Virtual Decisions, Real Results
Matthew Pruitt
May 9,2009
So who would study ‘virtual’
economies?
 Edward Castronova
 PhD Economics, University of Wisconsin-Madison, 1991
 Associate Professor of Telecommunications, Indiana
University
 “Virtual Worlds Pioneer” Award, Virtual Worlds
Innovation Awards, 2008.
 MacArthur Foundation Grant, “Synthetic World
Experiments and Impact,” June 2006 – October 2007
 Author of Synthetic Worlds: The Business and Culture of
Online Games (University of Chicago Press)
Okay…Who else?
 Dr. Eyjólfur Guðmundsson
 PhD. in Environmental and Resource Economics from
the University of Rhode Island
 Was Dean of the Faculty of Business and Science at the
University of Akureyri in Iceland
 Currently employed by EVE as Lead Economist


Provides up-to-date economic information to players
Provides analysis of major events in eve
What has been published?
 Fairly new field, but some big players
 Synthetic Worlds, University of Chicago Press
 Avatars at Work and Play, Springer
 Journal of Virtual Worlds Research, University of Texas
 Entertainment Computing, Springer
Why do they study virtual
economies?
 Everquest
 Can earn 300 Platinum Pieces every hour
 That’s $3.50 per hour

Castronova uses online auction sites to calculate the exchange
rate
 GNP of Norrath approximately $2000 per capita

GNP per Capita China 2005-$1736
Why do they study virtual
economies?
 Second Life
Total Users with
Month
Profit
Aug-08
60788
Sep-08
62663
Oct-08
61647
Nov-08
59422
Dec-08
62929
Jan-09
65809
Feb-09
64012
Average
62441
<$10 $10-$100 $100-$500 $500-$1000 $1000-$5000
32876 21153
4587
973
981
32177 23106
5016
1049
1079
33799 20882
4627
972
976
32555 20164
4613
926
983
34585 21501
4662
1023
953
36828 21827
4895
1019
1026
35456 21556
4765
1056
977
34039 21456
4738
1002
996
>$5000
218
236
211
181
205
214
202
210
Why do they study virtual
economies?
 EVE Online
 "Its the best real world economic simulator in the
[virtual] world...Its a giant spreadsheet”
Sam Lewis, Lead Game Designer at Cartoon Network
 EVE Online characters, avatar capital, can sell for
thousands of dollars online.
So what is EVE Online?
 Objective
 EVE is a player driven world
 Characters join corporations and try to take down other
corporations
 Mining and development form the foundation for the
economy in EVE
 Piracy is an option as well
Goal of My Research
 To see if there is a correlation between the real world
economy and that of EVE Online
 Data was taken from the DJIA and in-game price history
of minerals
 "Minerals are needed to produce almost everything, and
so it is expected that price changes in minerals would
indicate what the price change will be further down the
value chain.“
Dr. Eyjólfur Guðmundsson, CCP Lead Economist
First Steps, Let’s Make a Model
Isogen
DJIA
First Steps, Let’s Make a Model
Zydrine
DJIA
First Steps, Let’s Make a Model
Tritanium
DJIA
This isn’t working…
Let’s rethink the model.
DJIA
Time
This isn’t working…
Let’s rethink the model.
DJIA
Time
(10/6/2008,
9955.50)
Okay, Let’s split the data at
October 6, 2008.
Isogen
DJIA
Okay, Let’s split the data at
October 6, 2008.
Tritanium
DJIA
Okay, Let’s split the data at
October 6, 2008.
Mexallon
DJIA
Some didn’t work as well though…
Pyerite
DJIA
Explanations?
 Economic Decisions
 Instincts guide a player in the game just as in the real
world
 Decision making is mostly an unconscious effort
Wolozin and Wolozin
 The minerals that seem to have stronger correlations are
those that are not as rare and are necessary for most
projects in EVE
 Exception: Megacyte, used in mainly for armaments.
Did become slightly more volatile Post Oct. 6
Explanations?
 Player Types
 “Given that virtual worlds are both psychologically
unique and the setting for a range of different player
behaviors, we propose that virtual worlds provide the
ideal environment to investigate consumer
(mis)behavior because they allow players (or
“consumers”) to behave in a way that is realistic but
uninhibited by social norms.”
Drennan and Keefe
 Piracy common in EVE
 Exception: Pyerite, used in the Bio-Chem industry for
conduits. While common, it has a highly specific use.
Conclusions
 Virtual Economies Can Provide Insight
 In EVE, Isogen, Tritanium, Mexallon, and Megacyte
showed a correlation with the DJIA
 There are distinct trends that change almost
immediately on October 6, 2008

Some Headlines from this Day
 Bush Signs Wall St. Bailout After House Passage
 US Loses 159,000 Jobs in September
 Bailout Spending to Begin in November
 There is definitely some connection between the real
world economy and the virtual economy of EVE Online