Video-Game Economics, Ctd.

by Peter Suderman

Single-player video games can help us understand basic economic principles. But online multiplayer games with thousands of players can help us understand how real economies work.

Just as in real economies, the virtual economies of online game worlds also suffer from the malicious actions of those out to exploit the system. As the developers behind EVE Online, a popular online role-playing game with a fairly complex in-game economy, recently discovered, surgically removing the small number of offenders can make things better for all the other players.

A small percentage of the game's players were found to be trading game currency for real money, which not only had serious adverse effects on the game's economy, but also was the prime source of in-game fraud. As Ars Technica reports, EVE's developers decided to take action:

For weeks they studied the behavior and effects these real-money traders had on the game, and then they struck. During scheduled maintenance, over 6,000 accounts were banned.

...What they found was these real-money traders were not only soaking up in-game, virtual assets as well as hacking accounts, but also taking way more than their fair share of server cycles. 

The result? Not only did they remove a cancer on the game's economy, they freed up a huge amount of processor power on their server: the real-money players were some of the most resource-intensive users. Essentially, this is targeted police action against people committing fraud and illegal transactions. One might see this as evidence of the  benefits of light regulation, but I think an even better to look at it is as an illustration of why most classical liberal economists -- particularly Hayek -- have argued that rule of law is essential for a functioning society. Even in anarchic online fantasy worlds, things work better when everyone adheres to an equal and agreed-upon set of rules.