“Game Theories”
By Clive Thompson

This article all begins with the fascinating story of economist, Edward Castronova. Welfare researched was his main focus, and it proved unfruitful in reaping him attention, prestige and the success that he desired.
Castronova finally hit an interesting niche when he began to pay attention to the economic situations of EverQuest, a video game. Noticing the currency within the game, and the currency that the game generated in the real world, Castronova began to conduct more research, and wrote about the revenue the digital world produced in the “real world.”

“The Gross National Product of Everquest, measured by how much wealth all the players together created in a single year inside the game. It turned out to be $2,266 U.S. per capita. By World Band rankings, that made EverQuest richer than India, Bulgaria, or China, and nearly as wealthy as Russia… It was the seventy-seventh richest country in the world. And it didn’t even exist.” Thompson goes on to make the point that “Many economists define their careers by studying a country. [Castronova] had discovered one.”

Thompson goes on to examine how real world currency is generated by means of digital entertainment. In EverQuest, for example, players all start out on the same bottom level. They work themselves up the virtual socio-economic ladder by killing things like dragons, and obtaining gold and other valuable pieces, and also gain property. Once they gain considerable assets and position in the game world, they can sell their character to the real world. Such auctions can take place in online auctions like e-Bay, but people have also set up businesses where they buy characters and then turn around and sell them at a marked-up price.

There are ethics that play into this. Oftentimes a “guild” forms online – a group of players who have worked together to accumulate riches, which they split among each other. They help each other slay dragons, and thus help each other get wealthier. Thus the winnings tend to be everyone’s in a sense, and when one player sells his character, [s]he is selling what they jointly earned…

Utopian as well as free-market concepts, varying economic situations are, in certain instances, played out on EverQuest. Most everyone starts on the same level, with nothing, and works themselves up, some forming guilds that seem communal – and then there are the more privileged players who buy themselves position… also, “when game companies offer socialist alternatives, players reject them” because they get bored without some sort of defined competition. So it seems like the free-market, in some form, is predominantly mirrored in the game.

Robert Shapiro, who was in the Clinton administration as the undersecretary of commerce, feels that “Castronova’s research proves that the only way to create a truly free market is to support programs that give everyone a fair chance at success, such as good education and healthcare.”

So the once unnoticed economist is now noticed, and now he is hired as a fully-tenured professor at Indiana University. Though he likes gaming, and his research has been successful, when taking into account other online communities that are being contrived in order to replicate and even replace real-life training and scenarios (like what’s occurring in There.com), Castronova states that “he is dismayed by how the real world has bled into the virtual one. ‘I liked it better when they were, you know, just games.’”