Virtual Economy Research Network

The most interesting real estate transaction has been executed after a several months long auctioning process in December 15, 2004, a sale of a whole island at a rather incongruent price of 26,500 USD, BBC reports. The peculiar part of the deal is the location of the island; it is not situated in a lush Mediterranean climate or off the costs of Florida but in a rather constrained space of a few mainframe servers of MindArk company in Gothenburg, Sweden. It is a virtual property coded in the massively-multiplayer online role-playing game (MMORPG) game Project Entropia which can be used only by virtual personages, the so-called avatars existing as human user's digital extensions, but at the same time that property can be traded using real money. Virtual economies traded in the real world or so to speak virtual economy spillover into the real world (i.e. real money trade) resulting from the trade of these properties is not small by any standards and is estimated to be $880 millions in 2005 and rapidly growing.

The owners of those virtual worlds, most often medium to very large companies, themselves face the consequences of sprouting economic relationships based on their product, either by embracing them as MindArk did or by banning them as Blizzard did in their hugely successful MMORPG World of Warcraft.

What are the causes for this virtual economy's spillover into the real one? Why does it happen in the first place? The answers to these questions may not only be the analysis of the current situation of the economies in the virtual worlds but also serve as a direction for further analysis of emergent Homo Economicus Virtualis.

My thesis will explore two cases of virtual world economies in detail and examine the real money trade creation in those economies using abductive approach. The study will base itself on the information recollected using online interviews and surveys of the active population inhabiting the two virtual economies. Various secondary sources will be analyzed and existing theoretical frameworks will be used in the thesis. Consequently, theoretical virtual economy real money trade model based on the digital assets growth dynamics in the challenge level framework will be inferred and outlined. In the end, suggestions for the further research will be presented.

Keywords: virtual, economics, trade, pricing model, thesis, game, everquest, ludens