A Philosopher's Blog

A Virtual Economy

Posted in Video Games by Michael LaBossiere on March 31, 2010
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Spending money for games that allow you to play in an imaginary world is nothing new. However, a new way has been found to monetize games: selling items within games for real money. While this has been done in various online games against the terms of service of such games, Playfish has this as their business model. Facebook users can play their various games for free, but they buy the items in the game with real money (and lots of it).

Of course, virtual commodities are nothing new. People buy music, videos and software online. It can be argued that the virtual items in online games are similar-after all, they are digital “entities” that are purchased for enjoyment or use. Of course, music, videos and software do seem a bit more “substantial” than items in a video game, but perhaps this is not really a difference in kind but one of complexity.

While buying such game items might seem odd, it actually does make some sense. After all, if it makes sense to buy a song on iTunes because you enjoy it, it seems equally sensible to buy items in a game so as to enjoy the game. While the song might be seen as real, the game item is also real insofar as it creates enjoyment (as Mill argued, anything that can produce an effect is real).

In the case of competitive games, the selling of items does create the obvious problem of game balance and does violate a rather common principle of gamer ethics regarding buying advantages in a game with real money (that is, this is wrong).

Interestingly, this virtual economy is being lauded as not just a rather clever way to make money,  but also as a way to gain excellent data about economic behavior. While gathering such data in the real world can be costly and difficult (and often yield dubious results) the virtual economy in such games can be tracked with  precision.

However, there is the obvious concern of whether or not the online behavior matches real world economic behavior. Another concern is whether the people engaged in the online games differ in important respects from the general population. However, this is certainly interesting to folks who are into economics.

To close, I cannot help but think about Pet Rocks. When I was a kid, some clever people found a way to sell rocks as pets. When I think about people buying virtual things for real money, I keep picturing Pet Rocks.

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