Back in 2008, it seemed like only one thing was certain about the government's Troubled Asset Relief Program: It was a gamble. A really big one. The economy's problems were unprecedented and the potential remedy untested, which meant that economists could do little more than speculate about how hundreds of billions in bailout money would affect the country's overall fiscal health. In a New York Times article from February 2009, Treasury Secretary Timothy Geithner was quoted as saying of TARP, "We will have to try things we've never tried before."
But, some economists are beginning to ask, what if such broad economic policies could be tested first? Not on living, breathing, tax-paying citizens, mind you, but on goblins, wizards, and intergalactic space pirates.
In a report published last year in New Media & Society, Dmitri Williams and Edward Castronova suggest that massive, multiplayer, online role-playing games like World of Warcraft and Second Life are ideal Petri dishes for studying economic behavior and testing economic-policy theories. Their study found that these games, which are populated by hundreds of thousands of online players constantly buying and selling goods and services, mirror the real world in some significant ways. And while it may be a long time before folks like Geithner and Fed Chairman Ben Bernanke start fashioning their avatars, Williams and Castronova believe they've tapped into something rather remarkable.
"The way I think about virtual worlds is that they are like mazes for rats," says Castronova, an economist and associate professor in the department of telecommunications at Indiana State University-Bloomington, and author of Synthetic Worlds: The Business and Culture of Online Gaming. "I think we can learn something about the way people think about markets from studying the virtual world. And it's a heck of a lot cheaper to do a study in a virtual world than the actual world."
Broadly speaking, this field of study is not brand new. Social scientists have been interested in the experimental value of online virtual worlds for several years now. Prior research has even looked at individual economic behaviors in these synthetic societies, but the Williams-Castronova study is the first to calculate macroeconomic markers such as gross domestic product (GDP) and inflation in an online setting.
To conduct their survey, Williams and Castronova were granted unprecedented access to 314 million actual transactions from Sony Online Entertainment's EverQuest II. From that data (which was collected anonymously to protect privacy) they were able to make their calculations and draw possible parallels between real and synthetic economies. What they found was that virtual economies are influenced by many of the same principles and variables that govern those in the real world. Supply and demand, diminishing returns, risk analysis"”it's all there.
TBM bloggers discuss the sector's use and abuse of Facebook and Twitter.
Read Full Article »