Economics of MMORPGs

This is a summary of an upcoming thesis I am creating for my PhD:

What is the problem?

Mis-management of virtual economies in MMORPGs (Massively Multiplayer Online Role Playing Games) due to the implementation of overly simplistic tools, known simply as gold (currency) faucets (supply/source) and sinks (destruction), resulting in serious flaws in macro-economic flows, leading to unstable and unsustainable levels of inflation, known as Mudflation, a lack of distributive justice, compounded by the unique problem of asset permanence and abundance.

NOTE: Micro Economic management is inadvertently well catered for by designers.


Research Methodology/Method(*) – not finalized

–       Primary Constructive Research. The aim is to provide meaningful enact-able solutions to the problem at hand.

–       Quantitative Data Collection on Virtual Macro Economic Flows from both Secondary and Primary Sources (technical barriers need to be addressed) to create Positive Economic Trends/Theory.

–       Qualitative Data Collection on Player User Experience from both Secondary and Primary Sources in order to inform the implementation of Normative Economic Theories.

–       Drawing on Secondary Research Material (in particular the work of Castronova, and more recently, Barnett and Archambault)

–       This thesis will draw heavily on the structural characteristics of Castronova’s first published work, “Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier”, a first hand, participant ethnographic, largely qualitative investigation on the economic characteristics of MMORPGs.


Initial Literature

Joshua H. Barnett and Leanna Archambault (2010). How Massive Multiplayer Online Games Incorporate Principles of Economics, THE GAMING EFFECT, TECHTRENDS, Volume 54, Number 6, 29-35, DOI: 10.1007/s11528-010-0451-y

Tanla E. Bilir, (December 25, 2009), Real Economics in Virtual Worlds: A Massively Multiplayer Online Game Case Study: Runescape.

Edward Castronova (2001) “Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier”, The Gruter Institute Working Papers on Law, Economics, and Evolutionary Biology: Vol. 2: Article 1.

Edward Castronova, (July 2002). On Virtual Economies. CESifo Working Paper Series No. 752. Available at SSRN:

Edward Castronova, Dmitri Williams, Cuihua Shen, Rabindra Ratan, Li Xiong, Yun Huang, and Brian Keegan (2009), As real as real? Macroeconomic behavior in a large-scale virtual world, New Media & Society August 2009 11: 685-707, doi:10.1177/1461444809105346



Currently, very few MMORPG developers adequately monitor macro economic flows. Exceptions include EVE Online, and Alter Aeon. At first glance, there is also limited existing literature on the subject matter; a more thorough investigation is required.


Contributions to the field (of MMORPG Research)

Beyond the seminal work of Edward Castronova (possibly the only economist to take MMORPG research seriously) and a work of a handful of other mildly curious academics, this is a truly neglected field of MMORPG research, to the extreme detriment of continued MMORPG development. This thesis aims to provide, if not a foundation, then an indicator of what tools may be required in correctly managing virtual macro economic flows, whether they be unique to MMORPGs or analogous to real world methods, in order to promote a healthy and relatively egalitarian virtual society. We must also begin to integrate an understanding of game (or decision) theory in order to maximize optimal outcomes in player interactions, minimize sub-optimal interactions, while still maintaining the enjoyment of “play” (competitive or otherwise). Finally, we must begin to understand the player as not just interacting within a virtual gaming environment, but also as an economic agent, with the power to shape the economic system that is an MMORPG society.

In order to greater understand player expectations as to their socioeconomic position within such a society, I believe it would also be of great benefit to understand whether Culturalist or Substantivist models can apply to player population groups from different nation states, or whether the normalizing powers of MMORPG environments/developer initiatives, lead to the movement towards adoption of Formalist models of economic interaction.

Hopefully it will also serve to inform real world economics, providing an alternative and addendum to the prevailing free market paradigm, and provide the outline for viable means of testing a managed economy.

It is important to note this thesis will not concentrate on the currency transactions between real and virtual currencies between the effects this has on currency supplies within virtual world.

An epistemological and ludic analysis of what economics is within the context of an MMORPG social environment will need to be the precursor to the main argument.


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