The Invisible Hand in Virtual Worlds: The Economic Order of Video Games

Description

Video games aren't merely casual entertainment: they are the heart of one of the fastest-growing media industries in the world, and a cultural phenomenon in their own right. Gaming has evolved from a niche pastime into a global business that rivals film and television, creating, in the process, new art forms and social arenas and have become the subject of endless public debate. This book shows that games also provide a unique space in which to study economic behavior. Games, more than any other form of media, demonstrate the power and creative potential of human choice - an idea that's also the foundation of economic thinking. Whether it's developing trade relations, or the use of money, or even complex legal institutions, virtual worlds provide a captivating and entertaining arena for studying economic behavior in its most dynamic forms. The overarching theme of the volume is the economic order that governs virtual worlds, and the many ways individuals work together, often without knowing it, to govern their social relations in digital space. Cover Half title Title Copyright Contents Introduction 1 | The Economic Meaning of Play: Ludology and Praxeology in Video Game Worlds Introduction What Should Video Game Economists do ? Action, Play, And Economics Gameplay As Economic Behavior Scarcity Choice and Trade-Offs Opportunity Cost Specialization and Division of Labor Trade Entrepreneurship What Is So Virtual About Virtual Worlds ? Man, Economy, and the Virtual State Economic Law in Virtual Worlds The Puzzle of Puzzles The Promise Of Virtual Economies As A Field Of Research References 2 | Spontaneous Order and Video Game Narrative Spontaneous Order? Older Games: Limitations Encouraged Spontaneity (1971–1991) The Rise Of Linearity And Planned Orders In Video Games ( c . 1992–2009) The Ascendance Of Spontaneity (2009–Present) Conclusion References 3 | Law and Economics in a World of Dragons IntroductIon VIrtual Worlds As EmpIrical Platforms What Are Virtual Worlds, and Why Do They Matter? The Stakes “Dragon Kill Points” The Economic Problem A Private Solution The Role Of DKP In ReinforcIng Cooperative Outcomes Reinforcing Long-Term Cooperation Disincentivizing Free Riding Internal Enforcement Game-Theoretic Implications DKP Today ConcludIng Remarks References 4 | Minerals, Titans, and Connections: The Political Economy of Empire in the World of EVE Online Distinctive FeatureS Of The Game Incentives And The Spontaneous Order Of EVE Online The Nature And Features Of The Spontaneous Order: Economy The Spontaneous Order: PolitIcs War And International Relations In EVE Online The Meta-Order Of EVE Online Technology And Order The Reality Of EVE And What It Tells Us: The Nature Of Emergent Orders EVE Online , State-Of-Nature Theory, And Rational ChoIce The Implications Of EVE For IR And History References 5 | The Origins of Money in Diablo II The Basic Problem Of Money And Menger's SolutIon Diablo II As EconomIc EnvIronment The Monetary History Of Diablo II Conclusion: What Changed In D3? References 6 | A Virtual Weimar: Hyperinflation in Diablo III AustrIan EconomIcs , InflatIon, And Hyperinflation Virtual Economics Digital Hyperinflations ArmamentarIum Of The Virtual “Central BanK” Methods Early Concerns Gold Floors Versus BlacK Markets A Delirium Of Stacks Aftermath Conclusion References 7 | The Facilitate or Acquire Decision: The Tipping Points for Strategies toward User-Generated Content in Massively Multiplayer Online Game Platforms IntroductIon Problem Statement Thesis: The White–Gray Strategic MatrIx Part one: The White–Gray Strategic Matrix 1. A Review of Gray Markets Global gray market statistics Upstream production and downstream aftermarkets Gray transactions as peer-to-peer networks Lax enforcement Informal economics and economic development 2. Investing in the Gray Economy, or Investing in Formalization? Transaction costs and property rights Gray finance 3. Separating Black from Gray Markets 4. Gray Markets around High-Tech Platforms Free innovation and the wisdom of crowds 5. Gray Complementarities Rivalry between white and gray firms 6. The White–Gray Strategic Matrix Strategy one: facilitating the gray knowledge commons Strategy two: creating proving grounds and acquiring Strategy three: ignoring informal markets Strategy four: litigating informal bureaucracies The ignore or litigate decision The facilitate or acquire decision Part Two: The Tipping Point From facilitate To Acquire In The MMO Industry Three Mini-Cases in the MMO Industry Three rival transaction types Case One: Ignoring Complementarities in Rage of Bahamut Game mechanics Overpricing and the gray market Resolution Minecraft: The Facilitate Strategy Dota 2 and the Shift from Facilitate to Acquire Part Three: Conclusion, Limitations , And Future Directions For Research Conclusion and Limitations: The Matrix Conclusion and Limitations: The Tipping Points Applying the Framework to Government Activities Studies of Business Models and Formalization Processes The Perpetual Grayness of Entrepreneurship References 8 | Mod the World: How Entrepreneurs Learn from Video Game “Modding” Communities OvervIew Of ModdIng Theoretical Foundation Absorptive Capacity and Networks Entrepreneurial Judgment Three Types Of Modding Traditional Modding Quasi-Modding MUDs Discussion Conclusion References 9 | Levels without Bosses? Entrepreneurship and Valve's Organizational Design Valve’s EconomIc OrganIzatIon: Theory And History Entrepreneurship, Management, and Decision-Making at Valve Self-OrganIzatIon And DecIsIon-MakIng Problems The Implications Of Valve’s OrganIzatIon For Strategy The Implications Of Valve’s OrganizatIon For Capabilities Implications For Projects: Half-Life 3 confirmed? Half-Life: Alyx Conclusion References About the Contributors Index