MMORPG's and Austrian Economics

Economics Political Theory
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There are deep, intractable problems ascosiated with deriving economic truths from past experience, or statistical data. The primary problem is that historical records don’t allow you to isolate variables or hold them constant. You can’t get experimental results from the past. For similar reasons, it is also nearly impossible to construct a meaningful economic experiment, as they are either too contrived to be relevant or beyond the control of the experimenter.

The Austrian method avoids these problems by observing basic axioms and logically deriving economic truths from basic principles. By this method, conclusions may be drawn which are provable in the way the Pythagoran Theron is proven. No experimentation is needed. (explanation may well lack technical accuracy)

My point being, what if there was a meaningful way to test these conclusions? Would that help convince others of their accuracy. Could we learn anything new?

I think the model of massively multiplayer online games provide a way to do just that. Many of these games have simulated economies in which human players, with real incentives, directly effect the economy. Further, these “worlds” can be exactly duplicated time and again, allowing for controlled adjustment of variables.

This idea was inspired by the game World of Warcraft. Although I haven’t played it in years, I always noticed that the Price Level at the auction house was higher on servers that had been running for a longer time. I always assumed it was because everyone had more money on the older server beacuse they had killed more stuff.

It wasn’t until several years later when I got into Austrian Economics that I realized my suspicions were correct, and not only that, but that the results of the built in ‘monetary policy’ were predictable. The money supply was increasing over time!

Could we use this type of thing to investigate Austrian principles?

“I guess the game designers didn’t know Austrian economics.” I thought. “How vain they were to think they could centrally plan an economy and not cause rampant inflation. After all, where did that gnoll get that gold anyway. Did he steal it from someone. If so, whom? And who manufactured that loin cloth anyway?”

thoughts anyone?

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One MMO I am familiar with is everquest.

Their PVP servers are probably not a very good representation of anarchism because they literally restrict your ability to group/trade between racial factions. So you can only ever see them as potential enemies, which means it makes sense for the strongest guild to go around zerging everyone.

On the non-pvp servers, every player sees eachother as a potential resource or partner. Despite it not being officially pvp, you can still attack any other player basically without any punishment from GMs. You do this by “training them” which means u bring a whole bunch of mobs they can’t kill to them and watch them die. There is no defense against training.

Despite this, it was not regularly used save as a means of retribution. Example, if you steal my camp, I might train you. Generally this was viewed as legitimate.

Some lame people used to train for fun, but they never got very far in the game. There was also an artificial limit to how much you could ostrasize someone beyond /ignoring them, since you can’t have private property and keep them off it.

Anyway, I don’t think an MMO will ever be a good test for states because everyone voluntarily agrees to pay for the MMO. It could be an okay test for anarchism, but I think seasteads and securitzation of cyber commerce are/will be more convincing examples.

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I played WoW a few years ago. I noticed when I was playing that it was almost an-cap. 100% free trade and zero tribute (“tax”), the one exception being the forced alliance/enmity. I made some mad money just flipping stuff on the Auction House using a mod for statistical analysis and solving the price patterns. My observation was that low level goods were virtually free due to the ease of mass killing low level bots and lack of any use other than levelling professions. High level items were elevated in price when there were more raids. A longer running server would have more high end guilds doing end game, creating a vacuum of high commodities.

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What about creating more economically realistic models and observing the same basic world play out in 10 different universes with slightly different variables.?

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I’ve been working on a project for the past 2 years trying to make the money to make a more hardcore version of the WoW Ancapistan system.

A game can’t be realistic for the purpose you suggest because everyone playing knows that he has nothing in the real world to lose or gain.

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A game can’t be realistic for the purpose you suggest because everyone playing knows that he has nothing in the real world to lose or gain.

Yet people devote great amounts of time and effort into improving their condition in this world. Many people often spend real money from their real pay-check, to buy electronic goods … like cool swords. Given that value is subjective, it’s a stretch to say people can’t value the their eStuff as much as their realStuff.

Actually, the fact that people do spend “real” money to buy electronic possessions all but disproves your statement..

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Sieben I too used to play EverQuest I back a couple years ago and I often heard people refer to the games economy and not really understood what they meant, but it makes more sense now. Especially in places like the Bazaar if you remember that.

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It’s interesting, and now that you mention it, Diablo 2 perfectly validates Menger’s monetary theory. The “Stone of Jordan” (soj) was diablo 2’s official currency though it wasn’t actually currency–it was a ring. Blizzard made gold too easily accessible, and such, it was practically worthless. Thus, the Stone of Jordan emerged as the medium of exchange and the standard unit of account. It was chosen by the market, that is, it was the most marketable item available, but it wasn’t too rare to act as money.

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It’s interesting, and now that you mention it, Diablo 2 perfectly validates Menger’s monetary theory. The “Stone of Jordan” (soj) was diablo 2’s official currency though it wasn’t actually currency–it was a ring. Blizzard made gold too easily accessible, and such, it was practically worthless. Thus, the Stone of Jordan emerged as the medium of exchange and the standard unit of account. It was chosen by the market, that is, it was the most marketable item available, but it wasn’t too rare to act as money.

Yes this is exactly the kind of thing im talking about. It may start to become possible to run meaningful economic experiments, especially if the idea was developed and specific software written with this in mind.

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Games do motivate people, some even to the point of literally grinding themselves to death.

Do any MMOs let you start businesses and marshal capital to create a full business system, complete with employees and maybe even investors? That would kick ass. I would buy that, and I haven’t played games for 10 years.

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Do any MMOs let you start businesses and marshal capital to create a full , complete with employees and maybe even investors?

I don’t do the videogames that much anymore either. I do remember there being railroad tycoon and games like that when I was much younger, I wouldn’t be suprised if they hit an online status by now. They seemed to be games that would be good in that format. Also, I think David Freidman was just on these forums a couple days ago and mentioned something about developing a video game (I think).

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I think it’s crucial that the game not be any kind of “Free Market Simulator” or business game, but rather a MMORPG like WoW, where simply as a result of the freedom the game gives players, such arrangements become possible. That same freedom would allow people to start their own governments and states, panarchies, and all sorts of competing systems. Insofar as the games were true to life, of course, the centrally planned systems would all fail and people would notice that anarchy is in fact best. (Or claim something is wrong with the code.)

It seems to me far easier to make arguments when you can both show them how something works (the free market, seen and unseen, invisible hand, market law, market standards, inflation, central banking, gold standard, etc. etc.) AND get them to participate in it with perfect records kept. I’ve long thought that visual presentations are best for explaining things, and games are even better. Think if Sim City had central banking. People would get the concept of inflation and the problems it causes pretty easily, I think.

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If I hack you to bits in the game you are still alive.

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Heh, I’ve thought about this kind of thing too. I think it’d be interesting but I wonder how close you could get to something like a real-world economy and keep the game fun. For one thing it would be a mistake to openly refer to it as an economics simulation as that would probably just drive people away.

A few of the topics I’ve thought of in no particular order:

-In order to illustrate how money comes about in a free market there should probably not be a pre-determined currency like gold coins. Instead, much like the Stone of Jordan example, the players will most likely find more or less marketable goods during barter and select a currency themselves. Perhaps if there is a crafting system it would be possible to mine metal and smelt it into bars or coins.

-Generally, goods are not scarce. Monsters spawn infinitely and drop mysteriously acquired items and money. NPC shopkeepers have infinite items to sell and infinite money with which to buy the items players sell. Players can mine an infinite amount of ore, or whatever other resource the game allows one to gather. Some of these decisions are made for simplicity and “fairness” so each player has essentially “equal opportunity.” You could make it so that there is only so much ore to mine, for example, but then newer players have nothing to mine. This makes sense economically but players don’t like to have their expectations thwarted like this. You could simply omit NPC shopkeepers and leave players to acquire all their goods through appropriation/production/exchange, but I’m not sure of the wider implications for game design that might have.

-What about capital accumulation? Normally MMOs have a bunch of towns or cities already present, with pre-existing objects like forges, anvils, stoves, mills and whatever else might be involved in the crafting system. These games operate with a fixed amount of indestructible capital and a fixed level of technology. I don’t think it’s feasible to have a system that allows players to somehow advance technology or produce most capital goods. Ultima Online allowed players to “build” houses and run stores out of them (sort of), but it seems very difficult to allow players to engage in anything but pre-determined methods of production with pre-existing structures and capital.

-As has already been mentioned there isn’t the same aversion to murder that you might expect real people to have. Furthermore, death is not much of an obstacle in MMOs, since players are usually just resurrected. Since players face no real consequences from anything they do you’ll probably see a lot of abuse. In-game consequences definitely won’t matter to someone who’s only interested in griefing.

-I was going to say something about disutility of labor, but honestly a lot of these games are too much like work already, so maybe that wouldn’t be an issue.

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EVE Online apparently boasts a slightly more intricate economy than most MMOs. Too bad it was an absolute bore for me to play.

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Check out “EVE”. It is the most in depth game\MMO I have ever played. You’re free to start a corporation, some examples might be mining, or construction (ships, weapons, etc). The corporation system in EVE is much like the guild system in other games, but feel free to think of your members as employees, and I do believe (though I may be wrong) it has investors.

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I’m going to add my vote for EVE Online, also.

I’m not a hard core gamer, but I have played EVE and WoW for a few years. They’re probably the closest you can get to playing a game where there is any sort of free market–ignoring the faction rules of WoW.

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I still play on a private server. EQTitan. We’re developing the GoD era.

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Having a corporation “system” is exactly how not to do it. The only thing I can think might be necessary, in a fairly realistic game, is to develop a trademarking or logo branding system. Other than that, simply by making informal deals with other players to work as employees and investors, and making capital investments, advertising, and developing a reputation, it seems to me that businesses could naturally be formed.

What are some things stopping people from doing this in, for instance, WoW? Just eliminate those restrictions. As long as you can, say, auto-pay someone when they complete a task, and as long as there is capital equipment available for purchase (may have to be sold by NPCs), and perhaps arbitration agencies (also set up by players; would take time to develop reputations), it seems it could work.

Like a normal society, things would get off the ground slowly, and the game makers would surely be tempted to try and fulfill needs for arbitration and the like by setting up centrally planned systems, which may be why this hasn’t happened yet. The basic principle, if anyone wants to do this, is to implement only the barest of bare minimum of game features to help businesses be feasible. And in fact mostly you’d want to downgrade any systems currently in place.

For example, sales should not be reliable - it should be possible to sell someone a defective weapon, so that reputation, arbitration, and insurance become important. There should not be a universal auction house, so that shipping companies can be feasible and arbitrage is possible because of price differentials in different regions. Let there be problems for the market to solve!

People’s first instinct is to think this would be boring, but it’s not. Players think they don’t like to be beaten down and frustrated, but that’s what keeps them playing. That’s really what these games are all about: struggling to get just about any tiny thing done. Maybe being an employee would be boring, but then so is grinding - and if it’s more efficient than grinding people will do it. Or you could just hire NPCs to do things, or sell machines to do the same, such as automated ships (by magic if it’s a fantasy setting). If there were a player-owned chain of weapons shops, for instance, they could have a distinctive sign that no one else could use (this is one of the few cases where a game engine measure may be needed). This would tie into their reputation, so people would look for the sign if they were looking for reliable weapons.

Game designers don’t understand economics, because most people don’t, so they mostly have no idea how to make this work. Still some of it happens through player ingenuity.

  • Don’t create a universal money. Instead design the interface so that any kind of barter is very fast and simple, and let trade determine what becomes money. (See Diablo 2 for how a market money developed despite the designers’ intent.)
  • Don’t create guild, company, or government systems. Instead design the menu system so that instant communication among members could be carried out, and - depending on how complex the game is - add in systems for instant money transfer, access to property, etc. The more complex the game the less such systems are needed, because if the game is complex enough the market could fulfill the need instead.
  • Phase out any game engine features that assist with commerce at the first sign that a market solution might be developing. If a market solution does develop, even if it’s not as efficient as the game engine mechanism (and of course it won’t be), turn off that game engine mechanism so that the business will stand to gain profits (and competitors). In the early stages, try scheduled suspension of certain features with advance notice, to see if player entrepreneurs try to capitalize on the sudden rise in demand. Later just let things run on their own, and if you see a problem not being solved by the market despite player demand, see what aspect of the game engine is preventing entrepreneurs from stepping in, then fix it.
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I just can’t imagine how a game could come close to realistically simulating entreprenuership. The changes in technologies, material supplies, etc. in the real world that provide those with foresight with opportunities for profit are so complex and upredictable, that it’s hard for me to imagine how a MMORPG world could adequately model them. This is such a crucial process to the real world economy and unless the game managed to simulate this, it’s value as a model for a real economy is questionable.