Virtual Economy Research Network

The economics chapter of this acclaimed book discusses different types of virtual economies and various design choices available to developers. The author is not an economist and no scholarly analysis is attempted; instead the chapter identifies a great number of practical issues and considerations that spring from the author's long experience with virtual worlds. The examples show how the most carefully planned virtual economies can fail in practice due to numerous unforeseen factors. A particularly interesting observation is that free markets tend to fail because players are unwilling to accept some of their consequences. Unlike the real world, players are free to quit a virtual world and move to another one if they become dissatisfied with the economy; to avoid this, operators introduce price controls and other measures in an attempt to make the economy satisfying for those players whose economic activity is not valued by the market.

Another chapter reviews the research on virtual worlds from the point of view of economics. The author divides the research into three categories: using virtual economies as simulations for the purpose of studying real economies; studying virtual economies in their own right; and studying the interaction between real and virtual economies. The focus is on providing design tips for developers.