Guild Wars 2

We could have a huge philosophical debate as to what privileges should be granted to users on the basis of the their financial transaction with Anet. Within that discussion, an incredibly small minority might argue for “the right to be able to obtain everything in [GW2].” I’m assuming an implicit “over a reasonable period of time” claim tacked on the end. As written, or even with that out clause, I’d argue that GW2 already satisfies that claimed privilege (although it’s still likely a minority view). The fact of the matter is there’s no compelling argument to support that demand. “But we paid money” doesn’t carry any weight as the money paid was to access the software and absolutely nothing else, express or implied.

Let me be clear. I do not believe ANet is under any legal obligation to provide me with a Legendary weapon. I do, however, consider it a flaw in their economic eco-system that it is designed in such a way that earning many of the items within it (short of a lottery win), requires players to engage in certain very specific and unfun elements of the game, which offer considerably higher reward over time than other, more interesting activities. I do not believe that market day trading should even be a rewarding activity, much less the most cash-rewarding activity available.

I’m assuming that “a real economy” is the actual mixed economic system (i.e. market economy with regulation and subsidies etc etc) in use today, which is hugely complex and difficult if not impossible to replicate perfectly in a virtual video game environment scenario.

I realize some of my points below might seem a bit idealistic, but the idea is to maximize enjoyment of the game. For me the most important differences are as follows:

1) In the real world, if you do not already have wealth passed down to you, you either get a job, or you trade the heck out of the stock market as a day trader, or you innovate (i.e. create a new product or provide a service that adds value) and potentially encapsulate this in a business entity. In GW2, you can kill stuff and vendor/TP the proceeds, or you can flip items on the TP or you can transfer real world wealth in-game, assuming you have real world wealth. As a side note, to maximize in-game wealth generation you actually pay a real world monthly fee for an application which tells you exactly what items to buy from the TP and when to sell them. These robo-vamps just suck the lifeblood out of the economy and add very little value in return.

2) The real world market economy was created to breed competition (see game theory by John Nash). In a video game like GW2, one could argue that competition should be limited to PvP type scenarios. As an example, it should not be the case that legendary weapons take say 2 months to earn for people that started the game from the beginning (assuming they didn’t just buy it with real world currency), and 8 months for people that start the game later due to intensified competition on the TP for the requisite items and/or decreased drop rates to counteract the quantity of items on the TP.

3) In the real world, taxes (ideally) get spent on social welfare programs. In GW2 they just disappear In the real world governments actually need to spend money, thereby justifying taxes. In the virtual economy we get little to no benefit from the taxes levied on us (this point is purely meant in jest).

In short, the objective of a video game economy should be to provide people with the means to achieve everything they could want to achieve in the game given a reasonable amount of effort. This is not necessarily the goal of the real world economy where 1% of the people hold 40% of all the wealth combined and try as I might, I’m probably never going to own a significant portion of Manhattan Island. For clarification I do not mean robo-vamp trading the TP as one of the means of generating wealth. As others have mentioned it just destroys the game. If you (Anet) want to preserve the current model, which essentially is just promoting the “rich get richer” due to the robo-vamps now getting enough gold to seriously manipulate certain aspects of the market, then Anet needs to provide alternative means to accumulating in-game wealth.

That’s about all I have time for right now so I’ll have to leave it there.

This is a core problem surrounding the motivation in GW2.

You either play what you think is fun and end up nowhere (5000+ dungeon/fractal tokens and no use for them, 20+ ascended rings, etc).

Or you chase after something (legendary, ascended) and end up playing content that will not entertain you.

It is art imitating life to the extreme. You either party all day and waste a day of your real life. Or flip burgers until you can afford that new TV. This is the job from hell you hate.

However, in real life, you find ways to combine both things. A good job that is fun and pays all the bills. Something you like doing AND is rewarding. This is the country you love living in Hopefully, this opportunity is what you (probably) love about the country you live in (or why you want to immigrate from wherever you currently live). It still requires a lot of effort on your part, probably more than flipping burgers, but the ability to reach such a point of "fun & rewards " outweighs “the grind”. Games should aspire to mimic that.

It is the job of the ArenaNet design team to find these things players like doing and assign all sorts of rewards to them. Because right now, ArenaNet is making us flip a lot of ugly burgers. Dailies for ascended amulets anyone?

Right now you probably need to play gw2 for 300h to get a precursor. 300h of playing something you hate and as a result you probably think legendaries are stupid.

But type in /age and imagine you could play something you consider fun for the next 300h and end up with a precursor. You would do that in a heartbeat, wouldn’t you?

ArenaNet’s Homework
Design the game as such that is stops being the boss from hell and start to become the country we want to live in. Learn from China: economic grown by means of altering the motivation of the participants in the economy.

There are two very important differences between a virtual economy and a ‘real’ economy that I believe games such as Guild Wars 2 give us a good look at…

1) An increase in the average opportunity cost of time.

In a game, you only have so much time to play, and you could be doing ‘real’ things with that time. As such, a combination of less time and pressing alternatives leads to an increased opportunity cost of time.

This is part of the reason such large margins in the TP exist – getting money or goods now as opposed to later is a much different choice in a virtual market than in a ‘real’ market. That is, increased opportunity cost of time leads people to discount the future heavily, leading to arbitrage opportunities for those willing to be patient.

In a sense, people benefiting from arbitrage are, at least in part, being paid the cost of the time they have to wait.

Lots more to be said here, but this post can only be so long so I’m going move on…

2) An increase in ‘irrational’ behavior.

Behavioral economics studies people as something other than the bounded, rational beings that classical economics treats them as. One well-documented example of this sort of behavior is that people tend to treat cash differently than things that are exact substitutes for cash – most commonly credit and debit cards.

Virtual economies, being removed from cash by many more steps than credit and debit cards, will naturally see a large increase in behavior that would be considered ‘irrational.’

There’s a ton of things that could be said here, as well, but none that haven’t been said already elsewhere.

(On a related note, I hate the term ‘irrational’ as a descriptor for this behavior, as there is always a ‘rational’ explanation. It just doesn’t fit with the classical concept of a rational individual – a vastly flawed concept, hence why behavioral economics is a thing – which requires them to use a moniker that doesn’t fit the behavior particularly well.)

Anyways. I think, in general, there’s a lot to be learned by looking at virtual economies as though they were modified versions of real economies. You can determine some major influences that cause divergence from a real economy and track what sorts of changes those influences cause, or you can take the economy as it is right now and tweak it to see what happens, both to obliquely look at real-world economics problems and to see differences between how virtual and real economies relate to similar changes.

I’ve actually been doing a decent amount of looking into these sorts of things myself, so if you ever want to talk about it, I know I would enjoy doing so.

Behellagh.1468:

If they hold no value why are there so many threads complaining that it’s not fair gating them? Obviously to the those who desire them they have value. They are willing to trade coin for it so that establishes value..

I see the numerous complaints as a problem, yes. The desire to not have them gated by the community doesn’t establish a clear monetary value either, just that they’d be willing to spend coin on them. There’s also people that suggest simply having dungeon tokens as a general currency and being able to just buy the skins as an alternative. I see their point and i also see that as what ArenaNets stance once was, back in the day.

Behellagh.1468:

Oh and earlier I wasn’t directing my comment specifically at you munk. You were just the most recent person echoing the sentiment that somehow assigning a set of items for doing a particular activity is wrong, that those items should be freely available for all if you have the coin.

I appreciate your clarification, i didn’t think you were targeting me. Unfortunately the act of earning coin isn’t seen as something earned by the same standards set through gated items. If i wanted to spend my way to a legendary, for example, it’s seen as a distasteful way to go. Eye of the beholder i guess. I personally don’t think those particular items should be sell-able, but yet we keep getting more gated items that aren’t tradable, it’s quite mind-boggling. Curiously, are legendaries more or less valuable (or prestigious even) than an Arah set, simple since you can’t buy the set outright? How about ascended stuff? Cat tonic?

Behellagh.1468:

Those big stuff animals you can win at a carnival can be purchased if you know a supplier but it’s value to the person who received it is knowing that someone spent a stupid amount of money to “win” it for them. The suggestion that everyone should act like Veruca Salt a demand to be able to buy whatever instead of earning it disturbs me.

That makes sense, but what disturbs me is the “seriousness” behind some peoples passion against being able to purchase stuff in a video game. I personally have no problem with rarity or expensive items (i.e. tier 3 cultural), but why view those as less earned? Like i said before there is a stigma (and in some cases a pure jealousy) toward people that can buy their way through life, regardless how they may have amassed that wealth. That’s a socioeconomic issue really and i actually find it fascinating that it translates to video game economics. What i said in my first response seems to hold true, the biggest tie to real world and video game economics is peoples reaction to market changes and what those changes will bare.

FInN.7219:

The question we should be asking ourselves here is, What is the real life equivalent of CoF 1?

That’s easy. Prostitution. It is quick, easy and a good source of money. And people are always trying to nerf it with rules and restrictions.

Hey John, I’m a bit late to the party, but I think this is an interesting subject and wanna throw in my 2 cents by addressing the question, and also the conversation which sparked the creation of this thread. And while I obviously don’t expect a response, I hope you’ll at least read this post and give it some consideration.

I think that most virtual economies serve as poor analogues for the real world. Sure, certain phenomena can be modeled and tracked, and certain aspects can even be used as explanations for harder concepts (someone gave me an interesting explanation of the Labour Theory of Value using Guild Wars 2 as an example!), but there seem to be inherent flaws that are adopted by the large majority of developers. Why these flaws are adopted may be by design (probably by the accounting departments no less), but I also think there’s a certain lack of understanding, or at least forethought into the creation of a virtual economy.

My biggest beef with virtual economies is the method of creating currency. While the standard input -> output method can serve as an analogue to some phenomena in fiat currency, it tends to create some real problems for the virtual economy.

The convention for most games is to go to a quest-giver and earn some gold, or to sell junk back to the NPCs. The biggest problem with this is that it fails to take the subjectivity of the value of the labor, items, etc… (supply/demand) into account. You can have 1 person selling 1 piece of rawhide to a vendor, or a million people selling a million pieces of rawhide, and you’re going to get the same amount of gold for each piece. This may not seem like much of a problem at first (output just has to equal input, right!?), but gamers are a crafty bunch and can quickly/easily take advantage of static systems which diminishing returns on the loot table can’t completely compensate for (yes, that was a cheap shot).

This generally (if not universally) has caused rampant inflation (expansion of the monetary base). The people who can take advantage of this (much like in the real world) are the ones who use the system to their advantage. The botters, scammers, gold buyers (cash shop or 3rd party), etc… have a leg-up and have access to this ‘first money’, allowing them not only the excess accumulation of currency, but also the ability to use it at pre-inflation prices — as the expansion will only affect the economy once it’s introduced and starts to flow into areas which are subject to supply/demand. This causes ‘normal’ players (casuals to farmers to hardcore) to be left behind and on the short end of the stick.

And, while it seems like modern games try to mitigate these problems by introducing a cash shop which is partially determined by demand, it seems to only delay the consequences, while creating other issues (gem price nearly doubling since launch).

Finally, I understand I’m not really offering any solutions, although I could try to tackle that in another thread. I would like to at least try pointing out these major problems (there are other, minor ones) in what I see as the epistemology of virtual economy design. From my (an average player’s) viewpoint, participating in these games soon gets to the point where the only option to stay competitive is to spend money (which is obviously by design) in the cash shop. But, feeling forced to do this also makes me feel somewhat alienated by the game’s developers and pushes me towards other products.

Inflation is a problem when you are in the real world and the inflation negatively affects the value of the products you need to buy in order to survive.

Inflation is not a problem when you are in a fantasy economy where you do not need anything to survive. The game you are playing is not survival, if your health runs out, you revive. So if your ingame money runs out, does ArenaNet “kill” your character preventing you to continue to play? No!

I hope it is understandable that the name of the economy game is not survival. It is called excess money spending. You could watch a reality show about some celebrity buying a new Ferrari and get your aspirational itch scratched that way, or you play some game. MMOs are your small window into behaving like some TV celebrity when it comes to blowing money. This is the compulsion loop.

ArenaNet’s job is to keep that compulsion loop running. Include as many people in it as humanly possible. Easy way to do that: inflation! Either inflate the money and make merchant stuff more affordable. ArenaNet did this extensively when they tinkered with dungeon token rewards which are way up compared to release (90 per day back then!).

The other option is to increase the drop rate, which is also done here and there with varying success. (Ectos down, Precursors still up).

A third option is to introduce new currencies, which is a nasty way to put us all back to square one. But ArenaNet is doing it in service of its economic master.

Which is not stable economy, not the elimination of inflation, but aspirational consumerism in the context of a power fantasy.

Free markets without regulation tends to put our selfish genes into the spotlight.

We’re hard wired to survive. We will be greedy, we will be selfish. Create a virtual environment without regulation, without controlling inflation and just watch as this virtual economy eats itself like a cancer.

Calae.1738:

Free markets without regulation tends to put our selfish genes into the spotlight.

We’re hard wired to survive. We will be greedy, we will be selfish. Create a virtual environment without regulation, without controlling inflation and just watch as this virtual economy eats itself like a cancer.

Well in games like this, the control is in the creation of items (ie drops, increasing resource node spawns, etc.).

munkiman.3068:

Calae.1738:

Free markets without regulation tends to put our selfish genes into the spotlight.

We’re hard wired to survive. We will be greedy, we will be selfish. Create a virtual environment without regulation, without controlling inflation and just watch as this virtual economy eats itself like a cancer.

Well in games like this, the control is in the creation of items (ie drops, increasing resource node spawns, etc.).

In the real world, demand is infinite and resources are finite.

In a virtual world demand is infinite and resources are infinite. The only thing that has any real value in a virtual world is time. Each person values their time differently than others.

Calae.1738:

munkiman.3068:

Well in games like this, the control is in the creation of items (ie drops, increasing resource node spawns, etc.).

In the real world, demand is infinite and resources are finite.

I’m not convinced that demand is infinite in the real world. There are a finite number of people, and even if you look at a good like rice, there is a limit to the demand, even if it might exceed the current supply.

Calae.1738:

In a virtual world demand is infinite and resources are infinite. The only thing that has any real value in a virtual world is time. Each person values their time differently than others.

Even though resources are theoretically infinite, they are limited by the number of players and the time they can play. Resources are infinitely available and limited by the time it takes to collect them and use or sell them.

MMO’s generally place arbitrary values to items because they control the amount of time it takes to acquire. A good illustration of this is 2 currencies within GW2.

Karma versus Laurels.

The developers did not accurately predict the rate at which the average player would accumulate karma. Diminishing returns on this currency resulted in a massive community backlash. The currency kept inflating. Community voiced complaints of lodestones being too rare. Karma is now used to convert to lodestones or gold. It was a good decision to keep this currency valuable.

Laurels are a more recent currency idea. They’re much more controlled. They know precisely the maximum amount of laurels 1 person can accumulate over X amount of time. As long as the developers can create an environment that stimulates demand; the currency will always have value.

Which is brilliant.

John Smith.4610:

In another thread someone brought up the question, “what basis is there for considering the world of video game ‘economics’ has anything to do with ‘real world’ economies.” I thought it was an interesting question, can we learn more about our real world economies with more finite virtual economies?

Opening the floor.

A great starting point is to look to Eve Online’s economy. That games economy is renowned across the world as the best player driven virtual economy in existence. I understand that the cruelty of “player-death” in Eve Online is one of the biggest money sinks that drives it’s economy, but GW2 could do the same without such high consequences.

The other big thing that Eve Online does is it has an easily convertible exchange rate between all commodities (ore, ship parts, salvage, Isk=$$$). GW2 lacks this and everytime you create a new currency you are taking the exact opposite direction. What GW2 needs to do is make everything liquid like Eve Online’s “Isk”. This would require crafting materials, Badges, Karma, and gems to be all converted into whatever currency a player wants. Whenever you try and dictate player behavior it has negative impacts just like in real life economies. Ever wonder why the U.S. economy has has been the most prosperous these last 200+ years? Your answer is market freedom.

Goloith.6349:

John Smith.4610:

In another thread someone brought up the question, “what basis is there for considering the world of video game ‘economics’ has anything to do with ‘real world’ economies.” I thought it was an interesting question, can we learn more about our real world economies with more finite virtual economies?

Opening the floor.

A great starting point is to look to Eve Online’s economy. That games economy is renowned across the world as the best player driven virtual economy in existence. I understand that the cruelty of “player-death” in Eve Online is one of the biggest money sinks that drives it’s economy, but GW2 could do the same without such high consequences.

The other big thing that Eve Online does is it has an easily convertible exchange rate between all commodities (ore, ship parts, salvage, Isk=$$$). GW2 lacks this and everytime you create a new currency you are taking the exact opposite direction. What GW2 needs to do is make everything liquid like Eve Online’s “Isk”. This would require crafting materials, Badges, Karma, and gems to be all converted into whatever currency a player wants. Whenever you try and dictate player behavior it has negative impacts just like in real life economies. Ever wonder why the U.S. economy has has been the most prosperous these last 200+ years? Your answer is market freedom.

Pretty much a big +1 from me. There was an earlier discussion somewhere about how the alternative forms of “currency” are practically valueless. So i’d like to echo this. It seems like it’d be fairly simply to put a “banker” NPC in that does currency exchange. Have 5000 Arah tokens you want to trade for CM tokens, sure no problem, you want gold for those, sure here’s 10g … It would be an amazing change to the market and one i could get behind 100%.

Even though resources are theoretically infinite, they are limited by the number of players and the time they can play. Resources are infinitely available and limited by the time it takes to collect them and use or sell them.

In a virtual world; with a click of a button you can create an unlimited supply of anything even if the population is zero.

Can’t do that in the real world.

Calae.1738:

In a virtual world; with a click of a button you can create an unlimited supply of anything even if the population is zero.

Can’t do that in the real world.

That’s really a moot point. Players who play the game can’t do it. Anet, while they can do it, will never do it.

Goloith.6349:

The other big thing that Eve Online does is it has an easily convertible exchange rate between all commodities (ore, ship parts, salvage, Isk=$$$). GW2 lacks this and everytime you create a new currency you are taking the exact opposite direction. What GW2 needs to do is make everything liquid like Eve Online’s “Isk”. This would require crafting materials, Badges, Karma, and gems to be all converted into whatever currency a player wants. Whenever you try and dictate player behavior it has negative impacts just like in real life economies. Ever wonder why the U.S. economy has has been the most prosperous these last 200+ years? Your answer is market freedom.

The problem is, if you have many different currencies and a generous exchange rate, why have different currencies at all?

From a game design perspective, the reason why you have these exclusive currencies is to encourage players to play through unique content, and keep rewards unique.

If everything can be bought with gold (legendary)

1. You can do anything. More flexilibilty to the playerbase. (PRO)
2. Most efficient options become prioritized (CON)
3. A certain reward won’t imply mastery of specific content (CON?)

Whereas with exclusive currencies. (Dungeon armor)

1. You are restricted in content you have to do to earn rewards (CON)
2. Reward will imply mastery of specific content (PRO?)

There’s pros and cons to both sides of the argument. I tend to believe in option 2. (Unique dungeon armor, Legendaries should be account bound, etc.)

John Smith.4610:

In another thread someone brought up the question, “what basis is there for considering the world of video game ‘economics’ has anything to do with ‘real world’ economies.” I thought it was an interesting question, can we learn more about our real world economies with more finite virtual economies?

Opening the floor.

What you practice in the ‘real world’, you bring your practice along with you wherever you go.

It is easy to deny, but when it is considered, observe everything around you and yourself, and if you really done that self reflection, it will dawn on you.
Then again denying the above fact is all too easy unless it happens personally or to the point of shocking the personal if gentle experience cannot allow an individual to learn.

Ursan.7846:

Calae.1738:

In a virtual world; with a click of a button you can create an unlimited supply of anything even if the population is zero.

Can’t do that in the real world.

That’s really a moot point. Players who play the game can’t do it. Anet, while they can do it, will never do it.

Goloith.6349:

The other big thing that Eve Online does is it has an easily convertible exchange rate between all commodities (ore, ship parts, salvage, Isk=$$$). GW2 lacks this and everytime you create a new currency you are taking the exact opposite direction. What GW2 needs to do is make everything liquid like Eve Online’s “Isk”. This would require crafting materials, Badges, Karma, and gems to be all converted into whatever currency a player wants. Whenever you try and dictate player behavior it has negative impacts just like in real life economies. Ever wonder why the U.S. economy has has been the most prosperous these last 200+ years? Your answer is market freedom.

The problem is, if you have many different currencies and a generous exchange rate, why have different currencies at all?

From a game design perspective, the reason why you have these exclusive currencies is to encourage players to play through unique content, and keep rewards unique.

If everything can be bought with gold (legendary)

1. You can do anything. More flexilibilty to the playerbase. (PRO)
2. Most efficient options become prioritized (CON)
3. A certain reward won’t imply mastery of specific content (CON?)

Whereas with exclusive currencies. (Dungeon armor)

1. You are restricted in content you have to do to earn rewards (CON)
2. Reward will imply mastery of specific content (PRO?)

There’s pros and cons to both sides of the argument. I tend to believe in option 2. (Unique dungeon armor, Legendaries should be account bound, etc.)

I’ll try to put some of your worries to rest. First, the currency issue. Easily convertible does not mean generous. Different currencies have different values. Say for example if a person wanted to covert tokens to another dungeon token. That would come at a cost to counter people from doing the easiest path. Also dungeon tokens should scale with the difficulty of the dungeon. If ANET tracked how many people did a dungeon and increased rewards for the least visited (usually the heaviest resist) it would correct that. As far as mastery goes I think it follows the conversation tables. A person that wants dungeon title for (D1) the will achieve it before someone doing (D2) and converting to (D1).

The thing that ANET needs to do is introduce a better way of converting lower crafting materials (without dust) or introducing endgame crafts with low level crafting materials. Right. Maybe removing the repair option with player made repair kits available for all crafts that are exactly the same. This also removes supply which has a much greater impact.

We could learn that completely kitten economic models like communism could function in a world where money and work isn’t necessary for basic things like clothing, reproduction and shelter. GW1 is the perfect example, there’s no upkeep on playing which makes cosmetics the only goal. There’s no society more egalitarian than the GW1 community. There’s no reason to play except for play’s sake.

Other completely insane models IRL are anarchism and extreme libertarianism. There’s no government smaller than an MMO host. There’s very few rules strictly enforced by a.net. As long as you don’t infringe on the rights of others by botting or harassing, you won’t get banned. Apart from a few ground rules, society is entirely regulated by the society itself. IRL such systems collapse eventually.

In the real world this could work if food, shelter and reproduction were not an issue. Yes, reproduction is a core necessity in life to which most effort is directed once survival is guaranteed. These basic necessities undermine the viability of libertarianism and communism alike IRL because sooner or later someone is going to take control over them.

marnick.4305:

We could learn that completely kitten economic models like communism could function in a world where money and work isn’t necessary for basic things like clothing, reproduction and shelter. GW1 is the perfect example, there’s no upkeep on playing which makes cosmetics the only goal. There’s no society more egalitarian than the GW1 community. There’s no reason to play except for play’s sake.

Other completely insane models IRL are anarchism and extreme libertarianism. There’s no government smaller than an MMO host. There’s very few rules strictly enforced by a.net. As long as you don’t infringe on the rights of others by botting or harassing, you won’t get banned. Apart from a few ground rules, society is entirely regulated by the society itself. IRL such systems collapse eventually.

In the real world this could work if food, shelter and reproduction were not an issue. Yes, reproduction is a core necessity in life to which most effort is directed once survival is guaranteed. These basic necessities undermine the viability of libertarianism and communism alike IRL because sooner or later someone is going to take control over them.

Extreme libertarianism lol, darn American founding fathers were completely insane I guess. You know libertarians are fiscal conservative, socially liberal right? You also understand that most political spectrums have libertarians as slight right of center? I suppose if you drove on the left shoulder of the left side the middle would seem pretty far away.

This is GW2 and its a vastly different game. The developers wanted a player driven economy. The problem however is that they did not develop enough low level material “supply” sinks into the game. This causes for insane prices for endgame content. If they required materials from all tiers in their crafting we would see higher levels visiting lower areas and their dynamic events.

They also need to create a reasonable path to legendaries. I understand that you don’t want everyone to have them, but ANET let the cat out of the bag and just giving one to people that showed up to one event was a terrible idea. One way to rectify this is to allow for the creation of said precursor. Make it be a legendary process that requires all tiers of materials. It will give players a real attainable goal. Right now a precursor is like trying to obtain a great paying job. People find it too hard and give up and don’t participate at all. That’s bad for any economy, RL or Virtual.

I understand that this game has to make a profit and pay the developers, but if you broaden the base of players and get players involved in all aspects chances are they will pay a few $$$ on gems to facilitate a path of least resistance. An example is your mining pick. If a player doesn’t want to keep buy picks for farming they might buy one. They might go for a gathering booster too.

Sometimes its seems hard to make money as a company if the virtual economy is great, but both can be satisfied with the right balance. Again take a look at what Eve Online has done and you’ll have your answer.

Editted to add a few others thoughts.
http://m.washingtonpost.com/blogs/wonkblog/wp/2012/09/28/the-economics-of-video-games/
http://www.mmo-champion.com/threads/1214945-What-Video-Game-Has-the-Most-Enjoyable-Economy-Best-Marketplace-

Goloith.6349:

marnick.4305:

We could learn that completely kitten economic models like communism could function in a world where money and work isn’t necessary for basic things like clothing, reproduction and shelter. GW1 is the perfect example, there’s no upkeep on playing which makes cosmetics the only goal. There’s no society more egalitarian than the GW1 community. There’s no reason to play except for play’s sake.

Other completely insane models IRL are anarchism and extreme libertarianism. There’s no government smaller than an MMO host. There’s very few rules strictly enforced by a.net. As long as you don’t infringe on the rights of others by botting or harassing, you won’t get banned. Apart from a few ground rules, society is entirely regulated by the society itself. IRL such systems collapse eventually.

In the real world this could work if food, shelter and reproduction were not an issue. Yes, reproduction is a core necessity in life to which most effort is directed once survival is guaranteed. These basic necessities undermine the viability of libertarianism and communism alike IRL because sooner or later someone is going to take control over them.

Extreme libertarianism lol, darn American founding fathers were completely insane I guess. You know libertarians are fiscal conservative, socially liberal right? You also understand that most political spectrums have libertarians as slight right of center? I suppose if you drove on the left shoulder of the left side the middle would seem pretty far away.

I’m as centrist/moderate as it can get. Most right-wing people consider me left-wing, and most left-wing people consider me right-wing. Funny Nice how you completely missed me saying how communism doesn’t work either, just to brand me as extreme leftwing. A commie would have made the exact same post as you, but called me extreme rightwing instead.

marnick.4305:

Goloith.6349:

marnick.4305:

We could learn that completely kitten economic models like communism could function in a world where money and work isn’t necessary for basic things like clothing, reproduction and shelter. GW1 is the perfect example, there’s no upkeep on playing which makes cosmetics the only goal. There’s no society more egalitarian than the GW1 community. There’s no reason to play except for play’s sake.

Other completely insane models IRL are anarchism and extreme libertarianism. There’s no government smaller than an MMO host. There’s very few rules strictly enforced by a.net. As long as you don’t infringe on the rights of others by botting or harassing, you won’t get banned. Apart from a few ground rules, society is entirely regulated by the society itself. IRL such systems collapse eventually.

In the real world this could work if food, shelter and reproduction were not an issue. Yes, reproduction is a core necessity in life to which most effort is directed once survival is guaranteed. These basic necessities undermine the viability of libertarianism and communism alike IRL because sooner or later someone is going to take control over them.

Extreme libertarianism lol, darn American founding fathers were completely insane I guess. You know libertarians are fiscal conservative, socially liberal right? You also understand that most political spectrums have libertarians as slight right of center? I suppose if you drove on the left shoulder of the left side the middle would seem pretty far away.

I’m as centrist/moderate as it can get. Most right-wing people consider me left-wing, and most left-wing people consider me right-wing. Funny Nice how you completely missed me saying how communism doesn’t work either.

Than don’t open your post up by supporting communism out of the gate. I think you are confusing by accident. I’m glad you meant differently. However I would suggest reading the blog by the Washington post that shows libertarian approach that has lead to the success of Eve Onlines economy and game.

Calae.1738:

In the real world, demand is infinite and resources are finite.

In a virtual world demand is infinite and resources are infinite. The only thing that has any real value in a virtual world is time. Each person values their time differently than others.

In the real world a person can invent demand of worthless byproducts and make himself rich without the deus ex machina of a patch update or developer forum post that also affords that avenue to everyone else. There are no patents on crafting recipes.

Gasoline was once just a byproduct of the refining of kerosine, now it is a primary commodity. The entire computer industry was created by the exploitation of tech foreveralones tinkering in their parents garage by corporate exploiters.

Basically I get your point but I believe resources are only as finite as we are lazy, just like in any game world. If you look at the third world and see some simple solutions they have to problems first worlders have huge convoluted systems to solve you can see what I mean.

Solo.9027:

In the real world a person can invent demand of worthless byproducts and make himself rich without the deus ex machina of a patch update or developer forum post that also affords that avenue to everyone else. There are no patents on crafting recipes.

Gasoline was once just a byproduct of the refining of kerosine, now it is a primary commodity. The entire computer industry was created by the exploitation of tech foreveralones tinkering in their parents garage by corporate exploiters.

Basically I get your point but I believe resources are only as finite as we are lazy, just like in any game world. If you look at the third world and see some simple solutions they have to problems first worlders have huge convoluted systems to solve you can see what I mean.

I think your point about creating demand is interesting. In a more sandbox type game like Second Life, it can be possible to simulate that in a virtual economy. There’s a MOBA game out there that allows players to create new skins and sell them (unfortunately the name escapes me).

I think it’s difficult to discuss a virtual economy without knowing what type of game it’s a part of. EVE is a game that was designed with a player driven economy and political system as the central feature. Trying to compare that with GW2 is hard, because the game wasn’t designed to drive the economy. I could completely ignore the TP in GW2 and still enjoy the game.

I think consumers in general are not profit maximizing – however business entities tend to operate in a profit maximizing mindset and will more often negotiate a lower price.

Example: The end consumer might not wait for a TV to go on sale – because they want a new TV now.

You can apply that to the gw2 economy, often players want an item now. Lets say I want a certain food item now, because I need it now. Would I put up a buy order to save some coin or would I just pick it up off the sell orders now. Then I don’t have to wait to use it.
Buy orders do not have any inherent risk, as you can cancel them at no cost to you so the only factor I can think of is that people don’t want to wait for the things they want and are willing to pay a certain premium for getting a good asap instead of later. While PM is a general guideline for the economy as a whole – ‘convenience fees’ influence the GW2 economy heavily.

The second thing I would point to is that GW2 really doesn’t have business entities. Just a marketplace of solitary producers and consumers. Businesses in real life often constantly look for competitive pricing on the goods/resources/services they need to operate. Businesses are far more likely to care about profit maximizing and they are far better at planning ahead for what they will need at what point in time – often avoiding having to pay a little extra to get something right away.

TL;DR in real life end consumers often don’t have a profit maximizing mindset in the same way that businesses do. If a consumer wants something right away they are often willing to pay a little extra. This is reflected in the GW2 economy.

An example of how the real world can learn from GW2 is that trying to force players to do a specific behavior is always detrimental to an economy. Early on GW2 had this capitalistic feel and the market was fresh. That’s what most people bought into when this game was in beta and ready to be released. However there wasn’t enough demand so it swapped to a more socialistic economy for ascended gear to spread the wealth(gear) around. So basically what one can learn is that neither capitalism or socialism can function properly unless it has some type of civil libertarian mindset from the framers/legislators of governments. A big dev team limiting player choices by gated content is the same as big government forcing it’s populace into a certain behavior to survive/thrive.

John Smith.4610:

There are some really good points here, but my original intention was to talk about what the real world gets from us participating in this game economy, rather than what real world models were used in game economies.

In essence what can we learn here from the GW2 economy that we can have application outside of GW2.

An example I might think of is: Does players selling to highest buyer instead of waiting for a better offer show that people are not “Profit Maximizing” entities as basic economies assumes?

It all comes down to how people measure their time. I know some people that can’t translate time into money or money into time. It just doesn’t compute for them. Maybe they don’t care. Who knows.

There is also some limitations on the capability of profit maximization because the consumer in the GW2 environments gets all of their options in one source (the TP), which rarely happens in the real world. If I want to buy a TV, I can search many brick and mortar stores, their corresponding websites as they often vary in price, as well as many online retailers. Even price comparison websites fail to keep and update all the details specific to special offers with each deal. In GW2, the consumer can instantly see every possible seller and obviously chooses the lowest one. Also, producers being unable to differentiate themselves via value-add type services (customer service/quality of goods) is another significant difference. In GW2, every Elder Wood Log is the same, it doesn’t matter what server or tree it originated from. It’s lumped in with all the other Elder Wood Logs.

We can learn about what will happen when something like fossil fuels run out based on the prices of super adventure box skins.

We have seen that all it takes is whispers of scarcity for markets to over react as was seen when world events changes were mentioned on the forums and ecto prices spiked. Although, this was probably already known.

Also, we have a glimpse of how much people value their personal time in the listing/bidding prices on items with skill point costs being the primary expense.

If we are your experiment, John, my advice as a mouse in the maze would be to add more types of cheeze if you want me to keep searching.

Well in a virtual economy I would say most participants don’t have the patience to maximize their profit. To them it’s all about cash flow, ie sell now to highest buyer rather than price the item and wait for a buyer, and immediate gratification or JIT supply, it buy what you need/want now rather than plan ahead with buy orders and be willing to wait for it.

In the real world small Mom & Pop stores aren’t trying to maximize profit as much as having enough cash flow to cover the bills for the month. Most don’t have a revolving credit line to handle cyclical nature of the business cycle. So they don’t have large inventories which could have provided a price break or could handle a sudden sales rush, since it ties up cash now. They are also more willing to sell existing inventory at a loss just to free up the cash for more immediate needs. I would say this is how the average player is using the TP.

The “skilled” TP player is playing a longer game when it comes to buying and selling. They are willing to wait for others to either provide or pay the prices they set and not the price the under/over churn caused by short term players.

Hi, long-time lurker, first time poster (in the economy discussions, anyway).

I thought this question interesting, and started considering how I make sell and purchase decisions. Maybe I’m the example that you all are considering a “normal” player, or someone who doesn’t exactly play the TP.

When it comes to selling items, I practice something of a median profit method for certain items, but just grab coin from the highest buyer for other items. In the case of the former, an example would be an exotic ring I recently sold. There was one other listed for roughly 1g10s, but buyers were looking to spend just shy of 60s. I went a median route and posted it for 77g79s (an even 70s return for me after “taxes”). For “sell it now” items, there’s a sort of profit maximizing in my choices as well, but this applies to relatively common items such as runes, sigils and the likes. An NPC vendor may only offer 1s12c, whereas I can sell it immediately on the TP for, say, 3s64c, but the highest seller is posting them currently for, say, 3s88c. In this case, I don’t care about the other 24c, and just toss the item, considering that I’ve made enough profit by choosing the TP over an NPC vendor.

My in-game buying is similar. If I’m looking to toss minor or major runes on a character I’m levelling, I’ll just pay what the seller wants. However, if it’s a specific build for a specific character profession, and I’m after certain runes or armor pieces, I’ll bid low and wait.

All of this is quite different than how I make transactions in the real world. If I’m buying a fairly common item, a new SSD for example, I’ll spend weeks researching reviews, checking deals, finding reliable sellers, etc. I’ll also wait to buy a previous generation item when a new release comes out to take advantage of a drop in price for last-year’s model. I make these careful decisions in every case, even choosing to go an extra couple blocks to get a six-pack of beer that’s sixty cents cheaper at one store over another.

With selling, sometimes it’s different. A yard-sale will mean getting rid of stuff I don’t need or use, and so items that could be valued higher are moved post-haste for next to nothing, or even in some cases nothing at all. Couple years ago gave away a 36 inch television (the old tube style) just to get rid of the monster. This year a washer and dryer that work just fine, but are 15 years old and need to go to make way for new ones. Could I have waited and sold those items? Certainly, but in this case time and space are critical deciding factors. Yet other selling decisions are carefully researched to maximize profit. I’ve been monitoring a collectible set of books in my possession for the last seven years or so to figure out a good price. My decision on their value, too, is carefully considered when looking at their condition relative to the condition of the same books being sold by others. My intent is to not only make sure they go into the hands of a person who will care about them, but also to get as much for them as I possibly can.

I think most folks are profit maximizing, but the profit isn’t always measured in money (or time). I value transactions that save me inconvenience, even if they don’t save me much time. For example, I always over tip if the service was decent. Sure I’d have more money in my pocket and the person providing me service would still feel appreciated if I calculated out exactly 20% or 18%, but I can afford it and I don’t care enough to be bothered even though it would take seconds. I’d rather have my brain occupied with something else.

Filling a buy order saves me the effort of looking at the market and thinking about how much would maximize my profit while minimizing the time I have to wait for it. 99% of the things I sell aren’t particularly rare or valuable, and the amount of profit per transaction doesn’t motivate me enough.

I am complacent because I can afford everything I want. I have no need for a little bit more on every transaction because I’m not working toward anything, I’m just playing and having fun and whatever I accumulate is fine, as long as I feel my net worth isn’t dropping. It could be dropping in reality, but as long as it doesn’t feel like it, I don’t care.

John Smith.4610:

Does players selling to highest buyer instead of waiting for a better offer show that people are not “Profit Maximizing” entities as basic economies assumes?

At least in a large portion of transactions, we’re talking minimal or ignorable values of profit. The difference between Highest Buyer and squeaking under the current best sell order on a 1 gold Exotic may be as high as 20 silver, true, but 20 silver is currently equal to a little under ten cents USD. If we look to non-bulk sales of other goods, the value drops to fractions of pennies. You have to be dealing with pretty large scales or highly valued goods to actually matter.

Add in the time value of money and the tendency of humans to put a high time value on money, and it’s not terribly surprising. Nor entirely unreasonable, since less money now can easily end up saving a repair bill or otherwise increase efficiency.

That revelation shows some interesting things, though.

Pandemoniac.4739:

I’m just playing and having fun and whatever I accumulate is fine, as long as I feel my net worth isn’t dropping. It could be dropping in reality, but as long as it doesn’t feel like it, I don’t care.

If we could extrapolate this to the real world we would be living in a utopia. In reality there is uncertainty and my kids are hungry and rents late and gas keeps going up etc.. Just playing the game itself is a goal for pretty much everyone who plays a game, in real life work is not something people enjoy unless indoctrinated from an early age or they are motivated by fear or hunger.

Solo.9027:

Pandemoniac.4739:

I’m just playing and having fun and whatever I accumulate is fine, as long as I feel my net worth isn’t dropping. It could be dropping in reality, but as long as it doesn’t feel like it, I don’t care.

If we could extrapolate this to the real world we would be living in a utopia. In reality there is uncertainty and my kids are hungry and rents late and gas keeps going up etc.. Just playing the game itself is a goal for pretty much everyone who plays a game, in real life work is not something people enjoy unless indoctrinated from an early age or they are motivated by fear or hunger.

I’m fortunate in that’s how I live my real life too. I grew up poor (although not destitute or hungry) and learned the value of having enough money by watching my parents work their way into upper middle class. I also learned to appreciate the value of things that can’t be bought, because I never felt poor. I wish that everyone could have had at least as good a life as I have had so far. Unfortunately, reality sucks.

My point is that not everyone values accumulating a lot stuff, and although folks like me participate in some profit seeking, it’s a gradient and not a yes or no question whether folks are profit maximizing. Sometimes I am and sometimes I’m not when it comes to money.

Solo.9027:

John Smith.4610:

can we learn more about our real world economies with more finite virtual economies?

The purpose of economics in the real world(IMO) is to squeeze efficiency out of human labor for the benefit of other humans with as little cost as possible. The way that translates to this game is how little can I pay someone to farm salvage X for me while I RP in divinity’s reach with the trading post window open and my credit card handy.

So, yea they’re pretty similar.

That’s what I’m seeing and the implications are the same imo.

Is there access to some part of these resources that is actively being cutoff to other parts of the gaming community thru classism and thru the balance issues and thru man made mechanations like DR that’s not harming those who are completely free and easily in their element while playing in those locations. ie, is it fair to make certain types of loot (which directly affects the gold) available only in certain areas of the game where only certain types of players play, when in fact this game was touted as being a game with multiple play styles none of which would be more important or better suited then the others? That’s the real question. And how can cutting off resources (like Lodestones for example) be justified in a game that was never supposed to limit any one style of gameplay?

Why should the game imitate real life I guess one could say, in the worst possible way, poverty?

John Smith.4610:

An example I might think of is: Does players selling to highest buyer instead of waiting for a better offer show that people are not “Profit Maximizing” entities as basic economies assumes?

Only if you overlook the added value of instant gratification. Some players might also go for an accelerated turnover rate, hoping it will outweigh the increased profit gained from waiting on a buyer. Filling out buy orders is also a strategy to give the impression of low prices. This can be used to pressure an opponent out of a specific market, because you ruin his break even point. This might be at the cost of your own, but since you know where the price degradation is coming from, you will stay in the market, monopolize it and easily make back your money. I made around 300G bullying others around that way, while you would have said I was altruistic and then at the right place at the right time.

My lesson:
research money pays off
know your break even
know your competitors’ break even
analyze, invest, drive them out of the market, jack up prices.
TP is not a happy meal, it a cannibal’s buffet and so are real world investment markets

If you use your GM power to look at the items I bought, you might figure out what happened there. Currently I am less active in that field. To be honest, I cannot makes sense of the players I am selling, but I do not need to.

John Smith.4610:

There are some really good points here, but my original intention was to talk about what the real world gets from us participating in this game economy, rather than what real world models were used in game economies.

In essence what can we learn here from the GW2 economy that we can have application outside of GW2.

An example I might think of is: Does players selling to highest buyer instead of waiting for a better offer show that people are not “Profit Maximizing” entities as basic economies assumes?

What can we learn from the GW2 economy that we can apply outside in the “real” economy? Not much at all (and that is not a slight, nor a smart alec comment).

People taking less optimal profit paths is often seen in less sophisticated investors actively engaged in real markets (retail traders and at market trades for example). It is not surprising that someone trying to have a bit of fun in a computer game would also take a less optimal profit path.

John Smith.4610:

There are some really good points here, but my original intention was to talk about what the real world gets from us participating in this game economy, rather than what real world models were used in game economies.

In essence what can we learn here from the GW2 economy that we can have application outside of GW2.

An example I might think of is: Does players selling to highest buyer instead of waiting for a better offer show that people are not “Profit Maximizing” entities as basic economies assumes?

I won’t really touch too much on the “Profit Maximizing” idea, But, i will say that GW2 basically forces players to think that way. In many cases the player earnings are dismal, and taking a sampling of people willing to post on forums is obviously not a good yard stick. But I constantly hear of people with very low earnings that just play the game, most of my guild mates from other games have left mostly due to this. So, poor players and tightly wound earnings, check.

As far as what can be learned from the GW2 economy, one thing that stands out is the plethora of “currency”. It’s really not a good idea in real world markets to introduce alternative forms of payment (that aren’t tied directly to actual currency). One example of this lesson learned was Star “bucks”, it was a miserable failure and most of those ideas end up being really bad promotional choices. They simply hold no market value. Sure it works out ok for the regulars, but in the case of GW2 it pigeonholes players into aspects they may not care for participating in. So, too many “currencies” that hold no market value, check.

Voluntary, is another key component to video game economies. Regardless if we like it or not, our earning potential is tightly tied to our global, national and local markets. Our participation in most cases really ends there, at our salaries, but it’s a required one. The completely voluntary and, in most cases, less serious (outside of the hard-core folks) makes the market tumble about. I’d venture to guess most players will simply just buy items for asking price and not bother waiting to win at the best offer game. So time spent versus savings/earnings, check.

In closing, (and i emphasis this a lot on here), it’s a game, it’s meant to be fun. If playing the market is your thing, great, enjoy. But, the second it becomes a laborious task, there’s the door, take a break. I personally want to play the game and get the nice shiny stuff in a reasonable amount of time, if i keep getting held to the fire of running CoF p1 just to get there or become a TP guru, i’ll simply take my leave. I can think of at least 10 different ways you could make these goals work over time and still keep players interested. Sorry, went a little off topic there.

Do you know that in real world if everyone would buy gold we would be in deepkitten… For god sake thanks people IRL don’t play the market as hobby :p
http://www.caseyresearch.com/articles/what-if-everyone-world-wanted-1-ounce-gold-coin

John Smith.4610:

In another thread someone brought up the question, “what basis is there for considering the world of video game ‘economics’ has anything to do with ‘real world’ economies.” I thought it was an interesting question, can we learn more about our real world economies with more finite virtual economies?

Opening the floor.

We clearly see that when the supply of a good is kept under control so can the value of said good. Just like the Canadians do with Maple Syrup. We clearly see supply/demand taking place but mostly in a way that’s converse to the real world because most goods, example being ore, are infinite and increase in total supply over time, as opposed to the real world where most good are finite and decline in total supply over time.

Yes, we can.
If we take the comparison each item is a stock and each unit is a share, naturally, we’ve got a simplified economy – of course.
The main difference is that the real world economy simply has more variables to take into account, whereas a game such as GW2 has less of these variables.

Less variables means that players can use the market to their advantage for whatever means because signals can be more easily read.
Price movements that happen in game would happen similarly in reality. We can see the similarities in the way supply and demand works as well as inelastic goods.

Units, regardless of being in a game or in reality are treated the same.

We can observe in game how prices are affected by certain things, for example; lowered drop rates (reduced supply, price increases), new recipe using a certain material (demand increases, price increases), etc. I’ll call these variables.
Not only that, but we can observe to what extent certain variables affect the price. This can be used in real world economies, since real goods similar to the game item may be affected by those variables in a similar way.

Although the challenge would be to make the initial comparison between the two and link them. The variables would have to be similar. The more variables that are similar the stronger the connection and the more likely those items will behave and be treated similarly.

Another reason I believe so is because I’ve personally done the opposite, where I’ve used real world economies to help with my in game merchanting. Proving a link between the two at least.
In this case I was reading graphs and predicting patterns of the item just like I’d do to a stock. If done in game, I do believe you could even pick up on certain patterns you’ve never come across before simply because you’re working with a more simple instrument so signals are more obvious.
This could then change the way you treat and observe certain stocks in the real world.

EndoChronik.3507:

In this case I was reading graphs and predicting patterns of the item just like I’d do to a stock. If done in game, I do believe you could even pick up on certain patterns you’ve never come across before simply because you’re working with a more simple instrument so signals are more obvious.
This could then change the way you treat and observe certain stocks in the real world.

I would be very, very wary of people taking “chart patterns” they have learned from a video game and applying that knowledge to any real trading (although it is probably less potentially damaging than the kitten you see on the FX snake oil sales sites prevalent all over the web).

I am sure you have a strong, fundamental, knowledge of the assets you trade and how the market participants trading said assets will react to any given event. Reading the “charts” then may give you additional “insight” into possible entry/exit points.

But for the main part, single asset financial time series are non stationary, non normally distributed and follow random/quasi random walks, albeit sometimes with a stochastic term/drift (think GBM or Ornstein-Uhlenbeck type processes as a close(ish) proxy). As such “chart patterns” are about as statistically significant as throwing darts at a graph of a stock and buying it at the price you hit.

Goloith.6349:

marnick.4305:

Goloith.6349:

marnick.4305:

We could learn that completely kitten economic models like communism could function in a world where money and work isn’t necessary for basic things like clothing, reproduction and shelter. GW1 is the perfect example, there’s no upkeep on playing which makes cosmetics the only goal. There’s no society more egalitarian than the GW1 community. There’s no reason to play except for play’s sake.

Other completely insane models IRL are anarchism and extreme libertarianism. There’s no government smaller than an MMO host. There’s very few rules strictly enforced by a.net. As long as you don’t infringe on the rights of others by botting or harassing, you won’t get banned. Apart from a few ground rules, society is entirely regulated by the society itself. IRL such systems collapse eventually.

In the real world this could work if food, shelter and reproduction were not an issue. Yes, reproduction is a core necessity in life to which most effort is directed once survival is guaranteed. These basic necessities undermine the viability of libertarianism and communism alike IRL because sooner or later someone is going to take control over them.

Extreme libertarianism lol, darn American founding fathers were completely insane I guess. You know libertarians are fiscal conservative, socially liberal right? You also understand that most political spectrums have libertarians as slight right of center? I suppose if you drove on the left shoulder of the left side the middle would seem pretty far away.

I’m as centrist/moderate as it can get. Most right-wing people consider me left-wing, and most left-wing people consider me right-wing. Funny Nice how you completely missed me saying how communism doesn’t work either.

Than don’t open your post up by supporting communism out of the gate. I think you are confusing by accident. I’m glad you meant differently. However I would suggest reading the blog by the Washington post that shows libertarian approach that has lead to the success of Eve Onlines economy and game.

If you reread my post, you’ll see I didn’t support communism at all IRL, I only said it works in a virtual world because there’s no important things such as food and shelter that usually undermine such systems. I made the same argument for libertarianism which is equally crazy to communism. You’ll see i don’t choose between stupid economic systems IRL since neither works. In games, either could work though and that makes for some interesting case studies.