Video-Game Economics

by Peter Suderman

As I noted in my introductory post, in the past few weeks, I've spent more time playing Fable II than I'd really like to admit. Like recent entries in the Grand Theft Auto series, it's an open-world game that allows the player to travel to any location at any time and pick and choose between multiple available missions, some of which help complete the main storyline, some of which are simply entertaining diversions.

Unlike the Grand Theft Auto games, however, Fable II relies heavily on role-playing game tropes: depending on what choices are made, characters can develop unique abilities, collect items that open up new game-play styles, and communicate with a world's worth of computer-controlled characters.

There's plenty of action and adventure and tromping around the game's cartoony fantasy world. But what interests me most about Fable is that it's not just an action-fantasy game, it's also a clever economics simulator.

In addition to the usual fantasy questions, players have the option to earn money through work: The game-world is made up of a series of quaint towns, most of which offer one or more "jobs" -- bartender, blacksmith, etc. You don't really bartend or hammer out swords, but you do play various, simple arcade-style "mini-games" that increase with difficulty over time. And as the games get harder, you earn more money.

That money can be used to buy from merchants in the towns, who sell you new clothes, food, magic potions, weapons, and other items that change your character's look and abilities. If you don't like the prices, you can even barter with the merchants by playing another "mini-game." And if you buy or find items you don't want, you can sell them to store owners -- though you won't always get full value.

What's more, each of the towns has its own economy, which is either good or bad depending on the choices you make: Kill a lot of townspeople, or commit a lot of other "crimes," and the town's economy gets worse. Buy a lot of stuff from the local vendors, and the town's economy might improve. Sometimes stores have sales. Other times they have shortages. It's possible to take advantage of both by buying cheap -- and then selling when demand is high. I know that other games employ similar mechanisms, but, from my limited experience, Fable II's economy does seem somewhat more developed than competitors.

What's the point? Because games like Fable II don't involve the thousands of human players that massively-multiplayer online counterparts like World of Warcraft do, they aren't likely to be nearly as useful for conducting large-scale research into how market economies work. But it strikes me that they do suggest ways in which incredibly fun, addictive games might also serve as teaching tools. Imagine using a game like Fable II to teach middle- or high-schoolers about how markets work -- supply, demand, prices, labor. As a kid, I played a primitive, monochrome video-game called Lemonade Stand that, by allowing players to "run" a virtual lemonade stand, was supposed to teach all those things, but it always seemed like work. Fable II, on the other hand, offers a smart, compelling, extremely well-produced virtual experience -- and, with a little bit of tweaking, it or something like it might actually serve as a great tool for learning as well.