Saturday, 11 August 2012

MMORPG Economics

When familiarising myself with the difference between stock exchanges and commodity exchanges back in my 11th year, I always wanted to find an easy platform where one could get the hang of trading on exchanges while not involving any actual money in the process. Luckily, I quickly found one. Care to guess? 
It was RuneScape, a free online multiplayer roleplaying game. Read more to find out how an MMORPG brings the full experience of exchange trading to 18 million users, below.

Image edited from http://runescape-mysteries.com/


Yep, the game RuneScape, an MMORPG (massively multiplayer online roleplaying game, involving thousands of gamers playing in a common virtual world) actually includes a free, (almost) non-limited simulation of exchanges, complete with the unique atmosphere provided by you fanatically clicking with your mouse in order to reach the 'brokers' in the middle to make a buy/sell offer. There are graphs for every tradeable item in game - thousands of them -, market watches furiously arguing over the reasons of price changes, complete with a Common Trade Index, calculated with the same method as the DJIA, the Dow Jones Industrial Average (I know, it's not a difficult method).
And before you start to think that the game must be an isolated meeting point for a few unsocial madmen, The game has 15 million free and 3 million paying accounts, which makes for a RuneScape population bigger than 75% of the world's states. Not so borderline, huh?

History

 

RuneScape was founded like your average startup company in 1999, three brothers together under the ambitious name of „Java Gaming Experts” - only this time they were British, all three are graduates of the University of Cambridge. They created RuneScape in 2001, and their game was already enormously popular when they decided to implement one of the biggest updates ever released for the game in 2007 – the Grand Exchange, a location in the game's virtual reality where buyers and sellers of items could gather together to trade via a common platform, without having to wait to find an actual buyer/seller in person. 

Features

 

Of course, the game's economy was already up and running before that, with two of the big in-game cities serving as the most important trading hubs – but due to the fact that when you wanted to acquire say, a sword (which comes quite handy in a game mostly dedicated to players battling each other), you had to go through a long process of finding the appropriate vendor, wasting precious time searching, travelling and suffering from huge price differences, not to mention the possibility of fraud.
The introduction of the exchange has changed all that. If one wishes to buy or sell, they simply submit their buy/sale offer along the appropriate amount of coins/items, and then continue playing, receiving an instant ingame notification when the transaction is complete. To get the bought items, you need not even go back to the exchange – just visit one of the game's various banks.

The virtual economy

 

The game's virtual exchange perfectly simulates the inner workings of a real one. There is a large and growing number of 'merchanters', people solely living off trading on the exchange, there are the aforementioned market watches, speculators generating and in turn believing rumours, accurate statistics and history of prices and more.

It is not a perfect model, however. The number of simultaneous trades is limited – 2 for free, 6 for paying players –, and for long, you could only offer buy/sell prices for an item in a 10% range of the particular day's average trading price, hence limiting gains and losses. Also, the number of goods in the economy is theoretically unlimited: every registering user may mine as many ores, catch as many fish, kill as many cows, etc. as they wish, and goods which ARE actually limited in number have ridiculously huge prices compared to their ingame usefulness.

The virtual economy is not outright crazy, though – the number of active players practically limits the amount of goods in circulation, and the limited items (such as the Santa Hats widely distributed during 2005 Christmas Eve, but never since) are usually merely the conduits through which money circulates and fashion items. In the end of the day, both conventional gamers and amateur economists like myself find what they were looking for – an immensely enjoyable experience.

If you want to know more, try out Runescape yourself, or find us in comments or via email, at schoolonomic@gmail.com.




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