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Virtual Economies: Design and Analysis
How the basic concepts of economics—including markets, institutions, and money—can be used to create and analyze economies based on virtual goods.
In the twenty-first-century digital world, virtual goods are sold for real money. Digital game players happily pay for avatars, power-ups, and other game items. But behind every virtual sale, there is a virtual economy, simple or complex. In this book, Vili Lehdonvirta and Edward Castronova introduce the basic concepts of economics into the game developer's and game designer's toolkits. Lehdonvirta and Castronova explain how the fundamentals of economics—markets, institutions, and money—can be used to create or analyze economies based on artificially scarce virtual goods. They focus on virtual economies in digital games, but also touch on serious digital currencies such as Bitcoin as well as virtual economies that emerge in social media around points, likes, and followers. The theoretical emphasis is on elementary microeconomic theory, with some discussion of behavioral economics, macroeconomics, sociology of consumption, and other social science theories relevant to economic behavior.
Topics include the rational choice model of economic decision making; information goods versus virtual goods; supply, demand, and market equilibrium; monopoly power; setting prices; and externalities. The book will enable developers and designers to create and maintain successful virtual economies, introduce social scientists and policy makers to the power of virtual economies, and provide a useful guide to economic fundamentals for students in other disciplines.
In the twenty-first-century digital world, virtual goods are sold for real money. Digital game players happily pay for avatars, power-ups, and other game items. But behind every virtual sale, there is a virtual economy, simple or complex. In this book, Vili Lehdonvirta and Edward Castronova introduce the basic concepts of economics into the game developer's and game designer's toolkits. Lehdonvirta and Castronova explain how the fundamentals of economics—markets, institutions, and money—can be used to create or analyze economies based on artificially scarce virtual goods. They focus on virtual economies in digital games, but also touch on serious digital currencies such as Bitcoin as well as virtual economies that emerge in social media around points, likes, and followers. The theoretical emphasis is on elementary microeconomic theory, with some discussion of behavioral economics, macroeconomics, sociology of consumption, and other social science theories relevant to economic behavior.
Topics include the rational choice model of economic decision making; information goods versus virtual goods; supply, demand, and market equilibrium; monopoly power; setting prices; and externalities. The book will enable developers and designers to create and maintain successful virtual economies, introduce social scientists and policy makers to the power of virtual economies, and provide a useful guide to economic fundamentals for students in other disciplines.
294 pages, Hardcover
First published January 1, 2014
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Displaying 1 - 4 of 4 reviews
September 11, 2016
This was, conceptually, a magnificent book! You need only the most basic background in economics to be able to nicely read it. The authors explain things as they go, and they give references as they go.
While well done, some obvious editing errors crept in. One graph's axis was mislabled. The great dragon in "The Hobbit" is named "Smaug," not "Smaud." Finally, I can't exactly confirm it, but I think the Purchasing Power Parity exchange rate example was incorrect in Chapter 12. I mention these not to damn the book at all, but if these are the errors I caught, I worry what I might not of, and hope these are corrected in a deserved second edition.
The book's last chapter, where the authors present an argument for the relevancy of virtual economies and their study as they relate to national economies, is a tour de force.
Truly a landmark book for anyone interested in World of Warcraft, Second Life, EVE Online, game design, virtual economies, and the future of national economies!
While well done, some obvious editing errors crept in. One graph's axis was mislabled. The great dragon in "The Hobbit" is named "Smaug," not "Smaud." Finally, I can't exactly confirm it, but I think the Purchasing Power Parity exchange rate example was incorrect in Chapter 12. I mention these not to damn the book at all, but if these are the errors I caught, I worry what I might not of, and hope these are corrected in a deserved second edition.
The book's last chapter, where the authors present an argument for the relevancy of virtual economies and their study as they relate to national economies, is a tour de force.
Truly a landmark book for anyone interested in World of Warcraft, Second Life, EVE Online, game design, virtual economies, and the future of national economies!
December 9, 2018
By looking at what happens inside virtual economies, we can get a good sense of the social and psychological mechanisms behind the mental pleasures, anxieties, and status games of consumerism.
These virtual economies are allowing scholars to do research that previously was not possible, producing discoveries about human behaviour and society.
Enlightened by these insights, we'll use mobile and augmented reality technologies to bring virtual economies in the form of games and social media applications into every day social situations while reducing its ecological footprint. In this way our consumerist status games and markers might become just that: compelling games that need not have any material impact on the world.
These virtual economies are allowing scholars to do research that previously was not possible, producing discoveries about human behaviour and society.
Enlightened by these insights, we'll use mobile and augmented reality technologies to bring virtual economies in the form of games and social media applications into every day social situations while reducing its ecological footprint. In this way our consumerist status games and markers might become just that: compelling games that need not have any material impact on the world.
November 24, 2020
Good book providing insights into parallels between our "real" economies and those virtual ones. It definitely contains lots of valuable facts from open game worlds that might be mindboggling for many
October 7, 2025
A fascinating economic insight into the inner workings of video game economies and what we can learn from them in the real world. The book uses a lot more traditional economic theory than I thought it would for a seemingly pop economics book.
Displaying 1 - 4 of 4 reviews