Most (all?) economic theories are based on models. Models make assumptions about the world. Sometimes these assumptions are reasonable and the model will make useful/accurate predictions. Sometimes these assumptions are unreasonable, and the model will make bad predictions.

One of the hardest things to predict/make assumptions about are how humans act. The most accurate way to test if assumptions about human behaviour are correct is to run an experiment on actual humans. However running an experiment on humans at a scale large enough to actually test economic theories is expensive, and has legal and ethical issues (although for some reason if a government does exactly the same thing but doesn't call it an experiment it's ok).

MMRPGs (Massively Multiple Role Playing Games) sound like a decent way to tests how humans behave at a large scale with low risks.

For example you could imagine a tycoon style game where players buy, develop, rent and sell plots of land. Then you could test what impact Georgian land taxes or harberger taxes have on the 'economy' of the game.

Would it be possible to create an MMRPG with an accurate enough model of the economy to test economic theories whilst still being fun to play?

What parts of the economy would need to be modelled accurately, and what parts could be simplified/abstracted away?

What economic theories would you test, and how?

What would the plot of your economic MMRPG be?

How would it be funded in such a way that the game developers are incentivised to accurately test economic theories?

What types of inaccuracies would you expect results from theories tested that way to contain?

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I second the Eve Online suggestion as an example of what you are looking for. Relevant features of the game are: 

  • Wealth is the measure of player progress, and the purpose of player activity. This is because experience accumulates with time rather than kills or quests, and you simply buy the necessary skills when you have the prerequisites. Further, your ship is destroyed it is gone - you have to buy a new one. Though wrecks can be salvaged for parts.
  • Players participate in almost every level of the economy: they manufacture most of the ships and many of the weapons; they extract most of the raw materials used to build those ships; etc.
  • There is an explicit sector of traders, of both the merchant and speculative variety. The game has explicit transaction costs, and the skills in this area are centered around reducing those transaction costs.
  • The game deals with hard-to-reconcile social values which compete with economic ones (PvP is a wealth-destroying activity, and is called "content" because it is usually more entertaining than mining space rocks).
  • Players responding to economic incentives has several times unbalanced the game in such a way the game company needs to intervene. For example the most recent changes are being imposed to make raw materials more rare, because player mining got so efficient that ship prices plummeted across the board, resulting in wars among player alliances lasting forever because no one would ever run out of hulls.
  • The company, CCP, keeps at least one full time economist on staff, whose job is to help model the economy of the game.

Based on this example, the things a game needs to be able to show complex economic behavior are:

  • Players need to be able to both add and destroy value, which is to say there needs to be player driven production as well as material losses.
  • Players need to be able to exchange value, which means being able to buy and sell almost all things within the game.
  • The parts of the game need to interact, so that changes in value in one segment of the game can affect completely separate parts of the game.

This answer is really good. One thing I want to add is that "players destroying value" doesn't have to be quite as literal as it is in EVE Online to be useful.

In World of Warcraft, players destroy value every time they equip a "soulbound" item (these items can only be used by one player and can't be given away or sold once they're used for the first time).

There's also levels of accuracy in the simulation. You can probably test economic theories in World of Warcraft's auction house, but you'd have to keep in mind that the economy in that game isn't like the economy of any real countries (but maybe some parts are similar enough to generalize?).

The significance of value destruction in Eve is that it provides continuous opportunity for players to produce value. This is similar to selling gear to NPC merchants in most games; selling stuff to the NPCs destroys the thing, and new things similar to it are harvested from the environment. Since this is the default, and is often relatively symmetric, there's only as much opportunity for players to produce value as there is value routinely destroyed by the players. This is surely just a heuristic in most cases; games from Diablo to D&D have long suffered from a gold inflation problem because no-one troubled to balance this.

I've heard of quite a bit of research using Eve Online -- a quick Google Scholar search suggests 3,870 results at the moment.

Would it be possible to create an MMRPG with an accurate enough model of the economy to test economic theories whilst still being fun to play?

Mu. Take a game that's fun to play, and improve the accuracy of its econ model, rather than the other way around.

I suspect that starting with a desire to test economies and building a game around it may not be the order of operations that would get the best balance of quantity and quality for data. If a game feels like a chore to players, they're less likely to engage for as much time over a long term as they do in games which are described as "addictive". Instead, I would start with a game that's already mastered the player addiction loop, or even rip off the gameplay of something successful, and change as few things as possible to allow it to emit the kind of data I wanted.

What would the plot of your economic MMRPG be?

I would avoid games with a single plot for all players, because I think open worlds offer a more accurate simulation of the choices that people in real economies face. Plots with warring factions could emulate the dynamics between countries in the real world, but plots with individual NPC bosses that players team up to take down seem to make collaboration easier than it is in reality. I think it'd work only in as much as that type of boss is analogous to natural resources, or possibly big bosses could serve a function similar to scientific breakthroughs if the game lacks another way to unlock new mechanics.

How would it be funded?

If one used a sufficiently addictive game, players would pay to play it.

What types of inaccuracies would you expect results from theories tested that way to contain?

I would expect inaccuracies anywhere that I hadn't scrutinized for accuracy. In particular, economic changes resulting from exploiting bugs in the game itself may show up without real-world analogues. This could potentially be managed by introducing intentional and more-exploitable bugs that would be more realistic than any accidental ones, such as making it easy-ish to illegally print unlimited money for the tradeoff that the money could be detected as forgeries with sufficient scrutiny.

Some great points here:

If one used a sufficiently addictive game, players would pay to play it.

My worry with that is that will remove the incentive to make it a good testbed for economic theories of that will make the game less addictive.

That's an interesting question, tying back into the fundamental query about what would be required to make a game an accurate simulation. An argument in favor of using a maximally addictive game goes "the least realistic part of games is how people only play the game a little of the time, so they'll have needs which the game economy doesn't have to meet. If players spent 100% of their time in a game, the game would need to meet all their human needs, so it would experience economic forces related to all needs". The degenerate case of that argument would be for game currency to be tied to physical needs such as food and housing as well as non-physical needs like entertainment and esteem and fulfillment. I think I mostly agree with that argument, in that I believe games where players spend a higher percentage of their time tend to create more realistic microcosms of human behavior than those where players might only check in once per day or less. I'm having trouble imagining an economic theory for which a more-addictive game would be a worse testbed than a less-addictive one. Could you help me construct a toy example or two of those?
As I have understood it Eve players start world wars because they are bored and there isn't much to do in the universe. When the default win move is to play the game taht heavily favors against games where the default win move is not to play.
Thanks, that helps me understand. The concrete example of people getting to the top and running out of game to play reminds me that game addictiveness often involves an element of unrealism to character growth, or mechanics which let you succeed just a little more easily than you'd expect to in real life. I also hold in mind the example of well-established minecraft servers, where people who "run out of game" but want to keep hanging out with their friends often embark on ambitious community infrastructure projects to show off their power and skills. So an MMRPG trying to simulate the economy could potentially sidestep the world-war problem by encouraging a cultural definition of success more consistent with reality... although, that leads to all kinds of speculation about the complex motives behind actual world wars that I think I'd rather not dig into at the moment.
1Yair Halberstadt2y
Games which give players constant rewards tend to be more addictive, so there's an incentive to make it easy to create money easily, without producing a usable good for example.

The plot of my economic MMRPG would be humans in the far-future mining resources to build spaceships that they use to mine more resources and/or attack each other.

You might find it interesting that EVE Online hires economists to keep their in-game economy healthy, which among other things includes setting transaction taxes at a level that keeps inflation under control. You can see their March 2021 economic report here.

I'm having trouble finding a good article about this, but here's one.

MMRPGs could be a generator of insights but it proving stuff could get tricksy.

Most of my thoughts are about edge conditions on whether somethign forms or not.

In a way a good sandbox mmprg will have "player driven economy" as one of its game mechanics. In this way having "economic authenticity" has a somewhat solid grounding. however it also has the dark sides in that if you design something in and then measure that thing out then off-course you are not going to get surprised. A lot of what makes a collection of mechanics "an economy" places burdens that it has no hope but to work boringly.

There are quite a lot of things that have been "RPG takeaways". I started to flesh out some of them but decided just to list and let it be interactive whether further elaboration answers the question.

*Ruthlessness from Majora's Mask: Eve lets you play a scammer. If you make a very big slight in game but do not cheat while doing it the house will back you up 100%. When people have proper anonimity and pseudonimity reputation effects can grow rampant. 

*Blowing up pixels: Having a lot of wealth and having hard time to enjoy it. Buy expensive ships just to wreck them for marginal humor utility. "objective" ingame economic value being radically different from subjective evaluation

*You need money to make money: Progression curve and expectation where new player earn little and more established players have it easier. Income differences can be way bigger. making millions in a 15 min vs working 6 months to get to that point.

*Slavery for the sake of entertainment: Time sinkhole, all gains are fictional/experiential, possiblity of getting real hurt (loss of assets worth/generated by 1/2 a year of monotonous repetitive action). People can understand what a grind and ruthless thing it is and still undersign, instead of winching away as a violation of basic human rights.

*Uncommon sense: Security ratings and alpha vs beta. The thresholds of gain vs risk of loss are spychologically very different than what is mathematically good for game balance. One could think robbery possibility vs no-robbery posibility woudl be in the real of 1.0 vs 1.3. When is is more 1.0 vs 3.0 or 1.0 vs 10.0. How people can be financial incentivised to upkeep such sensiblity gradients. Also 3 months in high sec vs 3 weeks in low-sec for comparable gains.

*Adversial economics: Trading on the open market vs company internal market. Making ammunition cheaper for everybody means making it cheaper for your enemies. it can be important political/strategic point of keeping a price artifically ineffcient. The market price might not be the production price but what it can be allowed to be. There is a difference between company internal "market price" and open "market price". Flooding the market as a causus belli.

*Created scarcity: Extortion like tactics to actively make more people more dependent on others

*ISK=RISK: Somebody will do it for less until to the point where it becomes unsustainable because they die too much from doing it.

6 comments, sorted by Click to highlight new comments since: Today at 5:51 PM

I've spent some time working with MMRPG market data before (i.e. data on prices of goods traded in-game), as a way to test economic models of market dynamics. I know there's also a decent number of economists who do this sort of thing, although I don't have papers on hand at the moment.

For a lot of purposes, existing MMRPG economies are already great testbeds as-is. In-game markets are remarkably efficient, and the well-defined production pathways in most games let us directly check relationships between the structure of production pathways and the structure of price variation.

That said, game economies obviously diverge from reality in many respects. Some major differences:

  • Negative price of (some types of) labor. In a game, players do some kinds of "work" for fun or for upskilling. As a result, it's common to see more-processed goods which cost less than their inputs; players pay to do the work of producing things (often to skill-grind).
  • Capital requirements and capital markets. Most games have relatively little opportunity for real capital investments, and minimal-if-any capital markets. That means no banking system, no public stock market, etc. That makes such games a bad model for most macroeconomic questions, especially development and crashes.
  • No flexible, enforceable contract system. This makes joint ownership/investment much harder, and is one of the factors underlying the lack of capital markets.
  • Games typically contain mechanisms for players to directly produce "money" de-novo, or sinks which permanently remove money. These often make the currency value highly unstable - games can see very high inflation rates, or sudden massive deflation when a feature involving a new money-sink is released.

Negative price of (some types of) labor. In a game, players do some kinds of "work" for fun or for upskilling. 

In the real world people do volunteer and do some work for fun. There are people who run events with entrence fees but where the entrence fees don't cover the full cost.

There are some pretty major differences between game economies and real life that would need to be carefully considered.

  1. Motivation: People generally play games voluntarily for purposes of enjoyment and can stop when they get bored or fed up. Giving up on real life is entirely different. Games closer to reality will likely suffer from loss of interest.

  2. Difficulty: Surviving and thriving in most MMRPGs is much simpler than reality where (for most people) huge amounts of time and energy are spent earning money for the basics of living (rent, food, bills) and engaged in bodily necessities like eating and sleeping. Games without serious consequences for failing to meet basic monetary and biological needs will miss huge categories of economic incentives (e.g. wage slavery).

  3. Growth: Games tend to have monotonically increasing levels/stats for player characteristics. Reality is so much more frustrating. You lose strength if you stop training or get injured. You forget things you've learned, especially if you don't practice. Growth in the real world is longer and harder and naturally decays over time even when there aren't major regressions like an injury. Real-world growth tends to be asymptotically limited by individual aptitudes determined by things like the genetic lottery and easily hampered by arbitrary local environment and corresponding access to resources.

4. Selection effects.  On many dimensions, gamers are not representative of any more general population.
5. Value independence.  Economic choices in games are not connected to real-world experiences, so there's both a smaller absolute range of tradeoffs that can be made, and a lack of compatibility to non-game decisions and impacts.

The promise of huge wealth can make a capsuleer try to live the "Capsuleers dream" and be attached to monotonous activity for quite a long while. Lottery tickets are expected negative value. While everybody CAN become a milloinaire, most won't. The difference of expected income versus "fantasied income" can make wage slavery a thing that entertainment based thing might reach.

I think the Corrupted Blood incident in WoW might be an interesting context here (not exactly economy but still multi-agent phenomenon). It was apparently used in research for epidemic modeling.