Virtual Worlds Serve As Economic Laboratories
from the economic-test-tubes dept
One problem that economists face is the gnawing fact that humans often don’t act rationally, potentially undermining many basic theories. It would be nice if economic theories could be tested in a lab setting. While there is a burgeoning field of behavioral economics, tests are costly and difficult to carry out. Professor Edward Castronova has made a career studying the economics of virtual words, MMORPGS like Ultima Online and Everquest. He has made some interesting insights by looking at how players react under various economic conditions. For example, in worlds with little scarcity, people are bored. When too many players want to be a wizard (or anything else), the profitability of that profession decreases. Neither of these insights differ from what you’d expect in the real world, though therein lies the allure. Theoretically, these worlds could act as labs to test economic models, like socialism, the third way, or a flat tax scheme. As the games get more advanced, perhaps they could be used to study more complex concepts like unionization, school vouchers, and single-payer healthcare. The experience of games designers could help test for the unintended consequences of regulations, something that would be a help in public policy. While economists like to call their field a science, some of their ideas are as absurd as the geo-centric model of the universe. Having more of them do labwork, like other scientists, could go a long way in making economics less dismal.