Virtual Decisions, Real Results Matthew Pruitt May 9,2009

So who would study ‘virtual’ economies? Edward Castronova PhD Economics, University of Wisconsin-Madison, 1991 Associate Professor of Telecommunications, Indiana University “Virtual Worlds Pioneer” Award, Virtual Worlds Innovation Awards, MacArthur Foundation Grant, “Synthetic World Experiments and Impact,” June 2006 – October 2007 Author of Synthetic Worlds: The Business and Culture of Online Games (University of Chicago Press)

Okay…Who else? Dr. Eyjólfur Guðmundsson PhD. in Environmental and Resource Economics from the University of Rhode Island Was Dean of the Faculty of Business and Science at the University of Akureyri in Iceland Currently employed by EVE as Lead Economist Provides up-to-date economic information to players Provides analysis of major events in eve

What has been published? Fairly new field, but some big players Synthetic Worlds, University of Chicago Press Avatars at Work and Play, Springer Journal of Virtual Worlds Research, University of Texas Entertainment Computing, Springer

Why do they study virtual economies? Everquest Can earn 300 Platinum Pieces every hour That’s $3.50 per hour Castronova uses online auction sites to calculate the exchange rate GNP of Norrath approximately $2000 per capita GNP per Capita China 2005-$1736

Why do they study virtual economies? Second Life Month Total Users with Profit<$10$10-$100$100-$500$500-$1000$1000-$5000>$5000 Aug Sep Oct Nov Dec Jan Feb Average

Why do they study virtual economies? EVE Online "Its the best real world economic simulator in the [virtual] world...Its a giant spreadsheet” Sam Lewis, Lead Game Designer at Cartoon Network EVE Online characters, avatar capital, can sell for thousands of dollars online.

So what is EVE Online? Objective EVE is a player driven world Characters join corporations and try to take down other corporations Mining and development form the foundation for the economy in EVE Piracy is an option as well

Goal of My Research To see if there is a correlation between the real world economy and that of EVE Online Data was taken from the DJIA and in-game price history of minerals "Minerals are needed to produce almost everything, and so it is expected that price changes in minerals would indicate what the price change will be further down the value chain.“ Dr. Eyjólfur Guðmundsson, CCP Lead Economist

First Steps, Let’s Make a Model Isogen DJIA

First Steps, Let’s Make a Model Zydrine DJIA

First Steps, Let’s Make a Model Tritanium DJIA

This isn’t working… Let’s rethink the model. DJIA Time

This isn’t working… Let’s rethink the model. (10/6/2008, ) DJIA Time

Okay, Let’s split the data at October 6, Isogen DJIA

Okay, Let’s split the data at October 6, Tritanium DJIA

Okay, Let’s split the data at October 6, Mexallon DJIA

Some didn’t work as well though… Pyerite DJIA

So is there a correlation? Tritanium – Yes, Negative Post Oct. 6 and Positive Before Isogen – Yes, Positive Post Oct. 6 and Negative Before Megacyte – Yes, Positive Post Oct. 6 and Negative Before Mexallon – Yes, Positive Post Oct. 6 and Positive Before Zydrine – Somewhat, Positive Post Oct. 6, Negative Before with weak correlation Nocxium - Somewhat, Positive Post Oct. 6, Negative Before with weak correlation Morphite – Somewhat, Negative Post Oct. 6, Negative Before with weak correlation Pyerite – Weak Correlation all around, positive both Post and Post Oct 6

Explanations? Economic Decisions Instincts guide a player in the game just as in the real world Decision making is mostly an unconscious effort Wolozin and Wolozin The minerals that seem to have stronger correlations are those that are not as rare and are necessary for most projects in EVE Exception: Megacyte, used in mainly for armaments. Did become slightly more volatile Post Oct. 6

Explanations? Player Types “Given that virtual worlds are both psychologically unique and the setting for a range of different player behaviors, we propose that virtual worlds provide the ideal environment to investigate consumer (mis)behavior because they allow players (or “consumers”) to behave in a way that is realistic but uninhibited by social norms.” Drennan and Keefe Piracy common in EVE Exception: Pyerite, used in the Bio-Chem industry for conduits. While common, it has a highly specific use.

Conclusions Virtual Economies Can Provide Insight In EVE, Isogen, Tritanium, Mexallon, and Megacyte showed a correlation with the DJIA There are distinct trends that change almost immediately on October 6, 2008 Some Headlines from this Day Bush Signs Wall St. Bailout After House Passage US Loses 159,000 Jobs in September Bailout Spending to Begin in November There is definitely some connection between the real world economy and the virtual economy of EVE Online