posted on Thursday, June 28, 2007 3:42 AM by Endie

CCP Appoint a Lead Economist

Some things CCP do very well.  They sometimes might be shifty on the ethics side, but when it comes to world design, they're really awfully smart at times.

Their latest move is to hire a lead economist (as in leading, not as in the dense metal denoted by the letters Pb on the periodic table).  I'm impressed that they've gone for someone with a degree of academic achievement behind him, rather than picking up someone working on a doctorate in the field. He blogs about his appointment on their site, but his key roles seem to be to gather and disseminate economic information to the player-base and to CCP, and to interface with academics who are interested in research into the Eve economic model.

Eve has a wonderfully complex economy: many MMOs, while fascinating for researchers, are fairly simple in terms of the economic tools and options available.  Eve has thousands of complex and discrete regional markets, with a large range of in- and out-of-character skills needed to successfully trade on them.  There are a huge array of tradable products, from commodities to ships and fittings.  Substantial market analysis is already offered in-game, and I use that, myself, to decide what to trade in: I have no intention of publishing the secrets that make me sufficient profit in a few days to never have to rat or run missions or mine like most players do (and, should I wish, to play the game itself for free), but suffice to say that the figures I need on trading volumes, spread, trends, market liquidity and more are all available to me, while my character has trained skills that cut transaction costs and brokerage charges dramatically, allowing me to trade fine margins profitably.

Comments

# re: CCP Appoint a Lead Economist

Friday, June 29, 2007 12:30 AM by nate_combs
Very neat: releasing quarterly reports to the public seems unique for the industry - assuming they have the depth EG suggests.

His forum comments also suggest specific (albeit eve-centric) research-worthy questions that at least I have wondered about. For example, the question of how much influence transport "costs" have in goods pricing alone would be very interesting.

I've had a long suspicion that many traders in eve meta-game much more than their RW counterparts and not behaving rationally (e.g. trying to achieve local market domination somewhere while losing money or expending tremendous hours *transporting* stuff).

If true it could point to a distinction between how people differ (at least in degree) in how they perceive RW and in-game markets: one is more of a game because it is in a game! Conversely, if not true, it would suggestive of the opposite.

# re: CCP Appoint a Lead Economist

Friday, June 29, 2007 8:43 AM by Endie
You're absolutely correct about the behaviour of individual actors in the Eve marketplace. One reason that I rarely do production at the moment is that opportunity costs are often discounted: "I got most of the minerals by mining, so they're free. I just need to make a profit on my megacyte and the blueprint".

As a trader, however, those people are wonderful: buy their massively underpriced goods and resell them at a 15% profit. Occsionally, they are even priced at a rate where they can be refined and the minerals sold at a higher rate.

And traders in a game defined by PvP tend towards machismo: if someone is determined to sell his 500,000 units of alloys, you can price your 2000 units at 500ISK lower and see him go another 500 lower again, to show he's "not to be messed with". Do that a couple of times and he is so locked into not "losing" that he's underpriced dramatically, and can again be bought out at a profit.

I do wish that it was possible to sell short: the lack of such a secondary market is a shortcoming in that it is hard to profit from spotting falling markets. But someone who could come up with game mechanics to prevent reckless gambling where the percieved cost of failure is so low (ie in a game) would be a genius. I imagine that that's just what you're talking about in your last paragraph!

I really do think you're right to point up the importance of transport costs: I believe that transport costs are the heart of Eve's economy, both in terms of risk and travel time.

Without these costs, you end up with the auction houses of WoW, which I'm aware are deeply interesting to economists, but deeply unsatisfying to me!

Personally, I suspect that people initially ignore transport costs, but then eventually stop transporting at huge opportunity cost to their time when they simply don't find the rewards worth the immense tedium compared to the rewards for, say, mission-running.

The discounting for risk involved in getting stuff like morphite in from 0.0, and stuff like ships out to the front lines, is interesting. Carrier services tend to settle around fairly well-established costings based on distance and demand, and people do pay the huge costs rather than gamble with haulers through the pipe.