Why virtual economies defy the rules of your old college textbooks

lol, basic econ fail. life is not zero sum. WHEN will people get it through their damn head?<p>there are "sources" and "sinks" in the real world too. people constantly produce wealth, then consume it.<p>there is also artificial scarcity in real life: government backed labor unions (AMA, Lawyers, Teacher's Union etc), as well as regulation preventing competition in certain fields (medical insurance, banking, food and drug certification, DMV to a limited extent <i>Pennsylvania has a privatized DMV</i>, legal arbitration). I'm sure there's much more.

<i>Imagine if Wal-Mart tried to offer one-half of its customers one price and the other half a different price. Or even if they tried to change the price for a week to see what would happen.</i><p>Uh, they do exactly those things. 1) Wal-mart, Sam's Club and ASDA often sell identical items, but for different prices - different demographics, different prices.<p>2) Not all 'offers' are to drive stock levels down, many are a case of 'trying a different price point for a short period to see what happens', granted <i>raising</i> prices this way is hard, but again, wal-mart have done it in the past, which is why we so often see those 'Regular price $4.99, Now: $6.99' entries on Failblog and DailyWTF.<p>Also, the author misses out one of the most important reasons why <i>NO</i> MMO manages to adhere to real-world economics rules, even the economic focused MMOs like Eve, Goonzu, SL, Entropia, etc, and that is, people don't have the same 'value' to their in-game money, they know they can walk away from activities that are money sinks for small periods if they run out of currency to fund those activities. Overspending and then not paying your rent for a month or two, or not being able to afford to buy food, tends not to work so well in the real world.<p>So because there is far less risk involved, people treat in-game currency with less of a seriousness, and are willing to do things that economics and common sense forbid in real world economies.

Perhaps virtual economies defy the rules of my old college textbooks because, so do real economies? One thing that's become abundantly clear is that, if economists know how economies work, they're not demonstrating that knowledge.<p>This being said, if one uses a post-Keynesian model, it matches most video games very well. According to such a model, in the real world, any payment or loan by the government is simply a "source", and any payment (i.e. taxes/interest) or loan to the government is simply a "sink". From here, if your only goal is to stabilize inflation at a particular level, you need to reduce sources or increase sinks until such time as inflation reaches that level. This idea gets into trouble in the real world when you have competing goals, but it's probably fine for an MMO.<p>Post-Keynesian theory has its share of problems, but to its credit, it doesn't start by assuming that the amount of money in play is fixed. That makes it as close as we have to ideal for modeling videogame economies.

You have to remember that most MMOs are not economic sims, they have an economy minigame where people act silly with their virtual currency because it's not real life. Any steps to manage the in-game economy take away from designing more fun stuff that players may care about more.<p>Furthermore, I bet the only reason non-gamers pay attention to this stuff is because of third parties selling virtual currency and goods for real currency, which nearly all MMOs forbid.