• Virtual economies and the real world

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    MIGGY CASTAÑEDA

    You might look at a video game and wonder what it could teach people about economics. Funnily enough, video games – specifically those of the massive multiplayer online role-playing game genre – contain economies that rival real-world ones, although they’re largely considered for “fun” and have no real world implications. For instance, avatars within games have no biological needs and thus, aren’t susceptible to things such as a house to sleep in and the like.

    Virtual economies in games are built on marketplaces, where avatars acquire items that are otherwise rare or difficult to obtain. In some games, such as Final Fantasy XIV, the virtual economy also includes housing and furniture – though again, this has no real consequence for a player’s avatar other than a place in the game to call home and decorate as they see fit.

    Real world economics, virtually

    MMORPGs generally go as far as having microtransactions, where players may pay real money to purchase cosmetic items, or items that affect how much experience points or in-game currency they earn. Some games, however, like Eve Online and Ultima Online, go beyond this concept.
    Eve Online out of Iceland has a $36 million economy per year, and pushes into hard monetary value by replicating real-life economic phenomena. To explain, Eve Online is set in space, where factions compete for a number of resources including ships, the ability to trade with other players – and the like.

    Running on a system of limited resources means that the game is wholly dependent on each other to survive in the game. In 2013, a Revenant Supercarrier, valued at 300 billion Interstellar Kredit (ISK, an acronym shared with the games home country) or $8,000, was destroyed. There can only ever be three of these ships in-game to preserve its economic balance, and the fall of one sent the game into a large spiral akin to a global economic recession.

    At the time, the event led economists and researchers like Eyjolfur Gudmundsson, who works for CCP Gaming, incidentally Eve Online’s developer, to further dive into what makes the game’s economy tick. They stated that they had barely scratched the surface of how it might gain insight into people’s behaviors and how they affect the real world economy.

    The blurred line

    The existence of microtransactions and marketplaces within MMORPGs has become the focus by which a single server within the game might price its goods. For example, in Final Fantasy XIV, a game that has multiple servers to support its subscribers, the price for a plot of land might be different in Balmung than it is in Faerie, owing to the density of players within that server.

    This means that players will need to invest real hours working for the Gil – FFXIV’s in-game currency – in order to get themselves that plot of land, but they might be beaten by another player with vaster resources. It’s because of scarcities like these that some players might resort to the practice of using real money to purchase in-game currency.

    It is a shortcut that isn’t legal, and while there is little to regulate or even apprehend gold farmers or gold purchasers short of banning their accounts, there’s also little to stop people who would prefer instant gratification over a well-earned reward.

    Final thoughts

    Game economies have become a fantastic source of behavioral data, especially in the aspect of attaching real value to what otherwise are just lines of code.

    There are entire channels dedicated to the exploration of game economies and how behavior in these self-contained spheres might actually benefit the real world.

    Miggy Castañeda writes about personal finance for MoneyMax.ph, a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.

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