Thanks OP for posting that. I've long been fascinated by how the d2 economics work and it always looked to me like a very interesting environment to study economic behaviors.
I haven't opened the paper yet, but I hope d2jsp's FGs (diablo 2 community's third party fiat currency system) are included in the analysis as well.
Spoiler alert: it mentions d2jsp, but nothing about forum gold. That's a shame since it theorizes about social standing being used as a currency backing of sorts, so it hints at the idea.
The downside of studying economics in Diablo II is that it's an entirely non-coercive environment, whereas real-world economic behaviour is essentially defined by coercion.
That said, many economists are fully capable of ignoring the compulsive aspect of economics regardless, so perhaps for them, Diablo II is a perfect microcosm.
Guess one! I guess taxes are coercion, but when I think of coercion in economics, the fact that even pretty well off people generally spend the meat of their adult lives doing stuff they would rather not, because of the coercive power of economics, is what comes to mind! Even before you get to the global majority, that basically solely make economic decisions according to basic needs.
Isn't it coercive in the sense of the monetary "rules" being hard-coded? Lawrence Lessig says this is "East Coast Code" as opposed to West Coast Code in his book "Code 2.0".
Anyways, even if it is non-coercive in the sense of having no West Coast Code or legislative coercive forces at play, you can still learn a lot about monetary economics in such environments. This author is interested in the emergence of monetary exchange, and that's a pretty big literature for instance, going back to Menger's "On the Origin of Money" (though Menger does note the later imposition of standardization from political authorities, etc.) and more analytical work such as Duffy & Ochs (1999).
This literature on the emergence of currency/monetary exchange from barter exchange typically understands such emergence to occur independent of any such force - all you need is the existence of the problem of double coincidence of wants. What I have in my inventory may not match what you want to trade for in your inventory, so some object that is marginally more "saleable" in the sense of being more widely desired, easier to carry, etc., will emerge as a currency standard. Also see Radford (1945)'s study "Economic Organization of a POW Camp" where cigarettes emerged as a common currency.
I was thinking of coercion in the sense of, normally market actors are also vulnerable humans, who need various things from their communities to survive, and if you don't behave in certain ways (selling your labour, etc) you cease to get those things.
In Diablo, you can be a pretty rational economic actor, because there isn't this impinging plane of crushing material need distorting all your decisions. As such, it's not necessarily a good model for understanding real world economic behaviour.
In games, the phenomenon that repeatedly emerges is a transition from commodity barter to commodity money. Maybe it's due to limitations of each game's item and exchange systems, but we never see a credit theory scenario emerge. I'd love to see a game that allows for both scenarios where we can run this experiment any number of times to see what happens.
> Maybe it's due to limitations of each game's item and exchange systems, but we never see a credit theory scenario emerge.
It's not particularly surprising: credit relies on trust, which in turns can rely on either
1. close social relationship between participants (the traditional society model) or
2. the existence of a coercive force you can call to help you get your credit back (the state).
MMORPG have 1. inside clans and guilds, and as such lending between clan members is commonplace, but since there's no 2. the debt-based economy can never arise at game scale.
This tracks with my understanding and expectations as well.
What doe the "existence of a coercive force you can call to help you get your credit back," would look like in a MMO, and how you could gamify that mechanic. Maybe something like a credit score and bounty hunters? smart contracts? (not crypto based.) Fun to think about.
It's fun to think about indeed, but in terms of gameplay I suspect it would actually make the gaming experience miserable. IRL, people are already working all days most of their life to reimburse their various debts, transposing that mechanic in game would be terrible.
People are already complaining about “having to work” to cope with the gold sinks in MMOs, I don't think many would find it fun to be tracked by repo men in game.
This isn't too dissimilar from the Covenants in Dark Souls, which influence the way players match with each other. When you kill an NPC or commit other heinous acts, you gain Sin, which any players of a given Covenant can "invade" your world instance at random anytime they want to punish sinners.
This covenant system created a deep and engaging playerbase. I've not seen any other game pull such a system off, but it was fun. If the risks and rewards are right, it can work.
> Diablo II is a case study of great interest for monetary theory, first of all because it provides a set of observable circumstances in which monetary exchange emerged from a barter economy.
There is another great example of that: “The Economic Organisation of a P.O.W. Camp”:
Diablo 2 is a game where players are largely anonymous and act as strangers to one another.
This setting is more akin to the kind of low-trust situation where, according to Graeber (Debt: the first 5000 years), money is more likely to emerge because it doesn't require the same level of personal trust as credit systems.
I've never played Diablo 2, but in other MMOs there's a concept of guilds, and people band together for specific objectives to help others get loot, level up, etc. A game akin to that would probably be a better sandbox to test assumptions around the observable circumstances in which monetary exchange could emerged from a "barter economy."
In such an environment you can monitor how resources are distributed and acquired with in the guild. Do players in guilds, with in guilds, fall back on money based systems or in scenarios where one has "social credit," with in the guild to get what it is that they need?
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[ 2.8 ms ] story [ 56.5 ms ] threadI haven't opened the paper yet, but I hope d2jsp's FGs (diablo 2 community's third party fiat currency system) are included in the analysis as well.
That said, many economists are fully capable of ignoring the compulsive aspect of economics regardless, so perhaps for them, Diablo II is a perfect microcosm.
What do you mean?
I have two different guesses about what you might be talking about:
- IRL by virtue of being a biological creature, you must buy food, clothing and shelter.
- IRL you have to pay taxes.
Am I on the right track, or do you mean something else?
Anyways, even if it is non-coercive in the sense of having no West Coast Code or legislative coercive forces at play, you can still learn a lot about monetary economics in such environments. This author is interested in the emergence of monetary exchange, and that's a pretty big literature for instance, going back to Menger's "On the Origin of Money" (though Menger does note the later imposition of standardization from political authorities, etc.) and more analytical work such as Duffy & Ochs (1999).
This literature on the emergence of currency/monetary exchange from barter exchange typically understands such emergence to occur independent of any such force - all you need is the existence of the problem of double coincidence of wants. What I have in my inventory may not match what you want to trade for in your inventory, so some object that is marginally more "saleable" in the sense of being more widely desired, easier to carry, etc., will emerge as a currency standard. Also see Radford (1945)'s study "Economic Organization of a POW Camp" where cigarettes emerged as a common currency.
In Diablo, you can be a pretty rational economic actor, because there isn't this impinging plane of crushing material need distorting all your decisions. As such, it's not necessarily a good model for understanding real world economic behaviour.
It's not particularly surprising: credit relies on trust, which in turns can rely on either
1. close social relationship between participants (the traditional society model) or
2. the existence of a coercive force you can call to help you get your credit back (the state).
MMORPG have 1. inside clans and guilds, and as such lending between clan members is commonplace, but since there's no 2. the debt-based economy can never arise at game scale.
What doe the "existence of a coercive force you can call to help you get your credit back," would look like in a MMO, and how you could gamify that mechanic. Maybe something like a credit score and bounty hunters? smart contracts? (not crypto based.) Fun to think about.
People are already complaining about “having to work” to cope with the gold sinks in MMOs, I don't think many would find it fun to be tracked by repo men in game.
This covenant system created a deep and engaging playerbase. I've not seen any other game pull such a system off, but it was fun. If the risks and rewards are right, it can work.
There is another great example of that: “The Economic Organisation of a P.O.W. Camp”:
http://homepage.ntu.edu.tw/~yitingli/file/Money%20and%20Bank...
This setting is more akin to the kind of low-trust situation where, according to Graeber (Debt: the first 5000 years), money is more likely to emerge because it doesn't require the same level of personal trust as credit systems.
I've never played Diablo 2, but in other MMOs there's a concept of guilds, and people band together for specific objectives to help others get loot, level up, etc. A game akin to that would probably be a better sandbox to test assumptions around the observable circumstances in which monetary exchange could emerged from a "barter economy."
In such an environment you can monitor how resources are distributed and acquired with in the guild. Do players in guilds, with in guilds, fall back on money based systems or in scenarios where one has "social credit," with in the guild to get what it is that they need?