Economics – Thoughts on MMO Inflation

I’ve been kicking the idea of inflation in virtual markets around in my head for quite some time now. Not exactly questioning the basic premise of inflation in virtual markets as much as some of the implied assumptions.

A lot of this started upon seeing the age-old question “why are market-board taxes a thing?” The stock answer, often given as though the question itself is a dumb one, is “to counter inflation.” At some point, I began to ask questions of that answer though.

How do we know inflation is happening? Are we sure it’s a bad thing? Are market-board taxes an effective way to counter inflation? You get the idea.

  • How do we know inflation is happening?

This is really the first question I set out to answer. I wanted to know, above and beyond all other concerns, if any of the other questions were even relevant. Based on my reading and a little personal research I have come to the conclusion that since virtual markets are driven by human actors or sometimes bots acting on behalf of humans, that they behave in a manner consistent with real markets. As such, I cannot come up with any good reason why inflation wouldn’t occur if the required conditions were met.

Part of my problem was that MMO economies aren’t quite like real economies. When you complete a quest or bounty in a game, the currency that is paid to you generally came into existence that very moment. It didn’t have a chain of custody and there likely isn’t a system behind the scene adjusting the amount you receive to account for the fact that it can essentially generate “infinite money.”

The older “monetarist” view of inflation is that greater money supply leads directly to inflation. If you have more dollars you’ll pay more money to get what you want and in doing so driving up prices. The easy answer then is that you must remove some of that excess currency via “gold sinks.” Those activities effectively delete currency in the same way that rewards create it.

It was while driving this particular train of thought that I happened across Wilhelm’s The November MER and the Surge in Outer Passage, a post regarding EVE Online’s rather frequent posts containing a variety of economic data. I figured they might have a graph of the Consumer Price Index, a common measure of inflation, and stopped by to take a look.

9b_isk.float.3

Of immediate interest to my question is overall money supply. As one might expect, this seems to trend upward for the most part. This indicates that the total amount of currency in the market does tend to increase over time. As a result, monetarist theory would suggest a slight inflation increase over the same time. Obviously, the methods of extracting money from the economy are slower than the ones generating it.

9d_economy.indices.short

If we look at CPI over the last few years, it seems to trend along with total currency. I may come back and do a statistical regression of their data at some point, but at a glance it seems to agree, though it’s not nearly as neat an incline as the currency supply.

9aaa_top.sinks.faucets.over.time

As a final thought, their data on where currency is being generated and destroyed is also provided. Marketboard taxes make up the majority of the money sink. The tax rate was changed right at the end of July, rather noticeable here. Of specific interest to me was the fact that market taxes are the number one currency drain in the economy. Regardless of where things end up regarding the effectiveness of currency deletion in combating inflation, it’s obvious that it does a decent job at removing currency in general.

It’s also interesting to see that the communication changes they made a while back, leading to a large drop in bounty payouts, seems directly correlated with a reduction in the money supply and the price indices. With bounty payouts close to their pre-change level the other charts seem to have levelled off but not returned to their previous levels.

Guess I should bring this to some manner of conclusion, though I would like to emphasize that it’s a conclusion, not the conclusion. At least in the case of EVE, it seems to hold generally true that an increased currency supply leads to inflation, at least in the “short” term. When you expand it out over the last decade the CPI actually seems to balance itself in a sort of equilibrium that helps protect basic goods like T1 ships from inflation.

And now I want to play EVE again.

Y’all take care, and be careful which rabbit holes you look into. “If you gaze long into an abyss, the abyss also gazes into you.” – Nietzsche. Why is it always Nietzsche?

Q3 2019 Earnings Reports

While I don’t exactly have time to dig into these in detail, I stopped for a moment to check out the latest Activision/Blizzard and Starbreeze Q3 reports. It’s almost scary how much more sense they make with a basic understanding of accounting.

I mean, just looking at the consolidated balance sheet for AB, I get it. I know what those things and at least vaguely understand what they mean. Hopefully, that means I’ll have something more meaningful to say when they year-end report rolls around in a few months.

That knowledge sure doesn’t make Starbreeze look any better. I noticed an announcement buried in there that their partner for Payday: Crime Wars, a mobile title, has shut down most of the mobile publishing wing. This is probably one of the reasons why Payday 2 development began again recently. While the resumed Payday 2 income is certainly going to help, but probably not enough to offset the 80ish million SEK (roughly 8.4M USD) their VR parks are costing them. I realize most of the cost is an impairment, but still, they’re posing an overall operating loss of 20M SEK (~2.1M USD). They have 113.2M SEK (~11.7M USD) of cash(ish), so we don’t exactly have to worry about them sinking tomorrow. At this rate they have roughly a year to year and a half of operation. I’m sure the new paid DLC for Payday 2 will help extend that further.

Either way, y’all know the drill. None of this should be considered financial or investment advice. Likewise, I don’t own any stake in either of these companies. Partially because I have yet to find a way to buy shares internationally.

Y’all take care.

42

I’m not dead, I promise. Neither have I forgotten my blog, blogging, or Blaugust.

So, I may have slightly underestimated the workload I was signing up for. I did get the research project completed. I actually presented it last night, and it seemed fairly well received. Honestly, I’m not used to the idea of people taking interest in my weird side projects.

The good news is that my economics professor has expressed interested in working with me to turn my project into a publishable paper. That was an interesting and unexpected development.

I will, however, try to get back into a routine of making regular posts now that things are leveling out a little bit. Even still, I recently learned that my course schedule was more than full-time, and in order to synchronize myself with the intended schedule, I’ll be doing the same again for the Spring semester.

With any luck, I’ll see everyone around. Y’all take care.

Research Projects and Data Sets

So I mentioned a week or so ago that I had gathered some data under a specific assumption, a sort of psuedo-hypothesis, and was confused about why it didn’t look the way I expected. Well, y’know, that’s because my assumption was wrong. That’s fine, live and learn.

I’ve had a nice little conversation with one of the professors in the process of sorting all this out. I take science somewhat seriously and the error I made is mildly embarrassing and serves to demonstrate just how easy it is to fall into little subtle traps in this sort of thing.

Let me back up, though.

I took most of a day off work the other day to speak to a different professor regarding their “research symposium” and how I might participate in it. There are a number of reasons why that didn’t work out, but it didn’t. Among them was a difference in academic disciplines. He was a finance professor and my topic/interest was more of an economic one. I wasn’t thrilled, but I set it aside and returned to the aforementioned project and figured it would sort out in the end.

In the resulting return to my data, I ended up emailing the professor from my Microeconomics class to ask how to do what I was doing, because it didn’t match up with expectations. His response is what prompted my previous post, and that’s the conversation I was referring to at the beginning.

Of course, there were some aspects of my prior data that were… less than ideal. If I’m really serious about this, though, then I can fix that by gathering the data myself, manually. I’m prepared to do that, and it’s a contributing factor in my last post about having time to write.

What I did not expect was for him to ask if I was interested in participating in the research symposium, and an offer to sponsor/advise me. I had set that thought to the side as something to consider in the future. I don’t think it’s especially visible in the text of this post, but I’m positively over the moon. I’m attempting to exercise restraint the best way I know how, by acting like I’m not. Set that energy and drive aside right now, and come back to it later when I need it. Otherwise, it will consume me.

Now, I did respond. I mean, of course. It’s an opportunity I look forward to with great enthusiasm. If it is possible to do so, I will share it here when it comes to fruition.

I must away, however, and get some other things done. Y’all take care, keep doing what you do. Excelsior or something.


BlaugustBOnlylogoIn case you haven’t heard, we’re in the middle of an event called Blaugust. The goal is to simply promote and stimulate the blogging community by encouraging people of all skill levels and backgrounds to post. The official post can be found here and it’s never too late to start.

Tick Tick Goes the Clock?

You know that sound Wile E Coyote makes when he hits the bottom of the canyon and you see the little puff of dust? That’s about what this feels like, though it’s not a surprise. I suspected time to write would become an issue before the month was out.

So, one thing has become fairly apparent to me this week. Either I need a planner, or I need to set up a calendar category on my phone. The amount of time I spend every morning making sure the thing I’m doing is the thing I should be doing is becoming counterproductive.

Of course, it’s really not all that bad, it just feels like total chaos compared to my usual routine. That’s the point though. In order to improve myself and move past current limits, I must first find them.

Here’s the real deal though. Once Blaugust is behind us, I think my post frequency will have to be adjusted. At least in the short term. I’m already a little behind on posts and only pushing through because of Blaugust.

In fact, I’m going to cut this short here because I have no idea where I want to go with it and I’ve got something else I would rather be talking about than my scheduling woes.

Y’all take care.

Humans, Reddit, and the Internet

So I was speaking to Magimos on the Blaugust discord channel about reddit on Monday. What I said has been bothering me just a bit, because I was speaking about those things as though they somehow make Reddit unique, and I don’ think I agree with that statement. What I said was:

It’s a decent resource, sometimes, but you have to be somewhat familiar with the weird sort of reddit meta to find most of the good stuff. It’s most notable problem is bandwagoning and occasionally witch-hunting, though most of the major subreddits have rules against it. […]

Reddit is a strange thing. For all the interesting things I’ve seen and learned there, there are just as many strange and twisted bits lurking in the shadows. It reflects humanity very well, I think.

The first major issue is that everything a human does reflects some aspect of humanity. That’s a pretty broad statement and reddit certainly isn’t uniquely human.

I’m also not sure I agree with my statement that bandwagoning and witch-hunting are a specifically reddit-related issue either. First off, I have no real evidence to back up an assertion like that. I cannot think of any specific feature of reddit that would explain a higher occurrence of this than we would get on Facebook or any other social network.

I have not reason, then, to think that this happens more on one social network than any other. It could be true, but that was based on my experiences with that specific network when I don’t really use any of the alternatives. It’s an inherently biased anecdote.

Cyber-bullying, which certainly includes the behaviors I mentioned, is a very real problem. One for another post, I think.

Y’all take care, and for the love of all you hold dear, be kind.


BlaugustBOnlylogoIn case you haven’t heard, we’re in the middle of an event called Blaugust. The goal is to simply promote and stimulate the blogging community by encouraging people of all skill levels and backgrounds to post. The official post can be found here and it’s never too late to start.

Blaugust – Staying Motivated

So this is a fairly strange topic for me to talk about because first and foremost I feel that everyone has different reasons for writing a blog. I cannot give you a reason to do it, if you don’t want to. You must find your motivation for your reasons.

I personally keep doing it because I currently enjoy doing it. I must enjoy it quite a bit too since I can always think of other things I probably should be doing instead, yet here we are. I really don’t have much better reason or motivation than that, but that’s me.

Now, I could leave it at that, but there’s this weird collection of satellite reasons that I started and continued doing it as well.

I can vaguely recall, now, the way it felt when I first discovered this particular outlet of expression. As an intensely private and somewhat reclusive individual, I didn’t really have much in the way of expression. When I first started, finding a way to direct my thoughts was a rather strong drug indeed.

That’s one of the reasons I keep doing it as well. It forces me to take things I’m thinking and feeling and render them in a more concrete and communicable form. A decent number of my posts are exactly that. This is no exception. It’s as much me analyzing my motivation as it is talking about it.

Something I’m less certain about is writing… ability? They say the number one predictor of skill or ability is the amount of time spent doing it. I’ve seen various studies and articles comparing tasks according to the “hours required for mastery metric.” This implies that the act of writing, blog posts or otherwise, somehow makes me better at writing. I’m not sure how strongly I feel about that.

Still, when someone compliments me on a particular paper or post, I have to ask myself how much of that compliment is due to this “practice” and how much of it already existed. Not that it matters, really, but there have been a few times where I received an assignment, not a lot unlike “here’s a topic, write 500 words.” Since that’s the general length I aim for with my posts, I have a “here’s a topic, write a blog post” sort of approach to it. It lends a level of confidence that I like.

Of course, I know I won’t be doing it forever. Everything ends eventually. I cannot let the unknown future prevent present progress. I spent most of my life in that sort of “analysis paralysis” and I’m reluctant to give it much room to move. There’s a time and place, but personal expression is neither.

Okay, good enough for me, class starts here directly anyway and I’ll probably go straight to bed when I get home. Those are some of the things that motivate me to continue, I suppose. So many other thoughts for another day.

Y’all take care, and be kind to each other.


BlaugustBOnlylogoIn case you haven’t heard, we’re in the middle of an event called Blaugust. The goal is to simply promote and stimulate the blogging community by encouraging people of all skill levels and backgrounds to post. The official post can be found here and it’s never too late to start.