MMOs: Explaining real life

The BBC has published a story and a video interview on its website looking at how Eve Online teaches us about managing real world economies.

OK, it's time to get a grip people.

Games are at best inexact metaphors for real situations. A market crash in Eve may be superficially like a market crash in the real world but it's a huge leap to go from there to saying that Eve can teach us about real economies.

Let's look at the ways in which market behaviour is different in Eve as opposed to real life:

- it's a GAME. People are doing things that they would never do with their career, with their life savings, with their national economies.

- isk is not real money. People will gamble around with their game money because it has a totally different value to real money. Most notably your isk means nothing once you get bored with the game unlike real money which will be of value your whole life and can then be bequeathed to heirs.

People willingly invest in dubious schemes in Eve. In fact every financial scheme in Eve is dubious for a number of reasons including the game deliberately encourages an atmosphere of distrust, you are not hurting people by taking isk away as you would if you took their life savings away, the person you trust is an avatar that can be sold without you knowing to someone else and so on.

In real life people don't knowingly invest in Ponzi schemes. In Eve it's part of the fun, throw a few billion in while the Ponzi is building, extract it when the Ponzi peaks, chuckle at the people who got burnt while counting your billions when it all crashes. Scamming the scammers.

- it's nothing like a real world economy. People make items to sell just because they like making stuff, many items are cheaper than their raw materials. Many producers value the ore they mine and the time they spend transporting goods at zero. Mineral prices are protected by the isk payouts people get for making ships then blowing them up, the entire economy is underwritten by insurance fraud.


OK, but perhaps we're not being fair, let's look at the video and see what important lesson for managing real world economies the Eve universe can teach us:

"what Eve has taught us about how to deal with the current crisis in the real world I would say that the biggest lesson is transparency and trust in the individual in the sense that we need to trust individuals to make the right decisions."
Dr Gudmundsson, BBC News, from 1.33 in the linked video.

Now hold on just a minute.

The recent banking crisis was not caused by lack of transparency. It was pretty much an open secret in banking for some time before the crash that the system was going wrong because of a tragedy of the commons type situation. Bankers were getting bonuses based on making a lot of loan deals. The people supervising them were getting bonuses based on their staff making a lot of loan deals. The best way for any individual to meet his or her targets was to drop standards. Loans that would once have been refused because the lender's projected income would not keep up with the repayments were accepted. Collateral that would have been considered inadequate was passed. Each individual knew this was bad business but if they baulked at acting in this way the guys in the adjacent cubicles would make more loans, would get the bonuses, would avoid the sack.

This is not a transparency issue. Everyone knew what was going on.

This is not an issue that could be solved by trusting individuals. In this situation it is in the rational self-interest of the individual employed by the bank to make sub-prime loans and get a fat bonus. People who baulk would get sacked and replaced by people who won't baulk because their managers also want to hit their targets and get their bonuses.

So the key thing highlighted as being something Eve can teach us about real life is just plain wrong.

I'm not saying that everything in games is not mirrored in real life. Monopoly teaches us that staying in hotels in Mayfair is expensive, this is a pretty solid lesson.

However most of what games teach us is either bleeding obvious or wrong.

So why do academics find virtual worlds so fascinating?

It's partly the vested interest of academia.

Look if I say I will pay a yearly stipend to anyone investigating whether black is actually grey some people will simply say no it isn't and not get paid, some will take my money and do research.

In the same way if an academic says that an "instantaneous price change in Eve" such as tons of people buying a moon chemical after an announcement of a patch change in the way moons function is a significant example of how real world economics work they will get paid where the guy saying "so what?" won't.

Once you have a system where people are paid to rationalise then the rationalisations will trend towards the lines of thought that encourage new research grants.

This isn't simply pure cynicism: if you have a lot of very clever people explaining how black is actually kind of grey in many ways eventually your inner bullshit detector will fail and you'll start to see their point.

It's what's happening in virtual world academia. A lot of very clever people are articulating about how what happens in virtual worlds explains real life and people are increasingly buying into it.

Even to the point where a usually intelligent man is suggesting solving the banking crisis by trusting bankers (surely amongst the least trustworthy people) based on his experience of Eve players (undoubtedly the least trustworthy bunch of MMOers out there).