Virtual economies in videogames used as case studies

Virtual economies set up in videogames as players trade items are being used as case studies to track and model real-world economies.

As more people join massively multiplayer online videogame worlds like Activision Blizzard's World of Warcraft, NCsoft's Aion and Atari's Champions Online, real money is being used to purchase virtual items through micro-transactions. As a result, game worlds are creating virtual economies.

With the global recession impacting consumer spending - and the sales of videogames - a research group is using Sony Online Entertainment's EverQuest II as a case study to explore how virtual economies mirror real-world economies.

Researcher Edward Castronova, professor of telecommunications at Indiana University, said researchers can learn almost anything about human society in games as they really are human societies.

However, unlike real society, they can be observed and tweaked.

"We can do controlled experiments in virtual worlds, but we can't do that in reality," said Prof. Castronova.

"Controlled experimentation is the very best way to learn about cause and effect. We are on the verge of developing that capacity for human society as a whole."

Researchers found the average age of EverQuest II players is 31 compared to 35 for the general population. Eighty per cent of players are male versus 50 per cent for the general population and they skew more white than the overall population.

Everquest II players are also wealthier than the general population with an average mean household income of $84,000 versus $57,000 for the general population.

After studying 314 million transactions within the fantasy world of Norrath in EverQuest II, including trading in-game goods like armor, shields, leather, herbs and food, the researchers were able to calculate the GDP of one of the game servers (the back-end computer that hosts thousands of players in one world).

As more people opened accounts and flocked to Norrath, spending money on new items, researchers saw inflation spike more than 50 per cent in five months.

Fellow researcher Dmitri Williams, assistant professor at the USC Annenberg School for Communication, said the rapid economic changes may not be due to the economy being virtual but as it has volatile elements.