Everquest II and the quantity theory of money...

[Carolus Rex]

According to a swedish business site (see first link below, in swedish), some players hacked Everquest II and increased money in circulation in the game with one fifth.

Interestingly, the result was inflation of 20%... For the quantity theory of money, see the second link...

http://www.di.se/Nyheter/

http://cepa.newschool.edu/het/essays/money/quantity.htm

Edit: Scroll down to "Spelhack gav digital inflation" ("Hacking of game gave rise to digital inflation"), it's down to the right...

Carolus

[DrSpike]

I've been thinking about these issues a lot lately because of the various failed attempts to create an in game economy in Guild Wars. Most people can grasp that the money supply is always increasing because of monster drops, so there could be inflation. However, the rarely acknowledged flipside is that in virtually all MMORPG cases money given to NPCs for stuff goes into a void, which can counteract the effect.

[Carolus Rex]

In english (from Gamespot):

http://www.gamespot.com/news/2005/08/12/news_6130888.html

Carolus

[Skanky Burns]

On a certain level, it is quite funny that they are protecting against inflation in an online game.

On the other hand, the in-game economy has direct links with the external (real) economy so it does make sense.

[snoopy369]

In GuildWars, there's a lack of information that's incredibly frustrating, and a lack of 'ease of exchange' that also drives a lot of money OUT of the game. Imagine if all of the players (like me) who are way too lazy to sell their major/minor runes to other players 90% of the time stopped selling to vendors for 100 gold or even less, but started actually trading them in-game (due to some sort of auction mechanism that wasn't a lot of work to use ) ... inflation would go way up then (as less people would spend money at NPCs on runes). (Also the market would work PROPERLY, instead of how it currently does, which is not by any meaningful sense of market economics.)

EQ2 I have little experience with (no playexp.) but I have to assume that if it follows market economics at all, it must have a more informed (ie, 'going price' is not difficult to determine accurately) and more fluid (ie, you can sell something easily and fairly quickly if you sell it at or slightly below going price). Otherwise, the result doesn't mean a whole lot ... and from the "station exchange" element (that I just learned of), although it sounds like that means the game's goods are probably fairly accurate to market values, I also think that the inflation probably was fairly temporary (and would have been regardless of out-of-game action)...

[Carolus Rex]

Originally posted by Skanky Burns

On a certain level, it is quite funny that they are protecting against inflation in an online game.

On the other hand, the in-game economy has direct links with the external (real) economy so it does make sense.

Yeah... There was another story a couple of weeks ago in the same swedish business daily... It was about an australian student who bought an island in an on-line game (I can't remember the game's name)...

The price was staggering, but he was financially backed by some serious investors... With the island they would sell off property, collect taxes from its future inhabitants etc... They expected to make a nice (real-world) profit...

The article also covered an interview with the game developer (and game world supervisor)... What if they decide to increase available land in the gaming world to meet demand from new players? What about the value of that island (and other existing land) in that case? Or, worse, what if the developer goes bankrupt and closes the game server? Seems that investment in the digital world carries its proper risk too...

There is a great account about the economics of Everquest by an american economist. It also has some great journal entries from the game itself... I'll link to it later, gotta run!

Carolus

[Skanky Burns]

A link would be appreciated.

[DrSpike]

Patience, he said he would post it later.

[Skanky Burns]

And I was letting him know his future efforts would not be in vain.
(Seriously)

[MarkG]

Sony claims that a group of hackers illegally created a huge amount of EverQuest II currency over the weekend, and it says the players caused the game's economy to suffer 20 percent inflation in just 24 hours before being caught.

wow, mega corporations fighting inflation

[Carolus Rex]

Here's the link to Edward Castronova's paper:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=294828

Scroll down and download it via the SSRN link. It's witty and well-written; the journal entries at the beginning of each section are nice too...

Carolus

[Skanky Burns]

Very interesting read.

[Harovan]

There have been quite some downtimes and a bunchload of bannings (permanently) and freezings (until things are sorted out) in the last week. But the inflation peak was not that horrible as it sounded, and all found out ill-gotten platinum has been deleted. This caused no problems on regular servers and only minor issues on the Exchange servers (which I am of course not part of), because there people paid real money for the virtual cash.

Despite some critic, Sony has quite a good record tracking down botters and pharmers in the near past. And now after the Station Exchange introduction, their efforts even gained teeth, because now traded virtual cash has an equivalent in real currency and thus, activities like this can be prosecuted by civil law, as Sony can claim real losses. Before the introduction of Station Exchange this was hardly possible, no court would have made a case about the loss of virtual money.

Overall Everquest II has a nice in-game economy, better than its predecessor. It has money sources (mob drops either as cash or NPC-sellable goods, and quest rewards) and it has money sinks. These are for instance broker fees (20% in the same city and 40% cross-city), money for status objects like steeds, buyable titles like "Sir" (available for members of high-level guilds) and player housing (private appartments have a weekly rent, the bigger, the more).

So far it was balanced. Not exactly of course, but nearly. Prices and rewards have been adapted several times. The influx of money in the game economy is slightly bigger than the outflux, which is perfectly fine, as achievable money sinks are getting more expensive also. For instance the steed members of guild level 25 can buy using guild status (40% speed bonus), costs 6 platinum, the guild level 30 steed (or flying carpet, 48% speed bonus) costs already 66 platinum. It takes time and effort to accumulate that much, so a little bigger influx than outflux is justified, with keeping in mind, that the money goes poof once the player buys his status steed. All money I made so far in this game in nine months is perhaps 50 platinum, 30 of which I spent.

[Kuciwalker]

Originally posted by Skanky Burns
On a certain level, it is quite funny that they are protecting against inflation in an online game.

On the other hand, the in-game economy has direct links with the external (real) economy so it does make sense.

What's even funnier is the potential to use this sort of thing to teach schoolchildren about economics.

[Harovan]

By the way, who wants to read a true duping story, written in a rather entertaining style, could enjoy this link.