Real Money Trading in Virtual Worlds

Significant real money is traded into and out of virtual world currencies. Virtual world participating users buy and sell virtual products, virtual goods, virtual properties, virtual services, and other virtual items of interest. As gamers, some trade real money to: buy assets including characters, currencies and other auctioned items. Others buy at virtual auctions, purchase virtual currencies, purchase virtual land, build virtual properties and use virtual facilities. The Theory of Planned Behavior maps a structural equation modelling approach for real money trading (RMT) - suggesting RMT can be behaviorally promoted to participant users in virtual worlds

Economics in the Kingdom of Loathing: Analysis of Virtual Market Data

We analyze a unique data set from a massively-multiplayer online video game economy called The Kingdom of Loathing to assess the viability of these markets in conducting economic research. The data consist of every transaction in a market with over one million players over three years of real time. We find that 1) the game markets are efficient, 2) the complexity of the product determines information diffusion times, and 3) we can classify which and how players participate in trade.

An empirical investigation into the drivers of re-subscription in massively multiplayer online games: a commitment trust theory approach

This is a relationship marketing PhD which is examining, using Commitment Trust Theory, the customer decision to maintain subscribing to a massively multiplayer online game. This PhD is not an examination of initial purchase decision, but of the ongoing, post-purchase, customer retention. In keeping with the contextual nature of Commitment Trust Theory, this study examines the antecedents of the re-subscription decision and their effect on the key mediating variables of Commitment and Trust and modifies the framework to model the subscription based nature of the business situation and the context. The key contribution of this research to the literature is the application of the Commitment Trust framework to a customer’s ongoing relationship with a massively multiplayer online game entertainment product; a situation and context which has not been examined in the literature. An online questionnaire survey was used to collect a sample of data from 2226 massively multiplayer online game customers. This sample data was then analysed using Structural Equation Modelling to test the relationship hypotheses between the constructs proposed by Commitment Trust Theory. Furthermore, hypotheses examining the effect of relevant demographic and categorical variables upon the constructs of Commitment Trust Theory were also tested and analysed using appropriate statistical techniques. Evidence was found to support the Commitment Trust Theory framework in a massively multiplayer online game subscription situation, with the study’s model explaining 85.7% of the variance of the sample data, with evidence presented to support the key mediating variable approach to modelling the circumstances. The study, based on examining the effect size of the construct relationships using standardised regression weights then gives evidence that a more parsimonious model which reduces the number of constructs from 16 to six (a 70% reduction in complexity) would still produce a model explaining 85.3% of the variance of the sample data (a 0.4% loss in explanatory power). The study concludes that the key antecedent constructs in the sample for a customer’s renewal of an online gaming subscription are current satisfaction, past satisfaction, the amount of game capital they have within the game and the metagame benefits they derive from the game. The study supports a key mediating variable structure, but provides evidence that while Commitment and Trust are both relevant and statistically significant, a more efficient explanation examining the effect size of the relationships as well, would focus on the antecedents of Commitment rather than Trust, as Trust and its antecedents were not found to have a significant effect size on the overall decision to re-subscribe

Are secondary markets beneficial for a virtual world operator?

Selling virtual goods for real money has become the dominant business model for virtual worlds in the past decade. As the amount of money involved in virtual goods sales increases, market performance questions gain relevance. In this thesis, we examine the effects of secondary markets on the profitability of a virtual world service provider operating under a virtual goods sales model. More specifically, we ask whether the service provider should tolerate secondary markets or seek to kill them off. The structure of this thesis is as follows: we first review how virtual worlds operate as businesses and provide an analysis of the market conditions faced by a virtual world operator to provide sufficient context for the reader. We then examine the inner workings of virtual economies and review structures commonly encountered within them. Next, we conduct a literature review on real world secondary market models and analyses. Finally, we evaluate the implications of real world secondary market results on secondary markets for virtual goods. In the final section, we present conclusions and possible avenues for further study. We find that recent durable goods research suggests that a profit-maximizing monopolist will not shut down secondary markets, but will choose to reduce durability of goods instead and that these results can apply to virtual worlds as well. However, we also show that the question of allowing or not allowing secondary markets cannot be answered based on profitability alone and that service providers have to also account for externalities brought on by secondary markets

The Law of One Price and Virtual Worlds

Price convergence and purchasing power parity are two important foundations to international trade theory. Yet there is still no consensus on their existence, despite numerous studies. While the debate over price convergence and purchasing power parity continues, the last several years have seen a substantial rise in the use of virtual worlds. Virtual worlds are interactive digital environments where individuals with an internet connection can come together to communicate, cooperate and trade. Virtual worlds create smaller copies of the real world. These copies lack many of the complexities found in the real world. This feature makes virtual worlds a unique setting for studying price convergence and other economic phenomena. This dissertation begins by surveying the extant research on virtual worlds throughout the social sciences to illustrate the usefulness of virtual worlds in economics research. In the second chapter price convergence is tested in one of these virtual worlds. Insight gained from the second chapter is used in the final chapter to alter an existing purchasing power parity model. This altered model is used to estimate the effect transportation costs on purchasing power parity equilibrium

From Reputation Capital to Reputation Warfare: Online Ratings, Trolling, and the Logic of Volatility

What are the consequences of the tendency for ubiquitous online reputation calculation to lead not to more precise expressions of reputation capital, but, rather, to greater reputational instability? This article contrasts two conceptions of online reputation, which enact opposing attitudes about the relation between reputation and the calculable. According to an early online reputation paradigm – reputation capital – users strove to achieve high scores, performing the presumption that reputation could be incrementally accumulated and consistently measured within relatively stable spheres of value. Yet, ubiquitous calculation led not to more precise measurements of reputation, but rather to the increasing volatility of online reputation. Thus, a second online reputation paradigm – reputation warfare – has become increasingly prevalent, in which strategic actors indirectly capitalize on systemic volatility produced by reputation’s ubiquitous online calculation. Steve Bannon’s 2016 Trump campaign strategy, which mobilized trolls, exemplifies the indirect optimization of online reputation, placing an option on reputational volatility. Written in the wake of the 2016 U.S. Trump election campaign, this transdisciplinary article questions how online reputation’s relationship to financialized value is shifting, and why this is significant within the post-2016 political landscape. Drawing from sociological theories of reputation, critical finance studies, media studies, valuation studies and political journalism, I explore how increased volatility – key to derivative finance – reshapes online reputations’ means of producing value, both for online users themselves, and for strategic actors who actively incite others’ reputational volatility. This contributes a novel analysis of how options theory in derivative finance inflects online reputational value to critical finance studies. It also nuances understandings of why trolling becomes normalized in online political campaigns, insisting that such developments be understood in relation to the ubiquity of online ranking and rating systems, which already incite the reputational volatility on which trolling also thrives

Everyday economics: ideas new and old from lay theories of economic life

This project explores divergences and parallels between lay theories of economic life as experienced and developed in two virtual worlds – Final Fantasy XI (FFXI) and Second Life (SL) – and academic theories from sociology and anthropology as well as economics. My intent is not a critique of economics, but a suggestion that other economic sociologies are possible, and to provide points of departure and ideas for such alternative configurations. Exploration of lay theories is organised around four key conceptual categories – value, exchange, money and markets – which were suggested by participants' accounts and economic organisation within each field site. Respondents' theories offer polyphonic, heteroglossic approaches to economic life that sometimes diverge substantially from academic conceptualisations. Lay theories examined in this research emphasising plurality and multiplicity – especially with respect to monies – going so far as to suggest a radical reorganisation of economies based on monies rather than markets. When lay theories from each category are pieced together, they reveal a social imaginary of boundless abundance, strong reliance upon practices as ways of knowing about and theorising economic life, and strange parellels with studies of “primitive” cultures. This dissertation is based on comparative ethnographies of two disparate virtual worlds, FFXI and SL, which offer different slant-wise views of contemporary capitalist, consumer societies. Final Fantasy XI is a proprietary massively multiplayer online role-playing game (MMORPG) created, owned and maintained by Square-Enix, while Second Life (SL) is a free-form, nonproprietary, three-dimensional virtual world created and maintained in a laissezfaire fashion by Linden Lab. Fieldwork consisted of participant observation, one-on-one interviews, group interviews with FFXI respondents and analysis of fan-made media and corporate texts