Economics and MMORPGs

[Feba]

Hoping this thread will have some more resources, since I think it's a topic many of us would be interested in, but to start things off, an interviewer with CCP's in-house economist:

EVE Fanfest 2013: The Invisible Hand of EVE Online | Rock, Paper, Shotgun

Interviewer wasn't great, but there's an absolute gem in there where the economist mentions how CCP can implement price control measures for PLEX (Game time codes, buyable with cash, and able to be sold on the in-game market), which were being heavily hoarded, without having to get themselves into a situation of printing money: They sold assets that were held by banned accounts.

[Icemage]

Re: Economics and MMORPGs

That's a fascinating read. Very cool stuff, and incredibly smart of CCP to treat their in-game economy like a real economy (Valve does the same with Team Fortress 2, as I recall).

Makes one wish Square-Enix could find it in their heads to hire economists for their MMORPGs instead of constantly tweaking stuff that breaks the economy.

EDIT:
Here's a particularly illuminating set of questions from the interview:

RPS: How much ISK is there?

Dr Eyjó: 650 trillion.

RPS: That’s everything there is in circulation?

Dr Eyjó: That’s all there is in circulation.

RPS: How do you know?

Dr Eyjó: We count it. Every day.

RPS: Every day? But presumably it comes in and out, so it must alter a little?

Dr Eyjó: Yes, yes, on my economic lecture you can see a slide that shows the balance between ‘sinks’ and ‘faucets’ as we call them. A ‘faucet’ is when ISK comes into the game, and ‘sink’ is when it goes out of the game. So we, as I have said, we have a tax – a sales tax – that is there in order to take money out of the system.

RPS: This tax, does it go on hospitals?

Dr Eyjó: [shakes head]

RPS: Roads?

Dr Eyjó: Nope.

RPS: Stargates?

Dr Eyjó: No, no. We can build those for free because we are good at programming. But it’s the same system as in real life. We take a tax to keep the system in balance… We do it in other ways where people are buying services from the computer [NPCs].

Also this:

RPS: I want to test something with you.

Dr Eyjó: Okay.

RPS: I want to see what currencies are the best. I have here a selection of currencies. [Gets up and lays out seven ‘currencies’ on the seat] This is a dollar. I’ve got an Icelandic króna. A one pound coin. I think this one is a Russian ruble. Then this is, uh, play-money.

Dr Eyjó: [picks up and inspects plastic disc with ‘£1’ stamped on it] Ah yes, okay.

RPS: This one’s a watch battery. And then finally, this paper represents ISK – Interstellar Kredits.

Dr Eyjó: Mm-hmm.

RPS: So which is the best one?

Dr Eyjó: The one that you trust the most in. The one that you believe will be, one year from now, something that you can purchase goods with.

RPS: Which one do you put most of YOUR trust in?

Dr Eyjó: Which one do I put most of my trust in? At this point in time? Well, definitely not the battery [pushes watch battery away]. The battery will run out and there’s very few people that will accept it as a payment.

RPS: It has actually run out already.

Dr Eyjó: Right, so it has no functional value and therefore it has no trade value either because there’s nobody who can claim anything from it.

RPS: Okay, we’ll throw that away.

Dr Eyjó: Okay. Play money does not work for me [pushes plastic coin away]. Because I don’t know what’s behind it, I don’t know how many ‘play monies’ are out there and I don’t know who would accept it as a payment.

RPS: Well, that’s the only one I’ve got personally.

Dr Eyjó: Okay. The Russian ruble I would trust rather than the Iceland króna. The Iceland króna is very unstable and is under currency restrictions, so I’ll put that away [flicks króna away].

RPS: Okay.

Dr Eyjó: The pound and the dollar are kind of equal, both have a government behind them who you kind of trust – not completely – but you kind of trust them so you’re quite sure it’s going to happen.

RPS: So what about Interstellar Kredit?

Dr Eyjó: Hang on, hang on. The Russian ruble. I would not trust the Russian ruble compared to the dollar and the pound, simply because it’s under restrictions as well and is fluctuating [dismisses the ruble]. I would trust this one! [picks up paper marked ‘Interstellar Kredit’]

RPS: The most!?

Dr Eyjó: Yes. Because this is the one I have control over and I know in a year’s time I can definitely buy a spaceship for it. In a year’s time the dollar might have reduced in value and in a year’s time the pound might have reduced in value.

RPS: Okay, one final test. These are all the currencies [slides coins back into place]. Let’s play ‘real or fake’. The dollar, real or fake?

Dr Eyjó: It is as real as people believe it is.

RPS: Pound coin, real or fake?

Dr Eyjó: Same answer, it’s as real as people believe it to be.

RPS: Is this going to be the answer for all of them?

Dr Eyjó: No.

RPS: Króna, real or fa–

Dr Eyjó: Fake.

RPS: Okay! Russian ruble, real or fake?

Dr Eyjó: It’s kind of real, but not completely.

RPS: Play money, real or fa–

Dr Eyjó: Fake.

RPS: Battery, rea–

Dr Eyjó: Fake.

RPS: Right. Interstellar Kredit?

Dr Eyjó: Real.

RPS: Real? Even moreso than the króna?

Dr Eyjó: Definitely more real because I will be able to buy a spaceship. There will be people around next year who will be willing to accept this one as payment for a spaceship.

Icemage

[Armando]

Re: Economics and MMORPGs

(Valve does the same with Team Fortress 2, as I recall).

Yup. Their guy made a couple of blog posts last year.

[Aeni]

Re: Economics and MMORPGs

Many sides of the coin: The psychology of money usage

I think this article reinforces what's already been said here with research and study on real currencies. I think I've said this before a couple of years ago (and got called a whacko) that money is belief and it's just what it is. If one day I no longer believe that the wads of paper in my wallet hold any value, then it ceases to be money for me. Many people don't understand this on a logical level, but they only feel this at the subconscious level because they were taught this by their parents, the society and the media, with constant reinforcement, of this belief. It's just religion in that sense of the word, a belief in something, whether that's a deity, a custom or some financial representation.

[ItazuraNhomango]

Re: Economics and MMORPGs

I think I've said this before a couple of years ago (and got called a whacko) that money is belief and it's just what it is. If one day I no longer believe that the wads of paper in my wallet hold any value, then it ceases to be money for me.

Think that view is a little too self-centered; even if you don't believe the paper bank notes in your own wallet is worth anything, you can still exchange it for items which you may value from (honest) merchants as long as they think it's good money.

A currency unit's value is a collective judgement, not an individual's prerogative. I think money is any currency (usually bank notes, these days, except for oddities like Bitcoin) that's in circulation--can be used to exchange for other items or money with relative ease. Good money is a liquid currency (easy to exchange) that's relatively stable in valuation.

[Aeni]

Re: Economics and MMORPGs

Think that view is a little too self-centered; even if you don't believe the paper bank notes in your own wallet is worth anything, you can still exchange it for items which you may value from (honest) merchants as long as they think it's good money.

A currency unit's value is a collective judgement, not an individual's prerogative. I think money is any currency (usually bank notes, these days, except for oddities like Bitcoin) that's in circulation--can be used to exchange for other items or money with relative ease. Good money is a liquid currency (easy to exchange) that's relatively stable in valuation.

Please read what I posted. I said that the piece of paper ceases to be money for me. Nowhere did I say that how I believe would affect how others would perceive the value of said piece of paper. An alien visiting our planet could totally ignore our currency and call us backwards and I think no one would call him a loon to do that.

[ItazuraNhomango]

Re: Economics and MMORPGs

Please read what I posted. I said that the piece of paper ceases to be money for me. Nowhere did I say that how I believe would affect how others would perceive the value of said piece of paper.

If you can still buy stuff with it, how would it cease to be money to you, unless you're disconnected from reality?

[Aeni]

Re: Economics and MMORPGs

If you can still buy stuff with it, how would it cease to be money to you, unless you're disconnected from reality?

Sigh. Forget about it. I don't think you understand levels of context and specificity in an argument, because you take things either too literal or are too ingrained in some specific set of mindset that disallows you from seeing things in a more figurative fashion. Or you just like to argue for the sake of argument.

[Taskmage]

Re: Economics and MMORPGs

I think you are the one not understanding levels of context and specificity. Money, like language, is a collection of symbols that is what it is because of what society believes, regardless of your individual beliefs. You can no more cause a currency to cease being money by declaring your disbelief than you could cause a word to stop being a word. Money is something that can be exchanged for goods. So long as a currency does that, it is money. Saying that "to you" it isn't is meaningless.

Likewise defining contexts in which it does not function as money does not invalidate it as money. If I go to some aboriginal tribe and start speaking English to them, or offer dollar bills to them in exchange for their stuff, the fact that it won't work and they'll think I'm silly or backwards doesn't make English not a language or dollars not money.