For Sale – Virtual Stuff

by john on June 23, 2003

As I’ve written about before I spent more than my share of my younger years engrossed in the virtual worlds of MUD(Multi User Dungeon)s and the like. Back in those days some of us envisioned worlds such as those appearing today in EverQuest and Ultima Online but I doubt anyone foresaw the degree to which those worlds would foster real economies and in many ways mirror the injustices of the real world as they do today. I’ve never played those games but I know people who did (and do) and reading about the growth of these virtual worlds still fascinates me.

The seminal paper comparing the economies created by these virtual worlds to the real world was Edward Castronova’s Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier. In Virtual Worlds Castronova calculated that the GNP(Gross National Product) of Norrath, the virtual world in EverQuest, would make it the 77th richest nation in the world. How can that be? Because a market has been created for the objects available for the avatars in the game and eBay has provided a channel by which the buyers and sellers can be matched to fulfill that market. Day in and day out people play EverQuest and build up virtual wealth which they then convert into real wealth, a practice which Sony, the owners of EverQuest, is trying to stop, but that which most likely cannot be stopped. When the market is there the channel will be filled, by means of the Black Market if necessary.

In a research paper published this month entitled The Price of ‘Man’ and ‘Woman’: A Hedonic Pricing Model of Avatar Attributes in a Synthethic World, Castronova looks at the practice of actually selling complete avatars rather than just individual items like weapons or potions and finds that female avatars sell for considerably less than male avatars, causing c|net to ask A virtual glass ceiling in ‘EverQuest’?

A complete list of Edward Castronova’s research papers is available on SSRN(Social Science Research Network).

A year after the original Castronova paper was publicized Julian Dibbell published an article in Wired entitled The Unreal Estate Boom in which he documented the real life impact of the buying and selling of virtual objects for real cash in the fantasy world of Britannia from Ultima Online. Similarly to Castronova, Dibbell was able to show the very real effects of the fantasy economy and was able to compare it favorably to real countries, ranking Britannia 79th in the list of the Earth’s richest nations. Dibbell’s article is a little easier to read too.

Dibbell actually has taken this game to heart, appearing to be falling victim of the very thing he wrote about – he’s now trying to make a living doing nothing but playing the middleman in these virtual transactions. He has a weblog where you can read about his progress and travails.

While it is amazing to compare the progress of these virtual worlds over the past twenty years it is even more amazing to consider what the future could hold. In our investment club we joke about how the future is virtual sex but now I’m wondering if that is only the intermediate step to the real future, which is a virtual world in which virtual sex is but one component. Imagine how powerfully addicting a game would be that had real life graphics and tactile sensations delivered via a body suit. Fights would feel real. The danger would be palpable.

People get lost now in virtual tarot worlds like EverQuest, I can only imagine how bad it could get. Is that a good thing? Probably not – and it’s coming sooner rather than later.

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