We – humans – are at the point of our history where the pace of innovation and scientific discovery is truly defining our lives. The amount of improvements in our lives is growing exponentially and, although we have not colonised Mars yet, the reality that we see in science fiction films seems to be within our reach. Still, progress can be a very expensive and difficult process that can take years, if not decades, to bear fruits. This is particularly true for areas of science in which research is prohibitively expensive, potentially unethical or otherwise simply unfeasible and imprecise. Among them are economics and business.
Conducting economic experiments would a require a considerable amount of people to participate in a controlled environment for a long period of time and, if they are to be fully representative of real life, monetary rewards would have to also be similar to real life. In majority of the cases this would probably require isolating the test subjects from the society for a while, lying to them about the purpose of the study to ensure their choices are not affected by such knowledge and would mean that the experiments would be as expensive as the actual policies. Not ethical, not practical and not feasible. As a result, economists are forced to rely on historical data or very simple experiments that do not always provide reliable answers to questions we ask. One day we might be able to find those answers with the rapid progress of computer technology that will allow us to use all the available data to model the whole human economy. However, that day is still far ahead and, for the time being, we might have to look for different solutions to the problem at hand. One of them may be massively multiplayer online role-playing games (MMORPGs).
MMORPGs are online games in which thousands or even millions of players create a character – their virtual avatar – and interact with each other and the game environment. There are many different games and equally many goals set for players (other than having fun, of course), but the general aim is to develop your character, improve its strength and abilities, obtain better in-game items and unlock new features. These in turn allow for further development of the character. What could be interesting from the point of view economics is that most of MMORPGs have some sort of a monetary system: players obtain the in-game currency through different activities and spend it on improving their avatar. In a very simple form this is not very useful for any economic research, but in recent years the games’ economic systems have become more and more complex, giving players a chance to use currency not only to interact with the in-game environment, but also to interact with each other.
For example, if you happen to obtain an item you don’t need, you can sell it to another player who does and with the currency you receive you can now buy the items you want from a player who has them. Just like in real-life economy. Nowadays, players can trade directly with each other or with the use of auction houses, where they can list their offers or orders. You set the desired amount and price of a good you want to buy or sell and wait until another player accepts your terms. If the price you want to pay or receive is too high or too low, you will either not be able to find someone willing to accept your listing or you will lose on the transaction. With this growing complexity and new options for interaction, the in-game economies have started to resemble the real-life one. And this is where the fun begins because real-life phenomena begun appearing in the virtual environment. For example, the classical supply-and-demand model explains how the in-game equilibrium prices are reached – if an item is rare (low supply), the price demanded for it will be high. On the other hand, if an item is not necessary for many players (low demand), price demanded will be low. With high volume of transactions, equilibrium is quickly reached. Furthermore, if there is a supply or demand shock (e.g. a new expansion pack renders a previously rare item easily obtainable), prices immediately react. On top of that, if an item is very difficult to obtain and, as a result, very expensive, the sellers have very high power and can dictate price, resulting in the economy diverting from equilibrium. Another phenomenon that also appears is collusion – in the absence of regulations, players can cooperate to buy all the items available on the market – drastically reducing the supply – and then sell those in much smaller numbers with a much higher price tag. Depending on the game, many such phenomena and behaviours can be noticed. Supply and demand, collusion, transaction costs and many more exhibit behaviour very similar or exactly the same as the models we learned predict. Many players use these to obtain profit in in-game markets by carefully studying patterns and trying to predict the future. For example, if you want, in case of the game Guild Wars 2 you can find websites that show all the historical data on prices in the in-game auction house (a great way to practice your finance skills if you want to work on Wall Street in the future). Careful study of all of the above could help us with a better understanding of the real-life economy, evaluation of the existing models and creation of new ones.
Of course, there are many issues that arise with using online games for the study of economics. Although in-game economies have become similar to the actual one, there might still be crucial differences that could distort research results. For example, people do behave differently when interacting with an in-game currency that has little to no value in real life. Furthermore, games still are not a fully controlled environment – as a player, I would be angry if the game designers suddenly changed game mechanics just for the purpose of research. Still, a closer study of online games could be very beneficial. Also, I think it would be much more interesting – and fun – than many other approaches.
It is also worth mentioning that studying human interaction in the virtual environment can be very useful in other areas of science as well. A great example is the so-called “Corrupted Blood incident” that took place in 2005 in an MMORPG game World of Warcraft. The developers introduced a game mechanic that was supposed to make an in-game encounter with a monster more challenging by applying a condition that would spread between characters and eventually kill them. The condition was supposed to disappear after the encounter but, due to a bug, it stayed with players afterwards. The result was a full-blown in-game pandemic that ravaged the servers for a week. The players’ behaviour and the pace at which the “disease” spread have provided very valuable insights for epidemiologists.
Studying online games is not a golden solution to the problems of many sciences. However, this unorthodox approach could certainly add to our understanding of the world around us and of ourselves. Lower costs, conducting experiments that would be unethical in real-life but are not so in the virtual world or the ease at which you can access data are just a few of the possible benefits. If chess could be analysed for centuries to successfully study strategy and human behaviour, then why can’t modern games do the same?