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Virtual Economics

Virtual Economics. Theora R. Rice. Outline. Definition Economy Mechanics Currency Design Real Money Trading Some Problems Taxation Interesting Stories. A Virtual Economy.

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Virtual Economics

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  1. Virtual Economics Theora R. Rice

  2. Outline • Definition • Economy Mechanics • Currency Design • Real Money Trading • Some Problems • Taxation • Interesting Stories

  3. A Virtual Economy “An emergent economy… observed in Multi-User Domains, Massive Multi-Player Online Role Playing Games, life simulators, and also browser-based games”

  4. Economy Mechanics • Sources • Do a job/quest • Shake a tree • Kill/loot something! • Sinks • Traveling • Permanent housing • New items • EVE faucet • Bounty prizes • EVE Sink • In-game taxes

  5. Economy Mechanics • Player-to-player trading • Takes place in auction houses, or bazaars • “Freemium” • Game is provided free of charge • Money provides advanced features

  6. Currency Design • BAD money or “Efficiency is not fun” • Challenge! • Social interaction! • Currency: • Not divisible • Not fungible • Misrecognizable • Troublesome • Can be stolen • Costly to store • Perishable • Not private (flaunt it!) • Must be valuable • Must be reliable VS

  7. Real Money Trading • MMORPGS • RuneScape, WoW, Guild Wars, Warhammer Online, LoTR online and Final Fantasy XI prohibit • Undermines game play • Subject to real laws? • Responsibility for financial loss

  8. Real Money Trading • 2007 – eBay no longer sells virtual goods • EVE • Established authorized site • Blizzard – Diablo III • March 18, 2014 will be closed down • Many other games allow, such as Second Life

  9. Real Money Trading • Gold Farming • Approx. 30 cents/hour • 12 hours a day, 7 days a week • Grinding – Selling • Can sell to final customer for as much as $20 for same amount

  10. Some Problems… • Mafias • Gold or other valuables for protection • Cyber brothel • Pay for so many minutes of cyber sex

  11. Taxation • “Work in the fantasy world to pay rent in reality” • Taxation for real world value? • China taxes certain categories of virtual economies • 2007 Linden Labs (Second Life) collects value-added tax on European Union users • Many economists leaning towards “open-flow” system taxation • Would tax Second Life, but not WoW or LoL

  12. Interesting Stories • Diablo II - Gold became worthless • "Stone of Jordan“ ring became more valuable and was chosen by players • Eve Online 2013 • Revenant carrier was damaged beyond repair, worth $8000 • July 2013 Animal Crossing Economic crash • Bug - allowed players to duplicate items and money

  13. Works Cited • http://en.wikipedia.org/wiki/Virtual_economy • http://virtualeconomyresearchnetwork.wordpress.com/2012/04/15/designing-virtual-currency-by-breaking-almost-every-rule-in-the-economics-textbook/ • http://www.psmag.com/navigation/business-economics/the-real-value-of-virtual-economies-eve-world-of-warcraft-64593/ • http://animalcrossing.quora.com/The-Collapse-of-the-Animal-Crossing-Economy-and-the-Rise-of-Villager-Trading • http://en.wikipedia.org/wiki/Freemium • http://games.slashdot.org/story/07/01/26/2026257/ebay-delisting-all-auctions-for-virtual-property • http://us.battle.net/d3/en/blog/10974978/diablo%C2%AE-iii-auction-house-update-9-17-2013 • http://jvwr-ojs-utexas.tdl.org/jvwr/index.php/jvwr/article/view/7088/6333 • http://www.nytimes.com/2007/06/17/magazine/17lootfarmers-t.html?pagewanted=all&_r=0

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