An Analysis of Virtual Economics in Video Games

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AN ANALYSIS OF VIRTUAL ECONOMICS IN VIDEO GAMES

______

A Thesis

Presented to the

Faculty of

California State University, Fullerton ______

In Partial Fulfillment

of the Requirements for the Degree

Master of Science

Computer Science ______

Bijan Alexander Hamidi

Thesis Committee Approval:

Michael Shafae, Department of Computer Science, Chair Mikhail Gofman, Department of Science Sara Hariri, Department of Science

Spring, 2018

ABSTRACT

Bijan Hamidi explores economic systems in video games and expands on the definition of virtual economics to include economic behavior. Gamers commonly look to gain advantages over their opposition during game play. This thesis performs an analysis of how those decisions are constructed and provides insight on where economic principles are found in game play.

This body of work is based upon preexisting virtual economic works from

Edward Castronova, Zachary Simpson, and Richard Bartle. However, this work does not focus purely on economic markets, but extends to study economic behavior exhibited during play.

TABLE OF CONTENTS

ABSTRACT ...... ii

LIST OF TABLES ...... v

LIST OF FIGURES ...... vi

ACKNOWLEDGMENTS ...... vii

PREFACE ...... viii

Chapter 1. INTRODUCTION ...... 1

Synthetic Universes ...... 1 Physicality ...... 2 Interactivity ...... 2 Persistence ...... 3 Avatars Choose Skills ...... 4 Virtual Society ...... 5 What is Economics?...... 7 Virtual Economy ...... 8 Virtual Currency ...... 8 Virtual Market ...... 9 Why Do We Play These Games? ...... 9 Scarcity ...... 11 What Is Fun Play? ...... 13 Fun and Gain Association ...... 15 Virtual Worlds Require Economics ...... 16 Fun & Economics ...... 17 Gaining Is Winning ...... 18

2. SYNTHETIC UNIVERSES ...... 21

Alternative Synthetic Universes ...... 21 Pac-Man ...... 21 Playing Unconventionally ...... 24 Virtual World Alternative Play ...... 26

iii 3. THE ROLE OF THE ECONOMY ...... 29

Simpson ...... 29 Support Specialization ...... 30 Ration of Power ...... 31 Encourage Interaction ...... 32 Provide Goals ...... 33 Support Economic Role Playing ...... 35 Role of the Economy in a Synthetic Universe ...... 35 The Anatomy of Choice ...... 36

4. IMPLICATIONS OF ECONOMICS IN GAMES ...... 42

Summary ...... 42 Conclusion ...... 43 Game Design Implications...... 44

BIBLIOGRAPHY ...... 45

LIST OF TABLES

Table Page

1. Anatomy of a Choice (Salen & Zimmerman, 2004, p. 65) ...... 39

LIST OF FIGURES

Figure Page

1. Bartle’s interest graph that demonstrates the relationship between the axes of appeal in an MMORPG and the types of players associated (Bartle, 1996, p. 6) ...... 11

2. The anatomy of choice is displayed as a flow diagram. This illustrates the process that occurs during player interaction inside a synthetic universe. The decision making process is influenced by both internal and external events of the interaction stimuli (Salen & Zimmerman, 2004, p. 64)...... 37

ACKNOWLEDGMENTS

I would like to thank my father, mother and sister for their support throughout my academic journey over the years, and a special thanks to Dr.Shafae for his excellent mentorship at California State University, Fullerton.

vii

PREFACE

This thesis is divided up into four chapters. Chapter 1 provides background information that is core to understanding virtual economics. Chapter 2 illustrates examples of economical behavior exhibited in video games. Chapter 3 discusses the roles of economics systems within video games. Finally, Chapter 4 summarizes and states implications of this research.

viii 1

CHAPTER 1

INTRODUCTION

Synthetic Universes

Developers at game studios strive to create immersive settings in video games.

Developers can simulate laws of the universe, like gravity, to make their game experience more realistic. Not all games try to simulate the real world, but for those that do the end product is a digital world that reflects the real world. Developers decide and create laws that govern the synthetic universe which restrict the players within the bounds of that universe. These laws can be based on physics or completely made up by the developers.

One genre of game in particular, massive multiplayer online role-playing game

(MMORPG) embraces the synthetic world experience which is largely bounded by physical laws.

Edward Castronova is an expert on the study of synthetic worlds. He describes a synthetic world as a computer program with three defining characteristics:

• Physicality: people access the program through an interface that simulates a first-person physical environment on their computer screen; the environment is generally ruled by the natural laws of Earth and is characterized by scarcity of resources;

• Interactivity: it exists on one computer but can be accessed remotely and simultaneously by a large number of people, with the command inputs of one person affecting the command results of other people;

• Persistence: the program continues to run whether anyone is using it or not; it remembers the location of people and things, as well as the ownership of objects (Castronova, 2001, p. 6).

Castronova provides us with insight on his perspective of the synthetic world.

However, his three defining characteristics could be further expanded upon in the context of synthetic universes. Synthetic universes are any virtual environment governed by predetermined laws that restrict game play such that users can only perform actions within the bounds of those laws.

Physicality

Developers of MMORPG games create virtual online worlds that can be immense in size. For example, the MMORPG World of Warcraft contains five continents on one of its three planets. Games of this magnitude are typically adventure games which focus on the player’s character referred to as an avatar, and their journey throughout the world.

Avatars allow the player to embody the virtual world when exploring the vast digital frontier. This type of game play is notoriously known to be extremely immersive and addicting.

Castronova’s explanation of physicality of an interface that simulates a first person physical environment is not necessarily true for all games in the context of a synthetic universe. A better description would be software that simulates a universe governed by a set of laws, natural or unnatural, characterized by the lack of degradation of resources. Castronova is correct in saying resources are scarce, but it would be more defining of virtual worlds to express how resources do not age, or weather over time, and their only physicality truly exists in the form of binary bits on a server.

Interactivity

Video games of the MMORPG genre use the internet to allow players from all over the real world to log into a digital world. A person in Dubai can log into the digital

3 world with another player in Seattle, and stand right next to each other, and have a conversation within the synthetic world as if they had been in the same room in the real world.

Castronova describes interactivity as existing on one computer, but games are actually operated on a collection of servers. To describe the interactivity of a synthetic universe more accurately, one must consider what is actually being processed in the interactivity level. Online-game software typically operates on servers from which players all over the world are interconnected. Players send and receive packets of data when communicating with the server during game play. These packets contain their inputs and decisions which impacts their interactions with the synthetic universe and other actors within that universe.

Persistence

Non-persistent worlds cease to exist when the player logs out of the game. The game world in persistent games will continue to run regardless if anyone is logged into the game or not. Another important factor of persistence is that if a player takes a break from the game for a few hours or even years the world remembers where their avatar is and what items that avatar may possess. In persistent worlds, if a player leaves, the world continues on without them.

Persistence is maintained on servers with the use of bits stored in memory. All of the player’s items and ownership status’ of who owns what is maintained by the software.

Persistence is controlled and regulated by the game software which provides order to the synthetic universe.

Avatars Choose Skills

The game play experience in MMORPGs can vary from developer to developer, but the overall rules and laws that govern the game are roughly the same. Every player creates an avatar to represent themselves in the virtual world. The real world has many inequalities among society such as wealth and social standings given to individuals at birth. However, this does not hold true in the virtual world. An important quality in avatar creation is that all avatars are created with equal potential. Potential refers to the amount of the game’s features and player experiences that are accessible to the avatar.

Typically, no avatars alone can fully experience all of the features, as it is normal practice to require avatars to develop a specialized skill set to have access specific player experiences.

When the player creates an avatar, they may make their first decisions on choosing a subset of skills from the skill set available in avatar creation. A player may choose to be a nimble fighter with great speed to maneuver through dangerous situations, or choose a religious path that allows them to perform miracles that heal wounds, even bringing dead players back to life. This is a fantasy world after all, anything is possible.

The important factor here is that no one avatar can have all of the skills available in the game. As Castronova explains in his early analysis of virtual worlds, “Any inequality in the virtual world can only be due to one of two things: a) a person’s choices when creating the avatar, or b) their subsequent actions in the virtual world.” (Castronova,

2001, p. 11-12).

Avatars that wish to gain perks from other skills that they did not choose themselves must be outsourced to other avatars. For example, if an avatar is specialized

5 in mining rare metals and ores might need assistance from another avatar with skills in blacksmithing to refine the materials into something more useful such as a shield and sword. “The avatar’s skills will determine whether the avatar will be a demander or supplier of various goods and services in the virtual world. Each avatar develops a social role.” (Castronova, 2001, p. 12).

Virtual Society

Some of the more popular MMORPGs have player base numbers in the millions.

Having such large populations in a virtual world has implications of developing its own society though the interactions of players whether it is for communication or advancement in the game itself. An avatar’s skills define their social role, and in order for an avatar to advance their skills and further explore the world, they must work with other avatars in virtual society. Castronova points out that, “These communications allow social interactions that are not a simulation of human interactions; they are human interactions, merely extended into a new forum.” (Castronova, 2001, p. 13).

Virtual worlds allow convenient human interaction at will. If a human in the real world feels lonely, they can escape into a virtual society with their avatar. Avatars can form communities or guilds with each other to form a sort of online club. Online communities serve to help form social relationships between avatars to fill in the gaps of missing skill sets needed to perform tasks within the virtual world. “An avatar who does not form social relationships on at least an ad hoc basis will generally have a more difficult time doing things in the virtual world.” (Castronova, 2001, p. 13).

A common activity an avatar might participate in with a guild would be hunting.

Hunting is the act of venturing out into the virtual world with the purpose of defeating a

6 non-player character also known as NPC. Typically, game developers provide incentives for avatars to kill NPCs. A large amount of NPCs can easily be killed by a single avatar.

However, some NPCs are much more difficult and require a group or small army of avatars to defeat; these NPCs are labeled as bosses. Bosses usually have a larger incentive to defeat so it perpetuates avatars to work with one another.

This sense of avatars working together creates a community from which players feel a sense of companionship and belonging. When avatars work together, they must use their combined resources and skill sets to conquer various elements of the game. Guilds can split into smaller groups of three to five players called parties to defeat dungeons and are compensated by the game through rewards such as wealth or other virtual goods.

These goods are determined by the party on how to be distributed amongst members. For example, an avatar with a skill set in creating spell caster robes might make a claim to all the cloth resources. The ability to determine and make decisions on how much claim a character has to the reward is a basic economic principle. Parties can make economic decisions on who has the greatest benefit from an item to contribute to the overall well- being and power of the guild. Any excess loot may be distributed to other guild members or traded to other avatars in the game.

Trading in MMORPGs is critical to the immersive environment that captivates players. An MMORPG without an economy is not nearly as enthralling. The act of participating in a societal role provides more satisfaction by allowing players to accomplish more than they could on their own within the game. Playing in a group is more enriching and fun than playing alone.

What is Economics?

Adam Smith, the father of economics and capitalism describes how people work together to align their self interests as economics. Smith names this natural tendency the invisible hand as the driving force behind economics. Economics is not just analyzing the stock market and speculating on shares for investment, economics is a social science that focuses on the decisions people make in relation to cost and gain. The concept of gain is a relatively new idea being only two hundred years old (Heilbroner, 1953, p. 16).

Previously, before Smith, the act of gain was considered evil. To sell goods for more than their worth and to gain was viewed as a sin by the church. Smith however, believed otherwise.

Smith proposed that the self-interested humans would have motivation to drive trade markets and that their selfishness would benefit the economy as a whole. Profit would outweigh the risk to use resources to create innovation. Gain was the compensation for merchants, and in return the general population received competitive pricing and more availability of better goods. Smith paved the way for John Keynes, the father of modern economics. As the industrial revolution took place, the playing field of economics had changed. As the world evolved so did the economic processes Smith had first conceived. Production skyrocketed and costs were at an all time low. Keynes was known for adapting and changing his economic theories. He was once publicly criticized for doing so and he had responded, “When the facts change, I change my mind. What do you do sir?” (Heilbroner, 1953, p. 154). From Keynes one learns that economics is an ever-changing process that no one model will ever perfectly describe. Economics is the

8 study of the ever-changing environment of technology and the social studies of the humans that utilize those technologies.

Virtual Economy

The specific interactions of exchanging goods and services between avatars can be viewed as an economy. Avatars utilize their specialized skill sets and resources to either consume or produce goods and services by trading with other avatars for their specialized services, goods, or even virtual currency.

Virtual Currency

The virtual currency referred to in this literature is purely from a virtual world application and not that of crypto currencies such as Bitcoin. Virtual currency is the digital equivalent to monetary value in the real world within the game world. It is a common feature in MMORPGs to include a currency for avatars to exchange goods and services with one another. It is common for the virtual currencies to be referred to by gold or credits depending on the game.

Gold is primarily created for the avatars during game play as an incentive. For example if the avatar defeats a dragon he might uncover a hoard of gold coins. Those gold coins can then be used to purchase goods and services freely within the virtual economy. Another use for gold is to provide a consolation prize when hunting scarce treasures. Using gold as a consolation prize allows the game designers to keep items scarce. Gold provides steady compensation for avatars that come out empty handed after hunting for scarce rewards.

Virtual Market

The market in an MMORPG is open and available to all players to participate in.

Participation is often encouraged through game play. Players occasionally will receive quests that require virtual goods that are unavailable to obtain due to their skill set limitations. If the guild is unable to provide assistance or the item is scarce by nature, the player shall head to the virtual market place. The virtual market place can take many forms but it is usually a graphical user interface that is similar to a shopping website such as Amazon. At the market place players can search any item and exchange gold for virtual goods. The market place is created by the game developers to allow for ease of trading from player to player. The market place serves a purpose as players can sell items in their possession while they are currently logged out of the virtual world. Avatar entrepreneurs can create listings for items and set prices. An avatar on a quest for a specific item that must be obtained through the market can filter and sort through the available listings to find the best price. The incentive to play combined with the human mind drives economic behavior.

Why Do We Play These Games?

MMORPGs can be large fantasy worlds that provide the user with an adventure experience without ever leaving home. The genre’s success has a lot to do with the appeasement of the economic and self-interested tendencies in gamers, as well as properly structured incentive system that complement those tendencies. Participates of virtual worlds can find emotional satisfaction through game play. The feeling of satisfaction can be obtained through the game’s mechanics itself by use of incentives that developers have introduced in their game. This is primarily done through the game’s

10 reward systems. These incentives can range from powerful items that enhance the avatars capabilities to unlocking achievements that prove a player’s dedication to completing a difficult task in the game. However, sometimes gamers seek satisfaction by other means outside of the intended game play boundaries established by developers. Occasionally,

MMORPG participants will create alternative methods of play within virtual worlds.

Alternative play in virtual worlds can take on many shapes, but one example of this is role-playing. Some players take the virtual world’s immersion to the extreme and actively take on the social role of their avatar. These players in particular will communicate with other avatars completely in character fully dissociating from the real world during play. This type of behavior can be seen in a subgroup Richard Bartle describes as Socializers, “Socializers enjoy talking and role-playing with other players.

For them, the game is merely a setting; goods and services are just tools which help provide mood and context in role-playing.” (Simpson, 1999, p. 6).

This behavior is often observed in multi-user dungeons games (MUD) genres from the late 1990s. Bartle breaks down MUDs into different categories of playing style.

He pits action versus interaction, and world-oriented versus player-oriented dynamics in

MUD play. Bartle created an abstract graph to represent the sources of players’ interest

(see Figure 1.). From the two axes Bartle proposes four subgroups of players: Killers,

Achievers, Socializers, and Explorers. From this graph one can see how a virtual world’s entertainment value is a balance between the constructed world and its laws imposed by the developers and the social interactions that take place by the virtual worlds inhabitants.

The subgroups of players represent how some players might prefer to lean towards particular play styles.

Figure 1. Bartle’s interest graph that demonstrates the relationship between the axes of appeal in an MMORPG and the types of players associated (Bartle, 1996, p. 6).

Each of these groups inhabits the same virtual world but their means of finding appeasement to their economic status, self-interested tendencies, and emotional satisfaction can be vastly different. The Explorer might seek to venture deep within the fantasy world and is content with the experience the game provides, while the Killer ventures out into the world for the thrill of hunting dangerous enemies. As expressed earlier, the Socializers may not necessarily follow the implied rules of the game but create their own means of satisfaction. This concept may hold true for the other groups of players as well but requires more insight on if their play style is fully or partially supported by the boundaries of the game’s laws. The type of play style the user chooses to follow directly influences their economic decisions on how they participate in the synthetic universe, thus, changing their social role.

Scarcity

Edward Castronova described physicality as one of the three defining features of a virtual world. In his definition of physicality he mentions, “The environment is generally ruled by the natural laws of Earth and is characterized by scarcity of resources.”

(Castronova, 2001, p. 6). What exactly is the scarcity of resources? An example of this can be found in the Avatar’s Choose Skills section of this paper. All avatars are initially equal in terms of the potential they posses, but the decisions the player makes cause them to specialize their avatar’s skills. No avatar can have access to all the skills and resources without assistance from other avatars. Castronova illustrates three dimensions in which the user faces scarcity in a virtual world:

• Not all avatars are the same: the user faces constraints on the creation of avatars and, through leveling, on the development of their abilities. An avatar may die, and death may rob it of some or all of its powers.

• The avatar is constrained by the physicality of the virtual world in that a large percentage of important goods and services can only be obtained from other avatars or from biots (computer driven beings), always at a price or by risking death.

• The avatar is constrained by society in the virtual world, in that social roles are not open to everyone; an avatar must compete against other avatars to fill a role. In a sentence, avatars in avatar spaces could do no work and still do anything that any other avatar could do; avatars in virtual worlds must work to do anything interesting at all (Castronova, 2001, p. 16).

Castronova concludes that scarcity is the driving force that makes virtual worlds fun,

“Constraints create the possibility of achievement, and it is the drive to achieve something with the avatar that seems to create an interest.” (Castronova, 2001, p. 17).

Scarcity is one of the main drives of economic activity and the existence of scarcity incentivizes play.

Many players find wish fulfillment in obtaining scarce items within the virtual world. These items are nothing more than data that could be duplicated at no cost by the developer. Why not just hand over the most powerful weapons to every avatar? The reason is it would devalue the emotional satisfaction overall. Players enjoy working towards a goal and achieving goals in virtual worlds. If developers started doing handouts

13 it would be detrimental to the feeling of accomplishment that users seek when playing in a virtual world.

Scarcity also contributes to the overall wellbeing and health of a virtual economy in synthetic worlds. Whether the scarcity is derived from lack of skill sets or in terms of low drop rate items, it maintains the active trading system. The need for economics is not the goal, the underlying principles of economics drive the gamers’ interests. Hence, if all resources were available for free, gamers would lose interest and there would be no need to play.

What Is Fun Play?

In order to understand the goals and wishes of participants within a virtual world, we must first understand what rhetoric of play best applies to gaming in virtual worlds. Brian Sutton-Smith’s The Ambiguity of Play describes the different forms of play found not only in humans but other animals as well. Sutton-Smith enumerates a few examples such as mind or subjective play, solitary play, playful behaviors, and contests among other instances of play. Types of play can range from private to public and child to adult. Child play is creative and open, while adult play is recreative and closed. Sutton-

Smith’s book analyzes the different types of play through a lens of seven rhetorics comprised of both ancient and modern concepts. The seven rhetorics included are fate, power, identity, frivolity, progress, imaginary, and the self.

Sutton expresses outright that games are models of rational power with his statement, “The rhetoric of play as a rational power is almost manifest in game theory, which is an attempt to use games of strategy, such as chess to work out the systematic for anticipating an opponent’s moves, or alternatively, to use the game models to develop

14 process for conflict reduction between warring groups.” (Sutton-Smith, 1997, p. 80). It can be said that people who play any game are going about planning strategies in hopes to maximize their own gains at the expense of the opponent’s gains. Within a virtual world, the rhetoric of rational power can be found in one shape or another in every aspect of the game. Power can be found in terms of the statistics of the player’s avatar such as the empirical amount damage and health attributes in comparison to other avatars. The player’s power can be regulated though itemization and skill sets of the avatar. The act of choosing a skill set in a virtual world is impactful because it determines not only the avatar’s social role but also the type of power that avatar will posses. The same can be said about an avatar’s equipment. Proper itemization in MMORPGs can have substantial gains in regards to power. A deadly nimble ninja-assassin might be slowed down by heavily armored plate equipment and gain greater benefit from using a lighter leather hide based equipment as to move more freely.

When a guild decides to send a party on a hunt, those members are expected to gain compensation for their time.

“On the social play level, the general idea of the power rhetoric is that play or games or sports or athletics that have to do with some kind of contest and reflect a struggle for superiority between two groups exist because they give some kind of representation or expression to the existing real conflict between these groups. Whichever side wins the game or contest is said to bring glory to its own group bonding the members together through their common contestive identity.” (Sutton-Smith, 1997, p.

75).

The contest in a hunt can between different rival guilds competing to be the first to defeat a new boss on content release patches in MMORPGs. Another shape contests can take in MMORPGs is strictly in a player versus environment setting. A party of avatars can invest resources such as consumables, one time use items, to empower themselves to defeat stronger bosses with the wish to gain the glory and virtual goods as compensation for their avatars. MMORPGs promote social bonding between residents of the virtual world which is where the interpersonal satisfaction takes place.

The rhetoric of power in an MMORPG revolves around the concept of compensation and wish fulfillment. “The child plays because he enjoys the power of being a cause, or because he doesn’t have the power and in play is seeking empowerment as a kind of compensation or wish fulfillment.” (Sutton-Smith, 1997, p. 75).

Compensation and wish fulfillment can be found in every aspect of life inside a virtual world. For example, from character creation we can derive some of the first wishes a player has when they select their skill sets. Additionally, they are building expectations and mental models for their own game play before they even log in. During avatar creation, if you pick settings for a huge bulking avatar with war paint on his face, armored to the teeth and a giant shield one might immediately begin to think about his/her social role in guilds. The player may seek to create a front-line war hero and begins his journey through the virtual world with the immediate wishes and expectations that he will fill that role.

Fun and Gain Association

When players defeat bosses or accomplish difficult feats of strength they are rewarded. Power does not always take the shape of pure character statistics but also

16 comes in the form of wealth. This reward can be seen as form of power gain for the player. A player’s virtual wealth is directly correlated to the overall avatar’s power.

Players with more virtual wealth have more buying power and therefore have access to more powerful items via the virtual market than players who lack virtual wealth. Wealth can be described as virtual currency or may be in the form of other virtual goods. Virtual goods maintain value in the market place and can be traded or sold off to other players for profit.

Virtual Worlds Require Economics

Virtual economies play a key role in the virtual worlds’ game play. The process during play of choosing and categorizing items to sell, trade, and distribute among guild members is the clash of economics and game play. The virtual would without an economy by definition extends to more than a world without a market but a world without social economic decisions. The impact of economics is not limited to just trading goods but also includes the very act of decision making that is critical to the existence of the world. Economics can be used to describe the player behavior that drives virtual worlds. How might one look at a virtual world where players do not make these meaningful decisions? This virtual world would be radically different in the sense that the players’ motivations for playing a MMORPG would not be the same.

A virtual society develops when players are given incentive to work together to meet a common goal. We have already discussed earlier that avatars work together in

MMORPGS to fill in missing skill sets from their economic decisions during character creation. A game with no economics implies that all avatars would have equal access to all skills available in the game. All avatars would have to be completely equal and thus

17 the need to fill roles in game play would be lost. For the role-player this would be losing their avatar’s unique identity. To the Killers this can detract from the compensation of a failed hunt. With compensation being locked to that specific character and the rewards would be unable to benefit other avatars, and that reward could go to waste. Thus, we can derive that the lack of an economy in an MMORPG would harm the social structure of this genre of game.

Fun & Economics

To gain within the virtual world grants the player the compensation for the time invested for their actions in the virtual world. Compensation is critical to the emotional fulfillment that people seek when playing any game. In Pac-Man, we see the player that invests his time devouring dots and various fruits. The player risks Pac-Man’s lives for the compensation in terms of points and advancing to the next level, weighing the risk of lives for the glory of winning.

Similar events can be seen when players in MMORPGs go on hunts. They risk their avatars well-being for a chance at wish fulfillment. The balancing of risk and reward in game play provides an outlet of excitement and joy for the person controlling the avatar.

Surprisingly some players find another outlet of excitement and joy with this concept of fun and economics. This player in particular seeks to gain power by amassing virtual wealth. This game play seeks power by not risking ones avatar’s well-being, but their virtual capital. This type of player is the virtual entrepreneur. The virtual entrepreneurs look to profit from transactions within the virtual market place. The virtual entrepreneur is not a savvy stock broker from Wall Street, but the common gamer that

18 follows the mantra of buying low and selling high. This player uses their knowledge of the game to make educated investments in virtual goods and speculates to maximize profits. The avatar that is the most profitable will have the most buying power and there is a glory associated with that. Castronova draws parallels of the virtual entrepreneur,

“The process of developing avatar capital seems to invoke exactly the same risk and rewards structures in the brain that are invoked by personal development in real life.”

(Castronova, 2001, p. 16). The market place itself can be seen as a faucet of satisfaction in the virtual world if players seek to utilize it. In fact, during my time in the World of

Warcraft I have met many players that exclusively spend their time in the virtual world, dabbling in the market place and its user interface rather than exploring the virtual world the way it was intended.

Gaining is Winning

To invoke feelings of satisfaction is the goal of every game. Developers strive to make their games appealing and fun to their audience. Castronova shows us that developing avatar capital causes feelings similar to that of personal development. This suggests that a person who successfully sells off an unneeded item from a hunt not only feels compensated, but also proud to have made a gain.

In Pac-Man, when the player is rewarded points they are given confirmation that they are doing a good job as points are typically rewarded for correct game play. Points can be seen as an incremental confirmation that the player is on the winning track. A similar application can be seen with avatar capital. As the player amasses capital, the player feels as if they are winning. If a virtual entrepreneur speculates that the price of wooden swords will fall due to a developer announcement of an upcoming patch

19 introducing iron swords they will invest gold coins into copious amounts of iron ore. If the prices of iron ore spikes on the release date of the patch the player will feel immense satisfaction for being correct with their speculation despite the risk of capital that was put up front. The player has discovered a source of fun in the game through literal participation in the economy.

However, gaining does not only come in the form of points and virtual currency but also in making game play decisions that are profitable in terms of power. For a player to make an avatar with a skill set in high demand would net more opportunity in that avatar’s societal role. For example in most games it is very common for players to create avatars that are damage dealers. However, if a party or raid was comprised of only damage dealers then that group will quickly find defeat when going on a hunt. Healers and tanks are required to compose a proper group of well diverse avatars for a successful hunt. A player who trains their avatar to heal or tank would be in a better economic position than an avatar that is a damage dealer. This relates to economic concepts of comparative advantages and efficiency. While the decision to maximize their avatar’s social role for opportunity would be a gain, the person might not enjoy the play style of that role. It is up to the player to make their own economic decisions of balancing the game style that they want to play and their comparative advantages.

Economics in games comes down to the player evaluating their current state and the state that they want to be in. This state is almost always closely tied with the rhetoric of power in the sense that they seek to have their wishes fulfilled or be well compensated for their actions. Economics in video games provide that meaningful process of advancing and progressing through a game. It allows a player a sense of personal

20 customization in the video game and cultivates a sense of attachment to their avatar. The appeal of the synthetic universe depends on players making meaningful decisions by utilizing virtual economics in game play, overall contributing to the wish-fulfillment and compensation that players seek. Previous work on virtual economics in games only considers virtual world markets and currencies which represent a small fraction of economic decisions present. This thesis will demonstrate how economic behavior is found in all aspects of game play, including non-virtual world video games.

CHAPTER 2

SYNTHETIC UNIVERSES

Alternative Synthetic Universes

The idea of a synthetic universe expands well beyond the bounds of a virtual world. Synthetic universes can be described by any video game in which laws are instated to provide bounds on the actions that are able to be taken within that universe.

These laws can range from the walls and platforms of a 2D side-scroller to complex ability trees that avatars select skills from. However, the virtual world genre is a well defined subset of synthetic universes. Virtual worlds provide a multitude of player interactions and decisions that are helpful to analyze the economics that take place within synthetic universes. While virtual worlds provide much more depth we can also turn to less complex universes such as the classic 1980’s hit Pac-Man.

Pac-Man

The main objective of Pac-Man is to devour all the pixilated dots scattered around the level. Once all of the dots are gone, the player will advance to the next level. The player’s actions are bounded by the laws of the Pac-Man universe. The player cannot move through walls and is limited to only four directional movements. Another restriction to this game is the limitation of resources for Pac-Man. The avatar is given a set amount of lives to use during the game. Enemies will try and come into contact with the avatar to remove one life from the player, and once the life count is depleted the game

22 is over. These laws bound the player’s decisions to only acceptable actions within this universe. If a player wishes to befriend the enemies he will quickly find defeat as the act of befriending an enemy is not allowed in the Pac-Man universe. A player cannot choose to play the game in such a way that contradicts the laws of game play. However, there is an alternative play style to the standard technique of devouring all the dots and advancing to the next stage.

Many Pac-Man enthusiasts play Pac-Man not to simply advance to the next stage but to accumulate a large sum of points. The laws of the universe inhibit unsupported play, but still allow for alternative play. A player can choose to not devour all the dots in a short time span but instead move in motions to confine the enemies of Pac-Man. Doing so will setup the player to accumulate more points when they receive the power up item that allows Pac-Man to devour enemies. This power up only lasts a few short seconds and rewards players by giving bonus points. Gamers often take pride in having high scores in video games and this alternative play style can be seen as an optional decision making process that provides additional incentives related to the rhetoric of power.

The rhetoric of power in this instance relates to the satisfaction of having a high score. Power is rewarded in the form of points and the player will make economic decisions by quickly weighing the risks of different movement inputs against the benefits of that path to maximize their score. For example, if the player is being chased by an enemy from behind and can choose one of two directions to move in, that player will weigh the options of the benefits of each path. Path number one might have a few unclaimed dots that are yet to be devoured, while the second path has no dots but instead a power up that rewards more points. While the power ups do not advance the player in

23 the current level a player seeking wish fulfillment of a high score will opt for the path containing a power up. Now consider if the path with a power up had an enemy barreling down towards Pac-Man. The player will take this factor into account and weigh the risks.

If the player has lives to spare he could decide to spend one life for a surge in points. The trading of a life resource for a potential high score can be seen as the economic principle of trade-offs. The term trade-off is expressed as an opportunity cost. The cost of one life allows the player the opportunity of extra points.

“At every point, he or she considers the game state. That might be what he sees on the screen. Or it might be what the game master has just told him. Or it might be the arrangement on the pieces on the board. He considers his objectives, and the game tokens and resources available to him; he considers his opposition, the forces he must struggle against. He tries to decide on the best course of action.” (Costikyan, 2002, p. 12).

Economics can clearly be seen by the choices the player makes in determining their play style. The different play styles of the game are limited to the scope of this universe. If the player dislikes the possible play styles in the game, they will not feel satisfied with their play. The economics in the game, must grant the player a style that they enjoy or the game will not provide the wish fulfillment the player seeks. The desirable state is restricted to the laws of the game. In the Pac-Man example, the state of winning the game or having a high score is within the bounds of the instated laws. If a player desires a state outside of these bounds, then the player will not feel satisfied and will either have to conform to an allowed state or not play. While the main goal of Pac-

Man is simply to win the game, it does not prevent players from participating in unconventional play styles that are still within the bounds of laws.

Playing Unconventionally

Unconventional play can be defined as playing a game in such a way that it is divergent from the main goal of game play but is still supported within the restrictions of the synthetic universe. In recent gaming culture, it is a growing trend for gamers perform speed runs of older games. Speed runs are timed exercises of games where the player not only completes a video game but finds additional satisfaction in timing that victory.

Speed runs are additional restrictions imposed on the player by themselves and still within the laws. A speed run affects the player’s decision making when trying to minimize the time aspect involved in play. The player seeks power in the form of having a faster time than previous runs and will perform economic tradeoffs with other resources to reduce the time spent. Aspects that can be traded off will vary from game to game but it is common that players will kill their avatar and lose a life or other virtual goods in order to respawn in a more favorable location to improve a speed run. Speed runs are a competitive scene that push gamers right to the bounds and restrictions of game play.

In my experience from watching live speed runs on gaming websites, I have seen gamers exchanging tips and tricks with one another to further reduce their speed run’s time. In older games from the late 1990s, tricks involve manipulating some of the laws of the game and purposefully corrupting game files in order to completely skip levels. Since some of these games are over twenty years old, ample time has passed to allow gamers to explore every nook and cranny in those synthetic universes. Gamers discover glitches or holes within the binding laws of their synthetic universe and occasionally utilize them to skip levels. One example of this can be found in the classic game Pokémon Red Blue released in 1996. In Pokémon, players must defeat gym leaders in order to advance

25 further in the game. In the very first zone of Pewter city a computer controlled character blocks players from advancing to the next zone by blocking their path and displaying a scripted dialogue that then escorts the player to the gym. Speed runners have found a loop hole around this script by simply interacting with that computer controlled character then saving the game. Once the game is saved the speed runner will restart their game and their avatar will be detached from the previously running script. The character that was blocking their path proceeds to escort him to the gym unblocking the path to the next zone and the speed runner is free to make an improved time.

While the synthetic universe of Pokémon has a law that prevents players from advancing to zones without beating the gym, it is clear that this law in particular has some flexibility due to the technological limitations on the software at that time.

Therefore, this law does not prevent the player’s decision to skip the first gym if the player has knowledge of how to perform this glitch. This example demonstrates how overtime players become familiar with their synthetic universe’s laws to such an extent that they may be able to bend some of them, and therefore lessen the restrictions on their economic game decisions. The speed runner is a master of understanding the boundaries of a game, and desires to expand their capabilities within the game to achieve minimization of time. It is important to note while one law may bend or break over the course of a game’s life the other laws still regulate the player’s decisions.

With further analysis, one can glean economic behavior from the perspective of the player by looking at the player’s desired state. The player evaluates a number of possible actions to determine the next action to take. These decisions are caused by motivation to move from their current state to their desired state. Actions that are

26 divergent from the main game play experience must still fall into the bounds of that synthetic universe.

Virtual World Alternative Play

The previous examples demonstrate that divergent play is still bounded by the laws of the synthetic universe. The laws in the mentioned games are more restricting as those universes are on a much smaller scale than virtual worlds. Virtual worlds are large in scope and diversity to allow players more freedom in their choices of options in play styles. Virtual worlds often follow a character story line that helps the player advance their character and develop skill sets. However, since virtual worlds are essentially sandbox worlds where the player is free to explore at their own discretion, they often follow their own self imposed goals. Bartle’s interest graphic showed in figure 1 illustrates some of the divergent play from the main story arc that typically is found in

MMORPGs. A key focus here is the act of role playing. A player can act out an immersive experience pretending to be an actor within their virtual world. This is sometimes done by chatting in the first person taking on the role of the avatar. A player with an avatar of a brutish warrior might take on the persona by acting brash, and the avatar of intellectual wizard might act more thoughtful. If a communication system is supported within the universe, then role playing is a supported act. Role players enjoy acting with one another creating their own personalized stories. The stories they make are not simulations of interactions, but real human interactions. These stories are more often improvisations based on the interactions of involved actors. The actors make decisions on how they progress through their own story. These decisions are guided by the avatar’s defining background which is influenced by the synthetic universe.

In my experience playing World of Warcraft, I have encountered a particular type of role player that I find very intriguing. This role player is the virtual entrepreneur, as they heavily participate in the virtual market. The virtual entrepreneur initially takes an interest in the market with a drive for satisfaction in amassing virtual currency. The entrepreneur is an interesting type of role player because we can see many different aspects of virtual and non-virtual economics at work with their particular play style.

The entrepreneur utilizes the scarcity of virtual goods and makes predictions to invest their virtual currency similar to a stock exchange. However, many decisions and actions must be taken to make this investment. The player must first acquire the virtual good either by utilizing their own skill sets or from another player on the virtual market.

If the player uses their own skill set, then we must assume that their decisions in selecting skill sets within the synthetic universe have been appropriate for this particular virtual good. For example, if the desired investment is an iron shield the entrepreneur must have selected a skill set that assists in blacksmithing or refining iron materials. They must assess their current state to determine the proper course of action in obtaining their investment. If the entrepreneur lacks those skills then they must engage in the market place with other avatars. The actions and decisions in shopping around for the best prices to increase profit margins is classic economics. The actions of role playing in itself is a self imposed divergent play form the main story arc that helps the entrepreneur advance their game state to one that provides more satisfaction. When it is time for an entrepreneur to cash out on their investment, they must reengage in the market place to offload their products. It is important to note that when players exchange virtual goods

28 these social economic interactions are not simulations, but real social economic interactions that take place in virtual space, with virtual goods, and virtual currencies.

In my time within the World of Warcraft, I have encountered one of these entrepreneur role players who calls himself a goblin. In the World of Warcraft, goblins are known to be greedy creatures that will do anything for money. I had asked him,

“What is your motivation for taking on the play style of a goblin?” The goblin paused for a moment and then replied, “No doubt I only started being goblin for gold, but after awhile getting the gold wasn’t a big deal. My motivation became beating my month to month earnings. This was fun and became the game for me. Sometimes I would save for something I wanted, but mostly I made gold to make more gold. It was also super interesting to change up markets.” The goblin’s goals are clearly self-imposed by his statement. The rhetoric of power applies in the acquisition of virtual currency in the form of gold. This is very similar to the Pac-Man player who seeks a high score. The wish fulfillment is about the player beating himself rather than beating the conventional story arc found in MMORPGs. The synthetic universe for a virtual entrepreneur is merely a setting for their own play.

CHAPTER 3

THE ROLE OF THE ECONOMY

Simpson

The synthetic universe can be best observed through the lens of a virtual world.

Virtual worlds, by nature, offer more freedoms and choices for gamers. While their choices are restricted by the laws of the universe, we can see these laws propagated throughout the economy in virtual worlds. The economy assists in keeping order within the virtual world.

Simpson outlines five roles that the economy plays in virtual worlds:

• Support Specialization: An economy which limits what a player may possess though pricing will force players to choose their items carefully. For example, if tools of the trade are expensive, then players will need to specialize in only one trade. This encourages individual players to find a niche

• Ration power: Newbies shouldn’t be wielding ultra powerful armaments. A well functioning economy will limit access to powerful items.

• Encourage Interaction: A well functioning economy can motivate players to meet with each other for trade and work

• Provide Goals: There are many possible goals in a complex game, just as in real life acquiring wealth will generally help a player along the road towards any goal they select. In fact, acquiring wealth can serve as a default goal when the game setting or the player’s imagination temporarily fails.

• Support Economic Role-Playing: Some players will always enjoy taking on a specific economic roles such as artisan merchant or trader. A well functioning economy is crucial to supporting these natural roles (Simpson, 1999, p. 7).

It is important to note that Simpson wrote these five roles concerning only the economic context of the virtual market where players exchange virtual goods. However,

Simpson does provide us with a good starting point to assess the economic system and its role in its entirety.

Support Specialization

Simpson’s description of support specialization suggests that the economy imposes limitations on the player’s possessions. In virtual worlds players must find their societal role through specialization of skills in order to find their niche. MMORPGs give equal opportunity to avatars upon character creation, but the differences between avatars arise when selecting their skill subsets. This is closely tied to Castronova’s concept of scarcity. Scarcity is the driving force behind the constraints on an avatar’s social role.

“Not all avatars are the same: the user faces constraints on the creation of avatars and, through leveling, on the development of their abilities.” (Castronova, 2001, p. 16).

Simpson’s support specialization and Castronova’s scarcity are interchangeable terms. They both describe how societal roles are regulated through scarcity of resources.

In a synthetic universe, fun and gain are closely related. In video games, it is common for rewards to be some form of gain for the player. A few examples of gain are some form of points, progression in level, or other meaningful rewards. If a reward is some resource that is deemed scarce it would hold more value and satisfaction. Simpson comments that the economy limits possession through market pricing is not an accurate statement.

Scarcity can be imposed through a number of options such as the software the game runs on and random number generator events. Scarcity is the underlying principle that drives economics in a synthetic universe. Hence if all resources were available for free, gamers

31 will lose interest as there will be no need to play. Scarcity is very closely tied with the ration of power role.

Ration of Power

The context of Simpson’s ration of power is within the virtual world such as an

MMORPG. The rationing of power aligns with Castronova’s idea of scarcity in virtual worlds. In the virtual world, the economy regulates the total power available to a player.

As the player progresses in the game, the reward systems grant the player increments of power to provide a sense of growth as they progress with their avatar. The primary distinction from new players and veteran players is the amount of power they posses.

In a synthetic universe, the ration of power can be seen as an analytical tool to describe the management of resources available to the player. Instead of viewing power as an ever-increasing-player attribute, it can be viewed as a limited resource that the player can manage in pursuit of a goal. Chris Crawford, an expert in game design, suggests that resources are a key element that links the fantasy of the goal and topic into a workable system. “This key element must be central to the topic, representative or symbolic of the issues addressed in the game, manipulable, and understandable.”

(Crawford, 1997, p. 56). The game developers must choose a convincing element of their game to be the resource as it helps facilitate the fantasy of the game and promote immersion. The chosen resource is developed into a workable system that the player can manipulate to make meaningful economic decisions during game play interactions. “It must be expressively manipulable; that is, it must allow the player to express himself, to do the things that he wants or needs to do to experience the fantasy of the game.”

(Crawford, 1997, p. 57). Crawford suggests that resources provide a means for

32 entertainment value by allowing self expression in the economic decisions players make when managing those resources.

The ration of power in a synthetic universe combines attributes such as scarcity, manipulable resource management, and meaningful game play to create the economic system that governs the game. A scarce resource makes decisions that influence it more meaningful to the player. The resource is seen as an economic investment in their choices. Making the resource more manipulable also benefits the player by granting them more freedom with their decisions regarding that resource. For example, instead of having a light switch go from on to off, we might increase its manipulability by allowing different degrees of luminescence in-between on and off. Making these resource spending decisions increasingly customizable promotes the self expression that Crawford deems necessary in game design.

Encourage Interaction

Simpson states, “A well functioning economy can motivate players to meet with each other for trade and work.” (Simpson, 1999, p. 7). In an MMORPG gamers will exchange virtual goods and virtual currencies on the market place. Simpson’s scope of interactions occurring at the market level of a virtual economy is an understatement of what is actually going on in a virtual world. Richard Bartle’s explanation of interactions in MUDs that occur between the player and the world suggests that there is more to economic interactions than just motivating players to trade with each other. In a virtual world, player interactions are not limited only to trading but also include their interactions with the virtual environment. Play in itself is an economic interaction that is discussed in chapter two of this thesis. The type of play style the user chooses to follow

33 directly influences their economic decisions on how they participate in the synthetic universe.

Greg Costikyan offers an interesting perspective on the term “interaction.”

“Interaction has no value in itself. Interaction must have a purpose. A light switch is interactive. You flick it up, the lights turn on. You flick it down, the lights turn off. That’s interaction but it’s not a lot of fun.” (Costikyan, 2002, p. 10). To encourage interaction is not enough to promote entertainment value in a synthetic universe. “The thing that makes a game a game is the need to make decisions. Consider chess: it has few of the aspects that make games appealing – no simulation elements, no role-playing, and little color.

What it’s got is the need to make decisions. The rules are tightly constrained, the objectives clear, and victory requires you to think several moves ahead. Excellence in decision making is what brings success.” (Salen & Zimmerman, 2004, p. 196). In summary, interaction alone does not merit entertainment value. The specific type of interaction that defines a synthetic universe is the act of making purposeful decisions.

Provide Goals

Simpson describes the market in MMORPGs as providing goals to the player in the same way that a virtual entrepreneur finds satisfaction. However, the goals within a synthetic universe extend beyond gaining capital from the market. Goals can be progressing through a story or self-imposed challenges. Economics is utilized by player to reach goals but it cannot be said that these goals are always a part of the economic system itself. The economic play is the means for the gamer to reach their goal. Goals could not be reached without the ability to manage resources to make economic decisions. It can be said that the economics in synthetic universes are involved in

34 reaching goals but do not necessarily provide the goals themselves. Within the synthetic universe, gamers’ economic decisions are influenced by interactions and experiences when playing a game. “He considers his opposition, the forces he must struggle against.

He tries to decide on the best course of action.” (Costikyan, 2002, p. 12). When a player executes a decision, the game should respond to it to reflect that the decision is meaningful.

Tekinbas and Zimmerman, coauthors of Rules of Play, describe the relationship between interaction and choice. “The careful crafting of player experience through a system of interaction is critical to the design of meaningful play. When a player makes a choice in a game, the system responds in some way. The relationship between the player’s choice and the system’s response is one way to characterize the depth and quality of interaction.” (Salen & Zimmerman, 2004, p. 64). The economic system does not provide goals, but is unknowingly manifested by the gamer upon interaction and carried out through choice. The choice the player makes will determine what game state the player will be in next. The transition from the current state to the next is the game software’s response to that decision.

When a player has first contact with an actor in a video game, they can choose to respond to that actor in some way. The actor can be another player or a computer controlled actor. The player will consider the actor and their current state to determine if action is necessary. This process of consideration and determination of the final choice is the economic process involved within the relationship between interaction and choice.

Support Economic Role Playing

Simpson describes economic role playing as a merchant or trader. Again this is purely from a market analyses perspective, but what exactly supports the merchant role player? The play style of being a merchant requires avatars to be able to exchange virtual goods and currencies. Consider what virtual goods and currencies actually represent.

Goods and currencies represent power to the avatar. The avatar will increase in their character statics of wealth by gaining through trade. Wealth and virtual goods have a quantifiable value on the virtual market. To be sold on the market they must be appraised.

The concept of giving virtual items value and then selling or buying them is similar to economic resource management discussed earlier. The merchant is not necessarily an economic role player, but really just a fantasy role player no different than the player with the persona of fantasy brutish warrior. The main difference between these two role players is different resources these two play styles manage.

To apply Simpson’s concept of supporting economic role-playing, one would alter it to say the economy in a synthetic universe supports all forms of role-playing. The economy only requires meaningful resource management for decisions to be acted upon in order to provide support.

Role of Economy in a Synthetic Universe

Simpson expresses many points about economies in virtual worlds. These points provide insight into what the role of economics is during video game applications. There is some crossover when applying these points to a synthetic universe, however, the role of economics stands out clearly. Economics links the decision making process with the interactivity within a video game. Economics is how the player manages the desired

36 system response to their actions. The player considers their current situation and their desires and makes meaningful decisions to reach their goal. Managing meaningful resources is critical to having the player invested in the game. These economic decisions are bounded by the laws of the universe and gamers must choose actions to take within those bounds. The economics involved are done by the player with a goal in mind to achieve satisfaction.

The Anatomy of Choice

Choices arise when a player interacts with an actor in a game. When a player comes into contact with another actor they are treated as a stimulus. The choices that are presented to the player are meaningful to the situation and have an impact on the player’s game state. A player will utilize economics to determine the best course of action that nets the most positive gain. The game system will reinforce this decision by responding to the player in some way. This interaction between external and internal events is described as the anatomy of choice. The anatomy of choice in a game is a concept introduced in the Rules of Play by Salen and Zimmerman. “Although the concept of choice may appear basic upon first glance, the way that a choice is actually constructed is surprisingly complex. We need to ask the following five questions. Together they outline the anatomy of a choice.” (Salen & Zimmerman, 2004, p. 64). The five questions are presented in Figure 2. The anatomy of a choice is a useful analytical tool to better understand where exactly the economics lie inside the decision making process.

Figure 2. The anatomy of choice is displayed as a flow diagram. This illustrates the process that occurs during player interaction inside a synthetic universe. The decision making process is influenced by both internal and external events of the interaction stimuli (Salen & Zimmerman, 2004, p. 64).

Each step in the anatomy of choice represents how choices are constructed internally in the player’s mind from an external stimulus. The five questions together provide an outline that provides insight on where the economic principles are applied during the process of choice. Each of these questions represents the interactions between a player, their environment, or other actors. Additionally, the questions illustrate how external stimulus and choices are related. Each of these questions has great importance to the understanding of the anatomy of choice and will be expanded upon. These five questions begin when the player interacts with an actor in the game and is given the opportunity to make a choice.

1. What happened before the player was given the choice? This question considers all the previous events that have led the gamer to the current game state. It addresses the current status of player resources and the opposition. The player also considers the actor that they have just interacted along with many other factors at this stage.

2. How is the possibility of choice conveyed to the player? Choices in video games are conveyed through the game’s controls; which direction the avatar should move, attack or defense, and what to say in dialogue are just a few examples of inputs that are commonly available to players as choices.

3. How did the player make the choice? This is the step in which the economic process takes place. The player must consider all the factors and determine which option will yield the most beneficial results. The mechanism the player utilizes to make a choice will vary, but all are forms through which players are given the opportunity to take action.

4. What is the result of that choice and how will it affect future choices? Taking action within a system will affect other relationships in that system. The decision mad potentially can influence future states or future choices. Overall the impact of a choice will determine the outcome of the game.

5. How is the result of the choice conveyed to the player? Choices must be meaningful for the gamer to be invested in play. To express meaningfulness the game system should respond in some way to the player’s decision. The result of the choice provides the context for the next choice.

These five steps provide a closer analysis to forces that influence the economic decisions during play. The economic decisions take place in the third stage of the anatomy of choice. The mechanism of delivering the choice to the game system will vary, but the principles of applying economics to resources available to the player are persistent. Resources must be managed in such a way that the player will maximize their gain. This final decision in step three is influenced by steps one and two. All previous decisions have led the player to the current state. Resources will fluctuate between decisions and must be managed accordingly to succeed in the game. The player will react to stimulus in different ways depending on how threatening the stimulus is and its

39 potential influence on the outcome of the game. Players must not allocate all of their resources upfront when making smaller decisions and keep in mind the overall outcome of the game. Resources must be managed effectively in step three and the meaningfulness must be reinforced in steps four and five. The Rules of Play demonstrates some examples of the anatomy of choice with two examples. The first example uses a video game of asteroids that only accept input in the form of one of five buttons. The second example shows the anatomy of choice in a game of chess. Both examples consider the five steps through the relationship of interaction and choice. The anatomy of choice is displayed as a table (see Table 1).

Table 1. Anatomy of a Choice (Salen & Zimmerman, 2004, p. 65).

Anatomy of a Choice Asteroids Chess

Represented by the 1. What happened before the Represented by the current current positions and player was given the choice? state of the pieces on the trajectories of the game (internal event) board. elements.

The possible actions are conveyed through the The possible actions are persistent button conveyed through the 2. How is the possibility of controls as well as the arrangement of pieces on the choice conveyed to the player? state of the screen, as it board, including the empty (external event) displays the squares where they can relationships of the move. game elements.

The player makes a 3. How did the player make the The player makes a choice by choice by pressing one choice? (internal event) moving a piece. of the 5 buttons.

Each button press affects the system in a Each move affects the overall 4. What is the result of the different way, such as system, such as capturing a choice? How will it affect future the position or piece or shifting the strategic choices? orientation of the possibilities of the game. player’s ship.

The result of the choice The result of the choice is 5. How is the result of the choice is then represented to the then resented to the player conveyed to the player? (external player via screen via the new arrangement of event) graphics and audio. pieces on the board.

While Rules of Play does not explicitly describe the decision making process in step three, it is apparent in which the context of the decision is framed. In the Asteroids example, the player controls a spaceship and must maneuver through an asteroid field.

The player must consider the trajectories and positions of the asteroids. When avoiding one asteroid, the player must consider the implications of their movements as to not be hit by another approaching asteroid. In this scenario, the player’s resource is both time and movements. The player can only move and respond to asteroids one input at a time. The player will assess the game state and try to make the best movement in that moment. The player is looking to gain safety and approach their goal of winning the game. A series of good decisions will be reinforced by the game through visual and sound effects while bad decisions will be punished in a similar fashion.

In a game of chess, the implications of previous decisions can clearly be seen in the current state of the board. Chess pieces will be arranged and removed depending on previous moves. The results of previous choices affect the outcome of the overall game.

The implications of all decisions that affect the outcome of the game can be viewed as macro economics. Macro economics considers all the effort and decisions made that contribute to the overall long term goal. Many smaller decisions collectively have large impacts during play. These smaller decisions can be viewed as micro economics. When the player is challenged with a smaller conflict that does not merit allocation of vast amounts of resources the decisions will be less impactful. However, overtime the more micro economic decisions that are made will affect the outcome of the game on a macroeconomic scale. It is up to the gamer to decide how they want to manage their resources on both micro and macro levels. The successful gamer will be well versed in

41 managing their resources to progress further in video games. Virtual economics is the very act of playing games.

CHAPTER 4

IMPLICATIONS OF ECONOMICS IN GAMES

Summary

Synthetic universes are software governed by a set of laws, natural or unnatural, characterized by the lack of degradation of resources, and their only physicality truly exists in the form of binary bits. While play styles may vary from gamer to gamer, all decisions made are still restricted to viable options within the game. In multiplayer games, the economic role extends beyond resource management and includes social roles in virtual society. Due to scarcity of resources, players develop specialized skill sets to fill a niche in society. It is also important to note that in multiplayer games, social interactions are not simulations, but real social interactions between humans. In all video games, players must manage their resources economically in order to maximize gain, and put themselves in a more favorable game state.

The anatomy of choice gives perspective on how economic decisions are constructed. Choice is a player response to an interaction with another actor in game.

However, interaction alone does not merit fun game play. Interaction must be purposeful and the decisions made must be meaningful to the narrative. Choice is an internal event where the player considers previous events, their resources available, and their desired game state then decides on an action to take. Players exhibit economic behavior through decision making, as choice inherently is an attempt to maximize their value of resources.

In competitive gaming, players are constantly fighting for advantages by utilizing tradeoffs. They seek to win a collection of skirmishes between other players to gain smaller advantages. These advantages overtime contribute to the macro-economic game play which affects the outcome of the game as a whole. Skillful players have more depth in knowledge of managing resources as to not over expend at the micro-economic level.

Overall, economics contributes to the essence of game play by providing the player meaningful decisions and customizable decisions. Even games with a limited number of resources will be played differently from person to person, as play styles and choices will vary. Economics provides the game with depth and gamers with more knowledge of this depth will commonly find themselves ahead of their opposition. Game play is essentially seeking advantage over other economic actors. The successful gamer is a master of the economic system of the game they are playing.

Conclusion

Players exist in space, with free will and meaning. Games can be viewed as a medium which players can influence the virtual universe for entertainment. In the virtual universe the gamer is an economic actor. Part of the joy of playing video games is that gamers are rational actors seeking gain, and the way that they play and weigh their choices is to seek out gain from the faceless bodiless game system. To gain in a synthetic universe invokes exactly the same risk and rewards structures in the brain that are invoked by personal development in real life. Economic behavior is fun.

In addition, these economic behaviors can be viewed in all video games even those that are not virtual worlds. Previous work in virtual economics has focused on virtual worlds specifically their virtual market places where virtual goods and currencies

44 are exchanged between gamers. However, the concepts of managing these virtual resources can be applied outside of the previous scope to all video games (synthetic universes). A player managing their virtual currencies is just a subset of the multitudes of resources that they manage in a similar fashion. Seeking advantage and understanding of economics can help one understand video games better.

Game Design Implications

Understanding the choices that game designers present to their audience is important in constructing a narrative. The choices presented to the user should inherently hold some importance to the story. Meaningful choices immerse the gamer into the synthetic world, and as a result they become invested in their avatar. Game designers already construct relevant resources that have ties to the narrative for players to manage, as the very act of managing these resources is game play. The laws of the synthetic universe control the bounds of choices during the management of resources.

Understanding the environment which is being designed would greatly benefit the game developer and the player experience. Instead of just presenting the player with series narrative choices, the game developer can view these choices with different weights for various outcomes. Game developers could construct interactions and universal laws to better support micro and macroeconomic decisions. Giving the player choices that improve utilization of the game’s economics will cultivate more depth in the player experience. Games should reward players periodically through micro economic decisions all while keeping in mind the overall outcome of the game.

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