The Economics of MMORPG

While I am not much of a gamer myself, it is interesting to see how the theory of economics is applied in a MMORPG, or Massive Multiplayer Online Role Playing Game. There are two primary objectives of the game, that is, strength and wealth.

Strength can be measured by multiple quantities, often categorized into "hard" statistics, "soft" statistics, and defense attributes. Hard statistics include strength (physical power), endurance, and dexterity (agility, coordination, and reflexes). Soft statistics are applied on auxiliary attack mechanisms such as magic, and include intelligence (auxiliary attack power), wisdom (accuracy/MP), and charisma (AoE/Area of Effect). Defense attributes include health (HP), evasion (ability to dodge), defense, and multiple resistances (most often resistance to auxiliary attack types).

Most attributes are given to a player depending on his or her chosen profession(s). For example, "hunter" and "assassin" type classes are born with higher dexterity levels, but lower physical strength. Already at the very first stage of the game, a player has to choose to prioritize on certain attributes. This raises the basic economic question of opportunity costs. However, unlike textbook scenarios, the decision is far more complex. For instance, if a player chooses the "tank" class, he or she is not likely to die in the earlier stages of the game, or really any stage of the game. However, due to the lack of dexterity, and even strength in many cases, this class is difficult to level up and unsuitable for PVP (player vs. player). From the very beginning, choosing a character type determines the level pathway a player will take.

In most cases, the same dilemma will appear as the player gains experience points that can be distributed between different attributes. Players who assign points to attributes that do not immediately benefit their specialty will be less competitive later on, and will lose to players who are more specialized in every battlefield. However, players who specialize in certain attributes will suffer as well. For example, an "assassin" type player who devoted all of his or her points to evasion will be easily eliminated by another player who has some level of strength and wisdom. This is where we see an important misconception in economy. Instead of seeking to maximize marginal benefit and minimize marginal cost, marginal benefit should be equal to marginal cost in an ideal economic scenario. An equilibrium of attributes is what allows a player to truly accomplish the objective of "strength."

Another concept in MMORPG is wealth. Wealth is an even more abstract concept in games than in the real world, because wealth has no bearing on the status of a player. The only value of "gold," or a common currency in games, is its ability to exchange for exclusive items or items that are more difficult to obtain than gold. An interesting phenomena that is caused by this lack of true value is extreme inflation. Free games and more susceptible to inflation because their only source of revenue is through adjusting real world currency to in-game currency. The rapid inflow of new items through every update is also another source of inflation. This demonstrates how interconnected the real world economy is to the economy of a game.

Interestingly enough, this accelerated economic system almost always diverge from a market economy. In a game, bartering is a more prominent mechanism of exchange than currency. This demonstrates the abstract property of currency, and how its value is solely determined by its credibility and reliability rather than what goods it exchange. The common incorrect association of money and material goods is what causes state-controlled economies to collapse. Once an economic system is regulated to prioritize the input of money rather than the sustainability of a currency, this abstract system collapses.

A videogame is an accelerated simulation of real world economy. While it cannot represent the complex system on which the world operates, it is mainly controlled by human players. The bridge between videogame and the real world thus explains how closely related economy is to the social aspect of human society, and to human psychology.