Many mainstream economists hold in contempt the Austrian reliance on a priori reasoning. There are few real world examples that can clearly vindicate tenets of Austrian theory because of numerous confounding variables. One exception to this rule is Carl Menger’s theory of money. With the rise of the internet there have sprung up numerous online communities, gaming or otherwise, that give textbook examples of his theory in action. I will describe the internal economy of Diablo 2: Lord of Destruction.
Diablo 2 is an online role playing game. To begin, you pick a character, then complete levels of the game acquiring character levels and items. Some of the items are useful for only specific character classes, but all items are tradable. Theft is also impossible; there is no way to receive an item that someone else owns without their consent. A skilled player can reach the maximum necessary level for the game (85) in several hours or less. The result of this ease in reaching high levels means that levels are unscarce and therefore not valued. In contrast some items are scarce, the Zod rune for example only drop once out of every 65 million monster kills or once out of every 3 million Baal (the highest level boss) kills.
Because of different character classes there were different preferences. For example, a bow is not valuable if your character uses a sword. Of course, this barter economy is inefficient so a currency soon arose. This currency was a ring called the Stone of Jordon (SOJ). This currency has all the hallmarks of any natural occurring currency. It had an independent value; it was the best ring for spell casting characters. It was relatively easy to find, giving it just enough value to denominate the lowest items considered worth keeping. Though there was no central authority forcing acceptance of SOJs as currency, it was universally accepted. Because force was impossible in this game there was no interest market as there was no enforcement mechanism to guarantee repayment. After playing the game for years, I can only remember one person who refused to accept SOJs.
Eventually however, people began to discover how to manipulate the game code and began copying items. This led to predictable market disruption and eventually to another textbook example of Menger’s theory of money. The producers of the game released a patch (changes to the game code) that changed the probability of certain items dropping as well as adding new items. They also released something that was called the ladder, it created an independent gaming universe, identical to the old one, except for a few more items and to enter this universe one would need to create a new character. Because the probability of find an SOJ changed so drastically, they no longer were used as currency. An SOJ was now too valuable to use as currency as there were many items that were considered valuable, yet only worth a fraction of an SOJ. Instead, runes became the new currency. Runes could be placed in items to greatly increase the power, and therefore value of the item. High runes (HR) became the currency, with other runes serving as small change. The HRs as the SOJs before them were universally accepted.
The price changes could be observed daily as the preferences changed. Because no characters could be transported to the ladder the difficulty of achieving a high level increased exponentially. Now with levels scarce, low level items that help achieve a higher level became far more valuable. As more characters gained levels and therefore the ability to help low level characters gain levels, the low level items lost value until becoming worthless.
As Menger claimed, money comes about because of rational self interested actions of individuals in society. In fact, it would be impossible to come about any other way in Diablo 2. Theft is impossible in the game. A unit with independent value and easy to transport (space was scarce in Diablo 2 and both SOJs and HRs took up the smallest unit)
naturally arose in Diablo 2 because it facilitated transactions and provided utility to all participants.