Virtual Economy Research Network

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.

I'm writing this at Breaking the Magic Circle, a seminar at the Game Research Lab at University of Tampere, Finland. Overall, it's been an interesting seminar. As is typical of game studies gatherings, we've heard a mixed bag of presentations on diverse topics and from distinct angles. This can be both stimulating and frustrating at the same time.

My own contribution was a working paper titled Virtual Worlds Don't Exist. I got some useful feedback, for which I am thankful. Feel free to drop your own feedback either as a comment on this blog or via email. I'll paste the abstract below. Updated: you can find my presentation slides here.

In 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.

There 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.

Quite a few very different estimates of the volume of real-money trade of virtual items (RMT) are available. Part of the reason for the different estimates is the very rapid growth of the user base, and the number of potential real-money traders, in virtual worlds. New service types also spring up, and there are difficulties in defining what RMT should actually include. Regardless of what we decide to include in it, measuring it directly is practically impossible. In this post I review the existing estimates, speculate on what exactly might be included in them, and try to sum up some of the latest regional figures to produce an estimate of the grand total size of the RMT market.