News, research and discussion on virtual goods, currencies and economies globally.

Internal Economy

Habbo introduces a dual currency virtual economy model (updated with pictures)

Bubbles, a "rental"Bubbles, a “rental”Sulka Haro, Lead Concept Designer of Habbo, informs us that Sulake is introducing a dual currency virtual economy model for Habbo:

As of today, Habbo is a dual currency economy. Credits are bought and used to purchase persistent value, and you can earn Pixels by doing Achievements and just hanging around online. We’re piloting the change in UK, and if it’s working fine, the other countries will get it at some point in the future (as usual).

More details and screenshots below.  Read more

New peer-reviewed papers on commerce and consumption in virtual worlds

Journal of Virtual Worlds Research, an online journal that started this year, has just published its second number, titled Consumer Behavior in Virtual Worlds. Also, the Journal of Electronic Commerce Research, a more established online publication, has published a special issue on virtual worlds. Most of the articles from these two publications fall into the familiar group of Second Life -based qualitative studies and essays. There are also a couple of surveys. Below, I briefly introduce four of the papers that touch on VERN’s topic areas.  Read more

CCP publishes a new economic newsletter

Dr. Eyjólfur Guðmundsson, the economist from CCP, HIIT’s partner in virtual economy research, has published one more Quarterly Economic Newsletter (QEN) for EVE Online. The latest issue deals with Q1/2008 and can be found here (the previous ones are Q3/2007 and Q4/2007). The latest issue includes updates to some of the indices that have been published in the past.  Read more

Macroeconomic Indicators in a Virtual Economy

French economist François Quesnay (1694-1774)My virtual economy -related Master’s thesis (University of Helsinki, economics), titled Macroeconomic Indicators in a Virtual Economy, is now publicly available. As the name of the thesis implies, I ended up concentrating on the macro approach to virtual economies. I developed a measure of aggregate production for a virtual economy, and identified a suitable measure of inflation. A previous blog entry briefly described the idea behind the aggregate production measure, which I call the Gross User Product (GUP). To add some flesh to theory, the thesis also includes measures of GUP and inflation in EVE Online. I’ll probably be blogging on some of the findings in more detail later on.

The abstract and the whole thesis are available in the bibliography.  Read more

Gross User Product of a virtual economy

Artist View of Pulsar Planet System by NASA/JPLIn the latest EVE Online Quarterly Economic Newsletter, published yesterday, there is a section that is based on my work done at the Helsinki Institute for Information Technology (HIIT). The section in question is the one called Gross User Product, and is the first outcome of the research cooperation between HIIT and CCP that was announced earlier this year.

Gross User Product, or GUP, is a concept upon which I arrived when transferring the concepts of the UN System of National Accounts (SNA) to a virtual economy. SNA is a standard guideline according to which national accounting is performed for real-world national economies. In the very short, SNA tells the statisticians how to measure the national accounting aggregates, such as GDP.

GDP, GUP – what’s the story here? That’s what I try to explain in this blog article.  Read more

HIIT starts new research project in collaboration with CCP

HIIT I am happy to announce that we are starting a new virtual economy research project at HIIT. The project has an excellent lineup of collaborators from the industry: Nokia Research Center, Finnish digital media company SWelcom, casual game community Playdo, and MMORPG company CCP Games. Below is the press release.  Read more

Arden and experimentation in virtual worlds

Wikimedia CommonsThere are two main types of social science experiments that can, in principle, be conducted in virtual worlds. First, with access to necessary logs of an existing virtual world, one could conduct natural experiments, observing e.g. the effects of the introduction of a new feature. Second, with the necessary influence in some virtual world, one could set up and conduct controlled experiments, that is, tweak some property or rule of the world and observe how it affects the behavior of the participants.

The Arden project, headed by Edward Castronova, has the ambitious goal of building a virtual world for the purpose of conducting the latter kind of experiments. A version of Arden is now available for testing and downloading.  Read more

EVE Online Fanfest, QEN, and research co-operation with CCP

The fourth EVE Fanfest, an event giving the EVE Online players an opportunity to meet each other and the game developers, was held in Reykjavik 1. – 3. November. There were two interesting revelations in the event, which also sparked discussion in panels and roundtables, a part of which I’ll try to summarize here. The first one had to with a soon-to-be-published white paper on the EVE player democracy, and why it actually might not be wise to call it democracy after all. The second was about the soon-to-be-published EVE Online Quarterly Economics Newsletter, Vol.1, No.1.  Read more

Teen world Gaia Online appoints economic advisors

Chatting in Gaia Online CNET reports that Gaia Interactive has appointed Michael Boskin as the chairman of a new “Council of Economic Advisors” for Gaia Online, a sprite based virtual world slash community site a  Read more

Currency intervention in Second Life – Analyses and doomcasts

The Ludvig von Mises institute, an advocate for the Austrian line of economic thought, recently published an article in which Matthew Beller analyzes the Second Life (SL) economy. I’m happy to see such work done on virtual economies, and published on a forum that I suppose also some mainstream economists read.

There are also some other analyses of the SL economy available. Randolph Harrison has previously written an article that’s somewhat related to the Beller’s article, both of them dealing with Linden Lab’s tendency to intervene in the “foreign exchange” markets of Linden Dollars, the internal currency of SL.  Read more