the password to the Doors of Durin (topical: the Doors of Durin are in a fantasy world that just hasn't been MMORPGized yet). I assume that you aren't referring to "buy a friend" because as far as I know, slavery is illegal in Italy and the rest of the European Union. Or "buy a friend" as in a campaign contribution on the part of a political action committee?

OK, that was a bad joke.

Re:slave

[nurightshu]

The Lira is still, as far as I know, the basic currency unit of Turkey. Turkey's hyperinflation in the mid-'90's puts Italy's plain-old everyday inflation to shame. The last time I remember checking the exchange rate ('95, when I had to know the D-mark rate daily so I could actually live on the German economy), it was over 1,000,000 Turkish Lira to the dollar.

Re:slave

[ethereal]

Of course, the password hint was "Speak, friend, and enter", and we all know that money talks :)

Bullet speeds...

[Dareth]

I load ammunition for my 6.5x55 mm Swedish Mauser.. a nice little carbine (short barelled rifle) and the bullet speed is on the order of 3000 fps (feet per second) and is only a moderate load. You do the math, a lot faster than 100mph. : )

Re:Bullet speeds...

[thefinite]

Man, is there anything you can't learn on /.? Thanks :)

Re:Bullet speeds...

[Anonymous Coward]

That's right. Don't people watch baseball?

98mph fast balls baybe!

what makes reality different qjkx

[Anonymous Coward]

I will never feel cheated to have a replicator in real life because I can't limit myself. Otherwise, you could kill me before I kill you. In a game, you just respawn, but not in real life.

Earth & Beyond economy

[Dirtside]

The economic model in Earth & Beyond is an interesting change from games like EverQuest. It's closer to DAOC's model, as I understand it (I'm not very familiar with DAOC though).

Basically, the best items are player-made versions of loot-only items. Players can make better-quality items than the NPC merchants sell, but the best overall items aren't sold by merchants at all, but rather are dropped off NPCs that you have to go out and kill. So player crafting is important, because it yields the best items; but hunting is also important, because in order for the crafters to make those items, they (or others) have to go out and kill monsters to get those items in the first place. A big problem with EQ's economy is that *all* the best items are dropped off creatures. The best player-made items are pretty good, but do not compare to loot items.

Sort of off topic...

[mao che minh]

I always wondered why the publishers of new MMORPGs always insist on charging the standard $44.99-49.99 market price of computer titles when they release a MMORPG? The obvious exclusion is EverQuest with their expansions, but that is hardly a new game, and I am not sure that the expansions are complete games (I don't play that game, I don't know).

It would be more sensible to charge $20 for the game along with the inclusion of a free month. That would spur first and second month sales by removing the hint of caution that $50 puts into people when they go to buy a game that they know they cannot return, might suck, or might lag horribly for them.

Re:Sort of off topic...

[PainKilleR-CE]

The obvious exclusion is EverQuest with their expansions, but that is hardly a new game, and I am not sure that the expansions are complete games (I don't play that game, I don't know).

You have to have the original EverQuest to play the expansions, and most of the expansions are only valuable to people with higher level characters anyway. The expansions are priced around the same level as expansions for any other game.

Re:"Wooden game pieces do not...immersive experien

[unicron]

Your last sentence is laughable. It's a countless hour thrill in a 4+ year world where everything is just beyond your grasp. That is Everquest.

Gov't Jurisprudence in Virtual Economies

[limekiller4]

thefinite writes:
"Granted, if you are selling EverQuest items on Ebay, then you are subject to U.S. economic laws, but why would any government care about the economic activities in a virtual world, except in areas that affect their own economies? There may be an answer to this I don't see. If so, what is it?"

If you think about the selling of "plat" (platinum) obtained from Everquest on eBay, you're basically talking about a commodities market and the people running the game are essentially printing money.

Re:Gov't Jurisprudence in Virtual Economies

[Danse]

The only commodity being sold is the time that it takes someone to gather the plat to sell on ebay. Since the vast majority of us sell our time (and expertise or muscle as well in most cases) to make a living, this doesn't seem very different.

Re:Gov't Jurisprudence in Virtual Economies

[limekiller4]

Danse writes:
"The only commodity being sold is the time that it takes someone to gather the plat to sell on ebay. Since the vast majority of us sell our time (and expertise or muscle as well in most cases) to make a living, this doesn't seem very different."

You are 100% correct ...but this qualifies for oil too. Or electricity. Or or orange juice or porkbellies. These are commodities. And they're regulated because if you do not, it is possible to manipulate the environment which will result in profit with no risk for the manipulators and assured loss for those not "in on the deal." Hence 'insider trading.'

Whether the item in question is lawfully obtained by the sweat of your brow has nothing to do with the problem. Everquest isn't regulated. An admin could, conceivably, give themselves or others plat. Yes, there might be internal safeguards in place, but are they adequate? Can someone code a script to do that work automagically? Or even worse, can the system be hacked outright?

The result of "printing script" (ie, money) is that it devalues the legitimate money and this leads to inflation and relative devaluation. In other words, if there exists 1,000 units of money in an environment and we both have half, if you can print yourself 5,000 units, we now have 6,000u of money in circulation and my lot is significantly devalued.

Granted, this is an extreme example, but it is only provided to illustrate the point.

Re:Gov't Jurisprudence in Virtual Economies

[Mac Degger]

So? What business and prices all come down to is NOT supply and demand...a price is set by whatever a fool is willing to pay!

Look at Magic cards...now that's 'printing money'...the more they print, the more they sell, the more money they get (they being WOTC).

Re:Gov't Jurisprudence in Virtual Economies

[G-funk]

the people running the game are essentially printing money

No they're not. They're printing virtual money, in a vitrual world. They can make all the virtuamoney they want, and sell it for real world money, but only when people still want it. There is no net gain in the amount of real money, thus no devaluation of existing real money.

Saying they're printing money is like saying that since my time is valuable to some people, being a live is printing money.

Re:Gov't Jurisprudence in Virtual Economies

[Eugene O'Neil]

Pork bellies are a real, physical commodity: the people who make it truly are "bringing home the bacon" for the rest of us. So is electricity. To expect the federal government to treat a made up currency in an imaginary world inside a computer game as being just as important as pork bellies and electricity is demeaning to pork bellies and electricity.

Creating plat out of thin air does not devalue legitimate money, it only "devalues" plat, and if you think that has any real value in the first place you have a problem. If you buy 1000 plat for 1000 dollars, and then the EverQuest administrators create 5000 plat and give it away for free, you will end up looking like an idiot, but those of us who are REALLY not "in on the deal" in the sense that we don't even play EverCrack will just point at you and laugh for taking a mere game so seriously. At no point is actual real-world currency ever created, destroyed, or devalued by this process.

Buying plat is like buying video game tokens: when a sensible person does it, they understand that they are basically just throwing their money away, but they expect to at least have a little bit of fun doing it.

Define "Real"

[Mahrin Skel]

As probably the only one in the thread who has designed a virtual economy from scratch and had a few hundred thousand people beat on it, I found the paper very interesting. I also work for the first company to get sued because we stopped someone from converting virtual money to the real thing. This stuff isn't hypothetical to *me*.

What is real, when we're talking about economics and communities? Is the community of baseball card collectors real? Are the economics of fine art auctions based on rational decisions?

People "live" in these worlds. They have friends, lovers, rivalries, and the *emotions* are certainly indistinguishable from "real". You may smugly sneer at the inconsequentialness of it all, but what would your ancestors of a few hundred years ago think of you? How many of you make a living directly producing something you can hold in your hands? How many of you have jobs you can't quite get your grandparents to understand?

How many people who read /. routinely hunt and kill their own food, or till the soil to grow the wheat for their daily bread? How few people actually make things *essential* to daily life in this modern age?

The worlds I build are virtual. The communities that appear in them are real.

--Dave Rickey

My impression

[mao che minh]

I played Ultima Online of-and-on for about 3 years. My playing days ended a good year or so ago, but I spent so many hours obsessing over the particulars of the economy that much of it remains vivid in my mind. If there is one thing I can add to this discussion it's my belief that a "virtual economy" (like those in MMORPGs) can easily "run away" from the administrators of the game. The factors that give online economies their frailaties can not be applied to real world models.

When I first started playing Ultima Online, 10,000 gold pieces was a considerable amount of captial, and real estate of the lowest kind ran one roughly 55,000 gold pieces. Even with a considerably large user base, supply and demand of the various core resources (wood, cloth, ore) of the game was in a remarkable state of acceptable flux. Inflation was well controlled. The demand of "rares" (items that varied in degrees of difficulty to obtain) drove their prices high, but never to unreasonable levels.

This all ran smoothly, much like a real world economy of small nation might run. But then came factors that real world economists do not have to fret much over, factors that only exist in the virtual world. The most significant was that people started cheating. Specifically, a considerable amount of people found clever ways to mass produce gold by the tens of millions.

You might ask "why didn't the admins just remove all of the excess gold?". Well, they didn't know exactly who cheated, and therefore could not effectively enforce an across-the-board gold removal without losing valuable customers (where the real $$$ comes from). I stopped playing for a short period of time, and when I came back it was a new UO. Houses that were once 55,000 gold were now 1.5 million. Much sought over rares sky rocketed to values of 10 million gold (or more, I am told). New players (and long time players that decided not to cheat or purchase wealth off of Ebay) were now rendered "impoverished" for the duration of their UO life. Basic materialistic goals that players could pursue, goals that were promised to new players on the back of the box, were simply unattainable.

OSI, the company that runs UO, tried a plethora of schemes to make the economy bearable again. They failed utterly, and UO subscriptions continue to dwindle. What differentiates a make believe economy from a real one is the fact that people can do make believe things in a game. No one can dupe 1.5 million dollars out of thin air in the real world.

Re:My impression

[jmauro]

This all ran smoothly, much like a real world economy of small nation might run. But then came factors that real world economists do not have to fret much over, factors that only exist in the virtual world. The most significant was that people started cheating. Specifically, a considerable amount of people found clever ways to mass produce gold by the tens of millions.

I hate to break it to you but people cheat all the time in the real world. There is not much one can do about it. There's counterfiting, fraud, burgular, Pymramid schemes, etc, etc, etc.

James

Re:My impression

[mao che minh]

Money from fraud and pyramid schemes do not simply "come out of nowhere": they are part of the economy - the money aquired by the criminals come from a legitimate and tangible source. Counterfiting does not have the same measurable impact in the real world as it does in the virtual, and is also more easily controlled.

Re:My impression

[bbaskin]

>No one can dupe 1.5 million dollars out of thin air in the real world.

Actually, this is not quite true. Central banks have almost always done this. The Federal Reserve "creates" money out of thin air, buys government debt with it and thus tries to alter the various interest rates to what the Board of Governors desires. The central bank's control of the volume of dollars is nothing more than a monopoly on counterfeiting. This also shows that increasing the volume of money is the cause of inflation, both in the real world and the virtual.

The laws of economics apply to people no matter where they interact with each other and counterfeiting is still counterfeiting no matter who does it. It is a distortion of the economy and will eventually lead to its collapse. It's happened in the real world and evidently has happened online, too.

Inflation is evil, it is theft, it is a stealth "tax" (when used to buy government debt), and it is caused by government monopolies on the production of "money". Only a hard money system (much like an online system where people can't cheat) can save us from these problems.

Think about it, they don't call it "gold" in the games for no reason. It's been money for 6000 years all across the world until the beginning of the 1900s when governments banned its use and started cranking out pure fiat money. And look what has happened to its value. $1 today buys what 5 cents bought in about 1913, the year the Federal Reserve was created. Even at the "low" rate of about 3% inflation today (according to the Cleveland Fed) every dollar you earn today will only be worth 17 cents in 60 years. That's a tough hill to climb when planning for retirement.

Inflation is theft.

Bryan Baskin

Re:My impression

[swillden]

No one can dupe 1.5 million dollars out of thin air in the real world.

Sure they can. It does tend to piss off the Secret Service, though, and they can get downright testy about it.

Re:My impression

[Anonymous Coward]

Wow, you are a true economist. Where were you educated? Clearly not at an institution that valued the concept of real versus nominal prices.

Re:My impression

[Anonymous Coward]

But, inflation gives an advantage to those who are intelligent enough to not allow money to sit at zero growth. If I get $50,000, it may lose value over the next 60 years, but the land I buy with it, will gain value.

Re:My impression

[Anonymous Coward]

I played UO for 3.5 years. I was a beta tester, and was around on the Atlantic shard for the days when the game first started where evil was evil and PKing was a way of life. I liked it when their were great lords and dread lords fighting in dungeons, players were quite honorable, there was very little newb killing, and no duping. I was around for the great real estate crisis, which is why the houses went up in value. It had nothing to do with the gold being duped, it had to do with the fact that the land was filled with houses, people couldn't place more, so the demand went up for land, increasing the land value to what could be considered exponential proportions weekly. It went from small town house purchase to metro Toronto condominium building purchase. Eventually OSI decided to do a wipe of the land and allow people to re-place, which didn't work so well the first time, and the land still filled with houses, and real estate values stayed the same.

Then the patches begain.

Patch after patch OSI released made the game worse and worse. It caused more bugs and more problems, it probably caused the duping exploit. The original game was well implemented. It was the additions after that that made it worse. And once EA got hold of OSI, the game went right down the tubes.

You have to give OSI credit though. It was the FIRST MMORPG of its kind, and considering it was new territory they did pretty well. Everquest doesn't hold a candle to UO in gameplay or in world design. I played for 4 months and quit. It's just a medieval Quake.

-Diabolik

Re:My impression

[daveisoverlord]

No one can dupe 1.5 million dollars out of thin air in the real world.

Enron and WorldCom pulled a hell of a lot more than that out of thin air. And I'm sure the wealthy that hire really good accountants do the same thing.

Re:My impression

[Big_Breaker]

You obviously don't understand economics AT ALL. Constant, low inflation is ideal. Inflation is an incentive to purchase goods or invest their money rather than stick the cash under their mattress.

Goods purchased in present dollars are obviously immune to future inflation and investments like bonds have the inflation component priced in. An equity investment is partially shielded because companies can charge more as inflation picks up.

Currently in the US short term interest rates are extremely low - 1.75% apoximately. This is probably LOWER or about equal to the rate of inflation. That means the the federal reserve has built in a penalty for not consuming or being a risk taking investor (equities or long-term bonds). This is a powerful tool that would be lost if we didn't have inflation. Why? because money (ie cash, greenbacks, etc) ALWAYS has an interest rate of 0%.

Without inflation you can get deflation which is much worse. Look at Japan. Interest rates there are basically 0% meaning there is NO incentive to spend money or invest. Their economy has basically stopped producing the marginal good because no one is spending money. Its a equilibrium point that you never want to settle into.

One "bad" thing about inflation can occur when its rate changes. When inflation goes up it devalues capital owners and benefits debtors and laborers (in general). When inflation goes down relative to expectations it increases the value of capital

The other bad thing occurs when the rate of inflation is so high or unpredictable that the currency ceases to be a consistent measurement of value. Even travel to South Amnerica? The menus in the restaurants often don't have the prices listed or they are written in. Why? because the restaurant has to raise its prices so often because of hyper inflation.

Re:My impression

[bbaskin]

Actually, I believe I understand economics and human motivations pretty well. We just disagree on what drives investment and how an economy works.

I just deleted a huge passage of text that will take too much time to finish while I'm at work. Since you at least seem interested in economics, I suggest that you buy "Economics for Real People" available from the Mises Institute.

http://www.mises.org

This book clearly and quickly describes the Austrian school's view of economics as opposed to the Keynesian version most people are schooled in. Only the Austrian school has a model that incorporates the complicated, real world structure of capital goods and can describe why the business cycle occurs. It is also the only school the incorporates the real motivations of people instead of assuming people operate as equations. It is an entertaining read as these things go and is an inexpensive book.

To your point of deflation: Deflation is not necessarily a bad thing. In fact, slow deflation is the normal mode of operation in a free market economy as technology and business innovation makes good cheaper with time. During the 1800s in the U.S., the general price level fell by 50% while wages rose slightly. This was a time of relatively limited monetary growth since hard money standards were in place for much of this time period. Considering the level of 19th technology compared to today's, I'd say that this price level decline would have actually accelerated. If this regime had extended into the 20th century we'd have far smaller incomes (in dollar terms) but a Ford would cost 100 bucks, too.

Deflation does discourage taking on huge debt obligations (a good thing considering the telecom malinvestment!) but neither inflation or deflation really affect good investments so long as the inflation isn't hyper-inflation. People always want to make their money worth more, so they'll invest whether we have rising prices or not. People don't need a coersive "push" from the government to want to invest money. They always want to become richer. What government driven inflation does is make bad investment decisions much more likely since the money is artificially cheap to begin with. Inflation driven investment decisions are at the root of the modern business cycle.

For reasons a little too complex to describe here (part of what I deleted), I don't believe that growth comes from increasing consumption, but rather from increasing savings that can be invested. This is different from the Keynesian view but crucial. If no one saved but rather spent every penny, the only source of investment dollars would be freshly printed money which will rapidly increase the price level. Only production backed by real savings can grow an economy sustainably.

You correctly see that hyper-inflation is bad but I don't agree that a little bit of a bad thing is a good thing. Inflation is unnecessary and distorts the wealth producing nature of the free market. The price of nearly all goods should be following the model of the computer industry (if not so dramatically in more mature industries). How many people (besides Michael Dell!) view falling computer prices as a bad thing? If inflation and rising prices in general is desirable, does this mean the government should step in a take control of the dangerously deflating computer industry?

Bryan Baskin

Re:My impression

[bbaskin]

I didn't adequately discuss Japan, sorry.

Japan's situation is a perfect example of the failure of Keynesian economics. They are printing the currency like mad in the hopes of forstalling deflation. They have a 0.15% interest rate and massive monetary growth and soon, direct purchase of stocks by the central bank in hopes of rising their prices. There is even talk of sending to each family the equivalent of 10,000 dollars in the hopes they'll spend it and generate inflation. Why isn't any of this working?

Japan is in the recessionary throes of a central bank created business cycle in a highly regulated economy. Many, many bad decisions were made with cheap money and a land bubble, but those businesses and banks aren't being allowed to fail so that the tied up capital is freed for more productive ends. There will be deflation in the Japanese economy or hyper-inflation followed by an even bigger bust.

This isn't the "good" deflation caused by a healthy market economy, but rather a let-down from a failed, overly regulated one. Similar to a bank bust when all the credit money dissappears and suddenly there's less money than there was before. Japan cannot escape one of several painful scenarios, but it is not the picture of a market economy.

If the U.S. follows the Japanese model, continues to keep printing dollars to keep credit cheap, bails out the airlines, the telecoms, the auto-industry and eventually the huge banks, we will take a similar road of economic stagnation. Let failed businesses fail so that the talent and wealth tied up can be freed.

This is the danger with political control of the economy. This corrective action is either muted or prevented by elected officials via taxation or inflation in the hopes of staying in office.

Japan is in trouble, but printing more money won't help them until they allow investments to finally fail instead of sucking up more wealth non-productively.

Re:My impression

[Big_Breaker]

I retract part of what I said earlier. You do understand economics and I agree with your post above. I took some economics at MIT and I wouldn't exactly call it Keynesian. We didn't exactly write essays about the importance of consumption... it dived into econometrics as a method of learning/proving economic theories and there was a focus on the "first principals" or boundary conditions as being being assumptions and therefore the resulting conclusions being predicated on their validity.

Re:My impression

[MikeBabcock]

Counterfeiting has a _huge_ impact because of the international money markets. If foreign powers that invest in your country's currency find out that your currency is being devalued by counterfeiting, the value of your currency goes down vis-a-vis theirs and your country has a harder time buying foreign resources. One of the reasons the U.S. has less of a problem (currency-wise) with counterfeiting is that it is less dependant on foreign countries' investments in its currency. Mind you, if major american money holders invested in Yen or Euros instead of US dollars, it would slowly tip the scales. International economy's way too big of a subject for this size of post though ...

Re:My impression

[dghcasp]

55,000 gold pieces was a considerable amount of captial, and real estate of the lowest kind ran one roughly 55,000 gold pieces.

But then came factors that real world economists do not have to fret much over, factors that only exist in the virtual world. [...]

[...] and when I came back it was a new UO. Houses that were once 55,000 gold were now 1.5 million.

If this doesn't sound like the real world, then you obviously don't live in Silicon Valley. Example: Note the lovely boards over all the windows and the rotting walls on this 900 square foot home! only $489,000!

Any semi-localized windfall, legitimate or otherwise, even if it only affects a small percentage of the population, is going to drive up prices.

This is bunk

[Anonymous Coward]

That name is -hardly- Japanese. Nagoobalhu?

Weren't you the second to be sued...

[Anonymous Coward]

Anarchy Online beat you to that priveldge.

You can try to dupe 1.5 Million in the real world.

[Anonymous Coward]

Real Governments tend to take people eroding people's confidence in their currency pretty seriously.

At the worst, if you get caught "duping" in an Online game, you end up banned. In the real world, you get to spend 20 odd years in Federal, Pound You in the Ass prison.

you've found the food beneath the husk

[Stalcair]

...to use a grain analogy. Salt was once valuable enough and over a large enough area to be used itself as money from what I was told. Internal to these games there is the possibility of creating a virtual world that really can transport you to another place. A place where odd things can happen and the world be completely alien or parellel reality to various degrees. Artificial (in the context of gameplay not concepts of suspension of belief really) restrictions and limitations within these games serve to sever this possibility. Some would not want this or at least not in all games. However I personally would like a fantasy world that can evolve on its own and require less of a retooling to get it back in line. That would mean no levels, classes, or any other preset limits like that (obviously within reason unless we suddenly have clusters of quantum processors).

I would also just like to say that it is sad how our way of life has become a dependency to many instead of merely a convenience. Many would not know the basics of real life survival if it came up and bit them in their PDA. Technology isn't bad... but lets remember to not let it make us slaves. Shoot, a skill based RPG could teach us that! LOL

they appear real...

[mao che minh]

...and yet they are not. The commodity that you invented was real: the game, the software itself. The "world" within it is not.

Comparing emotions to the value gold is ridiculous.

Re:they appear real...

[Mac Degger]

I can't agree with you: real is whatever you percieve real to be. You can look at it in a number of ways; you can say that the world the software creates is real, because obviously people spend a lot of time there. That is where their emotions are projected, even if they're sitting in fornt of their pc's; they're not involved/interacting with the environment around their physical location: their attention is in a world far away.

Or you could be nitpicky and say "that virtual world is real, because it is composed of bits and bytes on a harddisk on a server somehow, and since when are electrons not real?

Re:they appear real...

[MikeBabcock]

Comparing emotions to value is not ridiculous, as any psychotherapist would tell you; people pay a very large amount of money every year to be happy. Not to live, or to eat, but to be happy. Why is there so much more money in pro sports than roofing? Why are the expensive homes filled with entertainment equipment? You obviously weren't thinking 'big picture' with your comment; peoples' feelings, emotions and perspectives _are_ the reality we live, the reality _you_ live.

Re:they appear real...

[wurp]

The vast majority of the value of gold is emotional (the "oooh! pretty!" factor), so your statement is obviously false.

A pharaphrase of sorts

[Anonymous Coward]

The study of economic behavior is pretty much the study of human behavior.

Put a group of people together, physically OR electronically; when you watch their interactions it will be The Economy. For them.

We happen to be interacting in a large group, of approximately a few billion people. It's a natural phenomena. They -are- all real.

Asheron's Call 2

[zaffir]

I'm in on the AC2 beta test (it's a free, open download at fileplanet), and they've taken the player economy to the next level - there are NO NPCs involved. You either get items from monsters you kill, or from ones you craft. And crafting is open to everyone - it doesn't require you to use skill points that could otherwise be spent in combat skills. This could be very interesting; it's a much more hands-off economic structure as far as the developers go.

Re:Asheron's Call 2

[MikeBabcock]

It should require skill to craft a weapon / armour though. It allows players who choose to develop that skill to make a killing selling their high-quality swords and armour.

If you're saying that it doesn't require skill to craft a weapon at all, but more skill = better weapon, then fine ...

Re:Asheron's Call 2

[zaffir]

Yeah, you don't need to split points between crafting and fighting. You get better at crafting by... well, crafting.

virtual economy explained by example :

[Anonymous Coward]

1. 29yr old CS college-dropout: "hey mom, can I barrow your credit card, just for $15 bucks?"

2. Mom: You're not paying for online smut again are you Arvid?!?

3. The folks at EverQuest deposit $15.

Re:"Wooden game pieces do not...immersive experien

[Eol1]

And how does that compare to the single Star Fleet Battles campaign I have been in for 7 years now? Everythign is not just outside your grasp in everquest....you all start playing another game and bet your ass Sony will start making it in your grasp. The latest high level premade character packs you can buy from Sony are examples of this. The thing miniature games have going for them is once you buy them..they are yours, regardless of what the company wants or the economy demands. I have spent $20 and have enjoyed myself for years on that game (~8->12 hours a week).... how much have you blown on evercrack? Where will everquest be in 4 years when the popularity runs out?On to greater and better...where is all your valuable time spent, gone, useless. Sure there are dedicated players ever much as dedicated as real life hobbiest, but they can't support the game along. I dont' care if my games makers go out of biz or not, I can always play the game, now or 50 years from now. One of my favorite games to still play is Renegade Legion Leviathon ... FASA discountined this ~1993 and FASA itself out of biz ~1999 ... yet I dont' seem to have any issues *immersing myself in it*. Your whole enjoyment is driven my mass market economics. Evercrack can't survive a loss of population the way real life games can OR even MUD's. When you product is driven my mass market, your quality suffers and so do your hard core games. And of course people will move on, better graphics, faster games, better engines ... it doesn't end. You can stay still in the computer business. (Everquest is about to die itself...everquest 2 on the way...an upgrade == complete repurchase of everythign you already invested even if they have an import function. They will add somethign to make everquest 1 players go and buy everquest 2). My 700 page ruleset covers all I can and ever need to know to enjoy my games endlessly. Hard to upgrade minatures (well besides better paint jobs).

MMORPG ARE 5 min thrills w/ 10 minute worlds. Its the same reason chess (with a board) will be here 500 years from now and everquest will barely be remembered.

Let's forget duping

[Perianwyr Stormcrow]

The effects of duplication bugs were far smaller than simple design imbalances- monsters yielding thousands of gold were trivial to destroy once you got a tamer up to high enough of a level, or a bard. And don't even get me started on the effects of sunken treasure or So one could rack up lots of gold completely within the confines of the game.

I'd blame the designers' lack of understanding with regards to gold faucets and sinks for UO's situation. Only recently have they started to get a handle on it, and it's far too late.

Umm, ChrisD, can you say-'conflict of interest?'

[Anonymous Coward]

Didn't chris just quit slashdot to start a company making MMORPGs? Sure that must make him really interested in them. But how about no MMORPG article approvals and you let someone else who works for slashdot take those????

Maybe no body cares. But that kindastuff seems like a two steps away from a 'microsoft switch ad'.

Re:EQ Platinum is a tradable commodity like any ot

[Best_Username_Ever]

The whole theory of inflation in these games based on an ever increasing pool of currency is flawed. In games such as Everquest the currency is used to buy and sell items. The pool of these items grows at the same time as the pool of currency grows. In fact, deflation is more typical, since the trend is for players to get better and better equipment so an excess of old unwanted items lowers the prices.

Also in EQ, the better items are usually not tradable, which means they can't be bought and sold. This effectively places a lid on the market, since people are not going to pay huge amounts for an item that isn't the best thing out there. The market is driven by buying and selling mediocre items, which are generally easier to obtain than large summs of currency.

EQ Economy in a nutshell.

[sigmund999]

1. EQ items
2. ?????
3. Profit!

Siggy

Re:EQ Economy in a nutshell.

[Anonymous Coward]

Step 2 would be online auctions.

From my experiences...

[mraymer]

I've noted that with most MMORPGS, on eBay, the real money isn't in the items themselves, but in high level characters. This is probably because of the insane amount of time it takes to level. Basically, impatient players or players with lives (heh) buy the time from other players, so they can enjoy the high level gameplay without the time investment.

An exception to this would have been the Diablo II expansion right after its release. Accounts basically sold for the value of the individual items. I sold a single item (the Eaglehorn bow) for $1010 USD about a week after the release of the expansion. Of course, Diablo II has sort of been destroyed by hacks. Even if it weren't, graphically, the game looked old when it was released. Now, it just seems ancient.

I'm really looking forward to World of WarCraft.

Re:EQ Platinum is a tradable commodity like any ot

[bigdavex]

When people buy EQ "Stuff", what they're REALLY buying is the TIME of the people who generated that stuff (or more accurately, they're buying the time they now don't have to spend getting the stuff themselves.)

I'm sure this is true. But doesn't it strike you as odd? Someone pays to play a game and later pays to to avoid playing the game.

Re:"Wooden game pieces do not...immersive experien

[Codifex Maximus]

Jeezus man!

7 years in one Starfleet Battles Game? Yikes! And I figured my week of doing a StarBase assalt with a friend was pushing it.

Now, I'm reduced to playing Interplay's interesting but somewhat lacking StarFleet Command Orion Pirates. It's almost but not quite what SFB was.

Just wait till I get you in the sights of my Andromedan Mauler my friend. You will wish you were somewhere else.

As for Everquest, I played that game for at least 2 full years. Very immersive, very nice - I just hate Lady Vox though... she sux... can't kill her... she wont die! Die dangit! Jeez.

Oh sorry... got a little carried away there. EVAC!

Re:EQ Platinum is a tradable commodity like any ot

[RollingThunder]

Like buying a house, then paying a maid service to keep it clean?

It's just a way of avoiding the boring scut work, to jump to the nifty bits.

I've met many men in MMORPG's

[Anonymous Coward]

using my alias
"Dunderwoman"

Diana Prince
big time fan of
http://www.askheartbeat.com/cgibin/ultimatebb. cgi

thesims and online warez

[nsda's_deviant]

will wright seems to know what he's doing and i bet he'll find a way for people to buy online warez in the real world. the economics make sense, sony cracking down is BS. south korea has real gangs selling online warez to finance their clubs and bars. the potential of tapping this industry is huge. it'll probablly become its own little economy within the game's economy for the sims.

Game economics

[willpost]

The reason that you'll never see an accurate economy in a game is the same reason why people play online games: People want to escape to a better place.

An economy is a careful, thrifty management of resources, such as money, materials, or labor. Having an economy requires someone to work boring and unpleasant jobs. This includes monotonous jobs in a factory/office/farm/mine/store/vehicle with paperwork, early/late hours, and homework. However, gamers don't like to be managed - when they have too many boring tasks in an online game, they go play another game that's more fun. In a game there is no need for food, shelter, or clothing to survive. Everyone is looking for adventure and as a result they constantly raid or fight each other. If you want to constantly raid new lands like Gengis Khan's horde then play Everquest (it gets lonely if you don't stick with the horde though). If you want to fight other players in large team battles then play Dark Age of Camelot. If you like boring jobs, log off and save up for a nice house. Forget about a gamer economy because no one has to be there.

I don't know which is more scary

[Anonymous Coward]

The fact that this drivel was moderated up or the fact that people wasted their time writing serious replies to someone who obviously feels too important to bother to read the article.

Everquest is $10 right now

[DrSkwid]

https://store.station.sony.com

DAoC is another example

[Andy Dodd]

DAoC definately does NOT cost as much as a single-player game initially.

When I bought my first copy, it was $30 - Most good games are $50+ these days.

When I bought my second copy recently, it was only $20 - Take into account that the game comes with a free month ($13 if paid a month at a time), and that means the game cost $17 and later $7 initially.

Bzzt... No comparison

[Andy Dodd]

As someone else pointed out, Battle.net is something akin to Napster - It just keeps track of clients and tells them where to connect with each other. It might store some information, like character data. (i.e. act as a savegame repository, in the case of D2)

Napster had no problem commanding massive bandwidth overloads all over, but their servers themselves were not strained much at all.

MMORPGs require the client to be connected directly to the server, which means the server and connection have to be a LOT beefier.

Not quite there yet

[Andy Dodd]

Currently, player-made items in DAoC cannot be the best in the game. Armor can have the best AF, and weapons can have the highest damage, but they don't have the magical bonuses that people REALLY want. As a result, especially thanks to the "epic armor" received after a quest at level 50, there's only a demand for 2 of the 4 tradeskills.

This all changes in 6 days, when Spellcrafting and Alchemy (The ability to give items magical bonuses and make potions) finally goes live. At that point, Mythic's original promise that players would be able to MAKE the best items in the game will finally become reality.

That said, DAoC's economy is a bit more robust than EQ's - The problem with EQ was that certain crafted items sold for more than they cost to make. This is what the free-money exploits take advantage of. In DAoC, EVERYTHING is a loss except for one of the lowest items, which will net you 7 copper per build. (Note: Macro this all you want, it would probably take a day just to make one gold, whereas a player could make that much in a few minutes solo farming.)

Also, DAoC has a couple of inherent "cash sinks" built into the game. While EQ's economy primarily consists of buying "rare items" that enter the game but rarely exit, probably 50% or more of the cash in DAoC's economy is used to buy wood.

Wood, you say? A key part of DAoC's endgame is realm vs. realm battle. Part of RvR is taking over enemy keeps and holding them.

Upgrading a door to level 5-6 usually costs a few hundred gold worth of wood. Holding a keep for two weeks against attacks can make an entire guild go flat broke. (This happened to my guild - People are just beginning to recover their cash reserves well over a month later.)

Re:Not quite there yet

[MikeBabcock]

Do any of the online games have the equivalent of enchanting your own weapons (like Morrowind) yet?

Being able to buy a Dai-Katana at the market for 100 gold and then enchanting it with soul stealing and high fire and shock damage for 5 seconds on a target (the amount of time in between my swings) was a very cool experience ... being able to craft several and sell them would be great in an MMORPG.

Re:Not quite there yet

[Andy Dodd]

6 days. :)

The new crafting types to go live on DAoC's servers on the 29th (note: www.camelotherald.net has lots of DAoC news) are Spellcrafting and Alchemy.

Spellcrafting:
Adding magical bonuses to crafted items. (Equipping item gives +5 intelligence, +2 Cold Magic, etc.)

Alchemy:
Ability to craft armor dyes cheaply
Ability to add particle effcts to weapons (Make em' glow - Pretty much useful for eye candy)
Ability to make statbuff potions (Adds points to an attribute for 10 minutes)
Ability to add "procs" to weapons/armor - A weapon with a proc will cast a certain spell when it hits in melee combat. (A guildie of mine has a sword that procs a fire DD spell, aka fire nuke pretty often). Reverse procs will cast spells (5-sec armor buff, etc) when armor is hit in melee.

There's a lot of info on spellcrafting/alchemy on the Herald, and on many other sites. (People have been playing with it on the DAoC test servers a lot)

Re:Not quite there yet

[MikeBabcock]

Sounds quite impressive; any screenshots of the interface for doing these things, especially the custom effects?

Re:Not quite there yet

[Andy Dodd]

None that I have.

Glowing effects - You can probably see that if you go to various sites (camelot.allakhazam.com, daoc.stratics.com, etc.) - Since these are already implemented on dropped items. It just happens that soon players will be able to customize them.

There used to be a really good friar staff shot at camelot.mmorpg.net, but they've reorganized the site and I can't find it anymore. (Entire staff glowed red. My staff only has a green glowing ball at the tip.)

Gold Standard

[Rupert]

There's nothing magical about gold. The demand and supply of gold both vary in a way not related to the cost of anything.

How many milligrams of gold did it take to buy a loaf of bread in 1913? How many today? What about a motor car? What about a computer, which actually has a higher gold content than either of the other examples?

Re:Gold Standard

[bbaskin]

You are entirely correct. What is special about gold is that it was chosen on the free market (and then codified by governments later) as "money" out of all the available commodities. It is divisible, durable, reasonably scarce but widely distributed, and has a good "value per density". And in a way, it is related to the cost of "something". It is related in part to the cost of investing in mining equipment, labor, and refining. It can't be magically created, so it is related to other goods. But this is not the root of it's value. It was valued by the market as the most marketable commodity, thus it was money.

The California gold rush was inflationary so a hard money standard doesn't prevent inflation but it will restrain governments and hyper-inflation.

The choice of making coins or jewelry is the same as dollars or jewelry, no different. It is just a unit of exchange that is not subject to much government manipulation. Instead of prices being measured in dollars, measure them in grams.

A motor car in 1913 (Model T) took about 7 ounces of gold (at the official exchange rate, so take with grain of salt) and today a new Kia can be bought for about 25 ounces. Note, however, that the Kia is a supremely superior vechicle to the Model T. A Model T today (assuming it is legal to sell! and not as a collectible) would cost, what $1000? Less? Only 2 or 3 ounces, then.

Much different than the difference between $200 and $8000.

Re:Gold Standard

[MikeBabcock]

Gold makes a poor economic tool though when you have to validate that you're being given real gold; its easier to test paper bills (especially here in Canada) for validity than gold.

Re:Gold Standard

[bbaskin]

No one ever said you had to be paid in physical gold. Paper money works just fine, as long as it's 100% backed by something physical, like gold.

Besides, gold coins, in useful denominations,would be exceedingly tiny. $1 is ~.1 grams or so.

Banks can settle accounts behind the scenes as we use "gold cards" :-) The important thing is to prevent manipulation of the money supply by the government.

Bryan Baskin

always-exciting "Work Game of Earth"

[bryguy5]

My favorit part of the paper:

"Then the issue can be handled elegantly in Equation(2). Game A happens to be the always-exciting "Work Game of Earth," where you go to the office and face the challenges, denoted C, presented by you boss, your co-workers, and your competitors, and where overcoming those challenges garners you rewards, denoted R, in the form of wages, perks, fring benefits, and assorted entertainments involving the office copy machine."

Oops back to the copy machine.

Who Cares?

[delus10n0]

If you're spending (say it with me) "real life" monies to advance yourself in a GAME, you are a loser.

And if your arguement is that this is for entertainment, well my friend, I only paid once for my copy of Soldier of Fortune II, and it's offered me endless hours of entertainment. Same with Half-Life.. Unreal Tournament.. Tribes.. WarCraft III.. Quake2.. etc..

I don't have to pay to advance my character or stats in these games. My level of fun isn't going to depend on whether I have some piece of "r4r3 ph4t l3wt" or if my character doesn't have a sword with +1 against ogres. I can just play, and not worry about such things. Nor do I have to pay a lame "monthly fee" to keep playing the game.

Consequently, EverQuest sucks the wang, and you all need to get lives.

Re:Who Cares?

[LordYUK]

Heck yeah. I agree with you completely. While I cant say that I wont ever pay a monthly fee for a game, I CAN say I will never ever BUY someones stuff from them using "real money". Thats just lame. the subscription fees arent horrendous, and I guess if you spend 2 hours a week (avg movie time) you got more than your 10 bucks worth out of the game.

Re:Who Cares?

[MikeBabcock]

Lets put it this way -- I wouldn't do it, but I could just as easily say "If you spend real life monies to buy a hint book, you're a loser" since I've never done that either.

That said, there are lots of people who aren't like me, and that doesn't make them ilegitimate players; perhaps poor players, but as long as they don't break the game's rules, players nonetheless.

Re:Who Cares?

[WndrBr3d]

Yeah, but if you go to a movie with a chick, you might get laid. Playing EQ, the best you could do is masturbate without your mom walking in.

I wasn't talking about inflation in the game...

[raehl]

I was talking about inflation relative to dollars. Yes, in *SOME* multiplayer games deflation of currency relative to in-game equipment is common (I've seen inflation as well, usually when you can sell equipment to NPC's for money and the NPC's sink the equipment while dumping even more money into the game), even if you spend less EQ platinum to buy a piece of equipment as time goes on, that doesn't change that you're ALSO spending less real life dollars on the platinum. In-game currency deflation relative to in-game equipment can still be inflation of in-game materials relative to out-of-game currency.

Ah, a deluded Slashdot arm-chair economist.

[raehl]

The value of money isn't just relative to how much of it there is, but the VELOCITY of it as well. Velocity is an economic term for how fast money is spent. Let's say we have an economy with 100 people and they all start with 100 dollars. Additionally, lets assume that everyone works their 40 hours a week producing whatever they produce. (Shoes, investment advice, whatever.)

Now lets say over the course of the year, everyone spends their $100. At the end of the year, that means that on average, everyone also received $100 and has $100 at the end of the year. Per capita income: $100. GDP: $10,000.

Now lets say that the next year everyone produces the same amount, but spends their money once in January, and then after they receive it, spend it again in February, and then after they receive it, spend it again in March.

That means that on average, everyone received $1200 over the course of the year, for a GDP of $120,000.

But since production didn't increase while velocity increased 12x, everyone has 12x more money to buy the SAME amount of product with, so you get 12x inflation.

Even though the SAME 10,000 $1 bills were involved.

Point is, inflation is not a simple matter of printing more money. It's a matter of how much there is and how fast it's spent, coupled with how much your production increases. Inflation/deflation is ACTUALLY (change in amount of money*velocity of money)/(change in production).

Ideally, your change in the amount*velocity of money increases at the same rate your production does and prices remain stable. If I produce 1.2x as much stuff as last year, having 1.2x as much money is a good thing.

Re:Ah, a deluded Slashdot arm-chair economist.

[bbaskin]

This "velocity" concept has never made sense to me. First, what are the independent definitions of "velocity", volume of money, etc. in the equations? Far too often, I've only ever seen then defined in terms of each other.

But in your little example, 12x velocity can't equal a 12x rise in prices since exchanges are made at a particular instant in time and place. At a particular time, there is still only $10,000 in the economy and only that dollar "value" applies to the transaction at hand. Now expand our time window some nominal period of time to allow the transaction and other bidders. Even with the velocity concept, there is only a fraction more than $10,000 for our transaction. To fully realize the multiplicitive power of the "velocity" you'd have to have a 12 month auction for every good for everyone to have a chance to bid their full "$1200". But that isn't the way the real world works.

I think the "velocity" concept comes from the Keynesian focus on aggregate demand and production instead of focusing on the individual, the only real and fundemental unit of the market economy. In short, I don't think it really exists as a player in prices.

Transactions are discrete, not aggregate and there is no simple pat formula to describe them all.

Re:EQ Platinum is a tradable commodity like any ot

[MikeBabcock]

Or paying someone else to build it (as most of us probably do / would) ...

Re:Maybe in ten years we'll be seeing this on CNN.

[tribguru]

If the stockholders of EverQuest SE are smart, they'll invest in non-virtual businesses in ten years.

I bet Time Warner will be a steal by then...

Obviously, the single copy of the genome...

[raehl]

Because if that goes away, I'm dead.

You said it in your first sentence...

[raehl]

You don't understand.

People will make many purchases with their $1200. They don't need to have it all at once. Let's say that everyone has $100, and spends $10 every week. That means that, on average, $10 flows out of AND INTO everyone's account each week. Because you arn't making more than $10 per week, you're not willing to buy more than $10 per week.

But lets say that this week, you want to buy something that costs $150. But you only have $100 - so what do you do? You go to someone else who has $50 and you borrow it and promise to pay them back $60 later. $60 later is worth more to them than $50 now, for you, $50 now is worth more than $60 later. Now you go spend your $150.

What just happened? Someone who was used to getting $10 a week just got $150. So now they can go spend $150 instead of $10.

A bunch of people do this and there's a lot more money to be spent, but no more goods to spend it on, so inflation results as buyers find that their customers have more money they're able to spend on their products.

This happens in the real world, only much slower, and it's balanced out by economic growth. Having 10x as much money is a good thing if oyu also have 10x as much people making 10x as much stuff.

Re:You said it in your first sentence...

[bbaskin]

Okay, hold on. Borrowing money does not drive inflation. Some people have more money to potentially drive prices up, but that money came from other people restraining their consumption so that they have money to lend. There are still the same number of dollars, just in different hands. After the loan is spent, the borrower has to work off the loan which requires a decrease in consumption on their part, plus a little more to pay off the interest. While the borrower is paying off the loan, he certainly can't contribute to "price inflation" by trying to outbid the lender.

Borrowing can only drive general prices higher if both the borrower and the lender can use the same money, as can happen in a fractional reserve banking system, but that is a different issue.

Re:"Wooden game pieces do not...immersive experien

[Eol1]

Thats one CAMPAIGN. Are little gaming group decided that the same old scenario's were getting old and FE was no fun. So we designed a spherical universe map, gave each person a planet in it, and the started a great war. About 200 sectors, each populated randomly and about 8 players. Haven't yet had a clear winner. Have to remember that a single large fleet battle (using max command points) gives you ~ 12 ships -v- 12 ships. At 12 hour game days, takes 2 weeks->1 month to finish a battle. One day my mighty Andro empire will win this :) (actually have my doubts from my position, but can hope)

-Peter

yes and no...

[raehl]

Borrowing money doesn't DIRECTLY drive inflation. SPENDING money does that. But borrowing money does enable you to spend it. Borrowing money doesn't prevent someone else from spending it, it enables someone ELSE to spend money that would otherwise have sat around doing nothing - thus increasing velocity.

Your fundamental error here is that you think the number of dollars in the system is the same as the number of dollars that can be spent. It's not.

Very simply, everyone has $100. If they spend $10 per week all year, $50,200 will be spent that year. If they spend $50 each week all year, $251000 will be spent that year. SAME amount of product produced, but FIVE TIMES as much money spend on it, and prices are five times as high, even though the SAME PHYSICAL AMOUNT OF DOLLARS was available.

GDP = Number of people * PER CAPITA INCOME.
GDP = Total money SPENT.

You must first accept that fact that you are NOT measuring the amount of money, you're measuring the FLOW of money. If there is more flow, but the same amount of product, you're going to need to devote more flow to get the same product, and that's inflation.

Re:yes and no...

[bbaskin]

Say you sat our fictional economy in a room and everyone had their 100 bucks. There's a vase in the middle of the room and this is the only good available. Bidding begins. The highest bid possible is a consortium of 100 people bidding 100 dollars or 10,000 bucks.

Now, increase the velocity of money by having everyone pass their money around in a circle as fast as possible. In the end, the highest possible bid is still 10,000 dollars by the same consortium. I don't care how you measure GDP of this group, the total number of dollars still determines the basic price level.

I guess where we diverge is viewing GDP and thus terms defined in terms of GDP as "real". Aggregate measures like this to me shouldn't be taken too seriously. Apples and oranges may be both measured in dollars but their relative value is determined by human preference, individual by individual. To lump all goods and services into a single cardinal number and have it represent wealth is to say that there is a definable exchange rate for every single good and service for all people in the entire economy. When it comes to human preference, assigning cardinal (dollar) values becomes often impossible. What is the exchange rate between vanilla and chocolate ice cream? I hate vanilla, so for me, there is no exchange rate.

I guess my point is, I don't think that GDP is a good way to represent the value of an economy. Maybe it represents population times income, but you can't say it accurately represents the level of wealth as a whole.

This is part of the fundemental difference between the Austrian approach and the Keynesian school of economics: emphasis on the individual vs. the collective. If you want a good and short into into this school of thought, check out the Economics for Real People book I mentioned in my first post at the Mises Institute.

http://www.mises.org

You might not agree, but you'll probably find it interesting. Plus it's a cheap book ;-)

Re:yes and no...

[jhantin]

While I agree with your point about GDP being a poor measure of wealth, I simply can't resist picking some nits with your example. :-)

Who's offering the vase for sale? If it's not one (or a consortium) of those 100 people, you're sinking the money instead of moving it, and its velocity becomes irrelevant.

If the money is merely being passed in a circle, is real value being exchanged? Is an actual trade taking place? Juggling money in that manner may be a part of a tax dodge in some cases, but it doesn't contribute to the true velocity of money.

Even if the money stays within the community, since money is a relative measure of value, there has to be something else to measure it against-- another good, or more of the same good, or the same item going up for sale again later, or what have you. People will work this one out, though: there's always a derivatives market, and here's an extended example based on it. :-)

Suppose a consortium of 51 people wins the bid (a bid of $5100 is a majority of the total dollars and so cannot be outbid), buys the vase from its original owner(s), then leases it out to non-members who need to carry water (exploiting it as capital). A year passes, and the Vase Management Group collects $6000 in lease fees. Gross economic product is $11100 ($5100 + $6000) for the year, and we've derived a new good: leased use of the vase.

The other 49 people decide that they want the vase for a while, borrow $2000 from members of the Vase Management Group, combine it with what money they have left, and make an offer of $6000 to buy the vase, which gets accepted. The newly formed Container Corporation collects $6100 from the members of the former Vase Management Group that year; they pay back the $2000 borrowed, plus $200 in interest. Gross economic product for the year is $12300 ($6000 + $6100 + $200), and we've derived another new good: loans, or leased use of money.

An enterprising former Vase Management Group member notices the rate fees are collected at, and offers to buy the vase from the Corporation for $10500! Only $50 is paid up front from the buyer's own money, while the rest is borrowed from others including the Container Corporation. Something interesting occurs: the effective money supply is stretched. The money that was borrowed from the Container Corporation need never materialize, since it was paid right back to them; once the Mister Vase Proprietorship owns the vase, lease fees paid by anyone he owes money to need never materialize, since it can be paid right back toward the loan balance. The buyer can even pay the interest on the loans in this fashion. Over the course of the year, Mister Vase collects $12000 in lease fees (there are about twice as many people to lease the vase to) and pays off its $10450 in loans plus $1045 in interest. Gross economic product is $23545 ($10500 + $12000 + $1045) for the year.

In the first year, the gross product was higher than the total amount of money in the system because some dollars changed hands twice-- the velocity of money in action, with the derivative market giving it a reason to move. In the second year, it was even higher since the vase price went up and a new good, the use of money, was being traded. In the third year, vase appreciation powered by quantum-leaping dollars lifted the gross product into the stratosphere!

The "virtual money"-- the payments that only exist as changes in who owes whom how much-- still contribute to the total velocity of money: there's real value (either ownership or use of a resource) changing hands. At the same time, undeniably, neither the number of dollar bills nor the number of vases within the system has increased; using gold coins instead of dollars would not have changed the effect.

Of course, if our enterprising vase buyer's business fails, its creditors are collectively up a creek unless they either form a new consortium or sell the vase again and split the proceeds ... but that's another matter.

Re:yes and no...

[bbaskin]

You've demonstrated some of what I don't like about "velocity" and gross products. By adding assets, liabilities, interest, etc. all in one lump value, you're saying they are all the same in some way. You implicitly begin to see this as a measure of wealth, yet we still have 1 vase and 10,000 dollars. Same amount of water can be carried. You then speak of "velocity" which is still defined in terms of gross product, a simple summation of all the transactions in the economy.

What is the independent definition of "velocity" and how is it measured?

As for the Mister Vase Proprietorship and its high bid for the vase, I think this is basically similar to fractional reserve banking, whereby the lender and the borrower both have use of the same money. This sort of transaction is inflationary in nature and also prone to failure as you have noted. Provided there isn't forced "insurance" via some sort of FDIC, this sort of transactions are limited by market forces and fear of failure, though I tend to see them as a little on the fraudulent side, too.

In the real world, when Mister Vase Proprietership runs into problems because the creek dries up for a few days or someone is late with payments, the whole shebang will quickly fall apart. At this point, however, our enterprising bunch will invent a central bank and printing presses and solve the situation nicely with a bunch of fresh paper money. Then inflation, velocity or not, will really begin!

Bryan Baskin

It's a takeoff on Pulp Fiction

[Anonymous Coward]

English, motherfucker. Do you speak it?

What makes the GDP approach seductive

[jhantin]

Apologies if I offend anyone, but I'm about to launch into a jumble of freshman economics, derivation, and opinion here-- please correct me if I bungle anything. :-)

What makes the GDP approach seductive is that GDP is a straightforward number to measure, and once obtained, a very easy metric to use as a basis of comparison, in support of an argument, or anything else such a measure might be used for. Unfortunately, while it's easy to measure, it's measuring the wrong thing: the mere movement of money doesn't measure of quality of life, production capacity, or available resources. In other words, while money might be something you can trade for good stuff, money itself is not wealth.

Fundamentally, money is just a means of determining resource allocation. It serves three major functions:

• It provides a common measure of value-- so people can compare what things are worth to them individually on a unified scale.
• It serves as a medium of exchange, simplifying trade by avoiding the hassle of barter systems.
• It serves as a store of value, so you can spread trade resolution out over time as well as space.

As a measure of value, while it works well on a micro scale, it fails on a macro scale, since the total money supply is effectively an arbitrary number relative to the quantity of resources in the system.

As a medium of exchange, on the whole, money has been a smashing success, although individual currencies have certainly hit bumps in the road (and lately a few hedge fund managers have been exploiting those bumps to the detriment of bondholders and citizens).

As a store of value, it works quite well in the short term, but the fact that its value is subject to significant change over time, coupled with the relative uselessness of money as anything but a trade token, makes it a poor choice for long-term storage of value. I'd say the disadvantages of using a fiat currency as a store of value are even more pronounced, since its value fluctuations are subject to politics and policy, and it lacks any use whatsoever should its backing institution not hold up its end of the bargain, while gold isn't created by administrative action, and if the central bank goes under, you can still make stuff out of it. On the other hand, using a commodity like gold as a common measure of value seems somewhat dubious to me, since changing technology can sharply alter both its supply and demand curves relative to other goods-- the price of platinum, for example, was driven up by its use in catalytic converters-- while I would expect the disconnected nature of fiat currency to render it more stable in the presence of such shifts.

From the speculation department: Could a hard currency not directly bound to an external commodity or another currency even exist? Would it successfully dodge the disadvantages of both commodity and fiat currencies?

Re:What makes the GDP approach seductive

[bbaskin]

A hard currency not based on a commodity would probably not arise on the free market as gold did thousands of years ago. It could be imposed via a government or agreed upon in the free market (more likely in modern times) but we are still left with the problem of determining and protecting the quality of money, number of bills, preventing counterfeiting, etc. These are all things handled automatically with a commodity (at least the right one) as money.

We could just say there will be 1 trillion dollars, period. What who then is in charge of printing them, removing old ones, making new ones? How will they be trusted? The government is the first answer most people will post, but a study of monetary history shows this is not a very wise choice ;-)

Bryan Baskin

And what about the concept of Project Entropia?

[Anonymous Coward]

http://www.project-entropia.com

One of the first MMORPG's which will involve having to exchange really money into the game money. Cuurently the exhange rate is set at 10PEds per $1.

This could make this idea of the ingame economics a lot more interesting.

Last Post!

[alpg]

Celestial navigation is based on the premise that the Earth is the center
of the universe. The premise is wrong, but the navigation works. An
incorrect model can be a useful tool.
-- Kelvin Throop III

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