Dateline Oct. 23, 2002: Academic Paper on Virtual Economies and how they might affect the real world

April 29th, 2009

How will virtual worlds affect real world economies? This question and many others are discussed in the scholarly work below. There are several million people interacting in these cybersocieties interacting and trading goods. The issues raised are fascinating from both an societal and practical perspective.


Several million people currently have accounts in massively multi-player online games, places in cyberspace that are effectively large-scale shared virtual reality environments. The population of these virtual worlds has grown rapidly since their inception in 1996; significantly, each world also seems to grow its own economy, with production, assets, and trade with Earth economies. This paper explores two questions about these developments. First, will these economies grow in importance? Second, if they do grow, how will that affect real-world economies and governments? To shed light on the first question, the paper presents a brief history of these games along with a simple choice model of the demand for game time. The history suggests that the desire to live in a game world is deep-rooted and driven by game technology. The model reveals a certain puzzle about puzzles and games: in the demand for these kinds of interactive entertainment goods, people reveal that they are willing to pay money to be constrained. Still, the nature of games as a produced good suggests that technological advances, and heavy competition, will drive the future development of virtual worlds. If virtual worlds do become a large part of the daily life of humans, their development may have an impact on the macroeconomies of Earth. It will also raise certain constitutional issues, since it is not clear, today, exactly who has jurisdiction over these new economies.

The entire article (PDF format) can be found at

One Response to “Dateline Oct. 23, 2002: Academic Paper on Virtual Economies and how they might affect the real world”

  1. admin Says:

    Recently, two other articles have been posted to SSRN.

    Real Money Trade Models in Virtual Economies

    Copyright Issues in Virtual Economies

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