Market Interventions in a Large-Scale Virtual Economy

by   Senan Hogan-Hennessy, et al.

Massively multiplayer online role-playing games often contain sophisticated in-game economies. Many important real-world economic phenomena, such as inflation, economic growth, and business cycles, are also present in these virtual economies. One major difference between real-world and virtual economies is the ease and frequency by which a policymaker, in this case, a game developer, can introduce economic shocks. These economic shocks, typically implemented with game updates or signaled through community channels, provide fertile ground to study the effects of economic interventions on markets. In this work, we study the effect of in-game economic market interventions, namely, a transaction tax and an item sink, in Old School RuneScape. Using causal inference methods, we find that the tax did not meaningfully affect the trading volume of items at the tax boundaries and that the item sink contributed to the inflation of luxury good prices, without reducing trade volume. Furthermore, we find evidence that the illicit gold trading market was relatively unaffected by the implemented market interventions. Our findings yield useful insights not only into the effect of market interventions in virtual economies but also for real-world markets.


No Silk Road for Online Gamers!: Using Social Network Analysis to Unveil Black Markets in Online Games

Online game involves a very large number of users who are interconnected...

An Experimental Study of Cryptocurrency Market Dynamics

As cryptocurrencies gain popularity and credibility, marketplaces for cr...

Algorithmic Bidding for Virtual Trading in Electricity Markets

We consider the problem of optimal bidding for virtual trading in two-se...

"Generate" the Future of Work through AI: Empirical Evidence from Online Labor Markets

With the advent of general-purpose Generative AI, the interest in discer...

Dance of the DAOs: Building Data Assets as a Use Case

Decentralised Autonomous Organisations (DAOs) have recently piqued the i...

Machine learning model to project the impact of Ukraine crisis

Russia's attack on Ukraine on Thursday 24 February 2022 hitched financia...

Please sign up or login with your details

Forgot password? Click here to reset