February 06, 2003

Economist Edward Castronova has studied

Economist Edward Castronova has studied the economy of Norrath, the world of Sony's EverQuest. Some interesting findings are that the currency of Norrath, platinum pieces, is worth about one penny which makes it stronger than the yen or lira. The average wage is $3.42/hour, but deflation is boosting the real wage.

In writing about Castronova's paper, Robert Shapiro comes to this conclusion about what we may learn about real economies from virtual ones:

In this virtual world, a powerful government appears only briefly at the start, in the iron rule that everyone starts out with roughly equal assets. Then it retreats and lets economic nature take its course. In Norrath, more equality permits freer markets. This may provide the most important lesson of all from the EverQuest experiment: Real equality can obviate much of a democratic government's intervention in a modern economy. Many of our own government's current policies?progressive taxation, securities regulation, social insurance?are aimed at offsetting some form of inequality. If EverQuest is any guide, the liberal dream of genuine equality would usher in the conservative vision of truly limited government.

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Daniel Drezner links to the Shapiro article and talks about political science and computer simulations.