Second Life and Lego: Part 1
Second Life is a pretty well known “game” by now. I put “game” in quotation marks since it really is more like a second life, or at least a significant extension of one's first life. Its in-game freedom enables players to simulate real life actions, modelling the real world, and giving us more data for analysis – much like creating a whole new country from scratch.
Of course, there’s a key element which makes this information meaningful: realism. Realism does not come only from the ability to perform a wide range of actions, but also from the personal importance given to a situation. After all, actions speak louder than words. This importance can arise in a couple of ways.
First, there is money. As poker players know, playing with fake money and playing with real money are very different. The Second Life currency of Linden Dollars can be changed into US Dollars. This means that when Linden Dollars are at stake, your money is at stake. Meaningful information is revealed through these Second Life actions. (Furthermore, since Linden Dollars are subject to supply and demand in the same system as real world currencies, we can gather data on effects on the currency itself.)
Alternatively, emotional attachment can make decisions important. Even if money isn’t directly at stake, we still try to get the most happiness possible out of our resources. And if I might say, gamers are pretty likely to become personally invested in such games. Remember that markets arise out of the idea that we’re trying to get the most happiness we can, and that money is really just a representation of resources, so these two possibilities aren’t that independent.
Second Life is particularly interesting because virtually all of its institutions have come from its residents, much like how markets are created in the real world. Many organizations are involved in not only this virtual world, but many others. EVE Online even hired an economist to gather information about their economy!
As the article suggests, in virtual worlds we can make experimental-type tweaks to see the results, which we could not do in the real world because of the magnitude of effects. While masses of people could lose their jobs due to bad central bank policies, a micro-economy like that of Second Life stands to lose relatively little (although the makers of Second Life aren't going to try and collapse their economy any time soon).
Economists dealing with macroeconomic issues could profit especially. Macroeconomics is notably problematic when distinguishing correlation, causation, and coincidence; a smaller and more transparent economy would help immensely. We could analyze changes in, say, the money supply, and try to figure out the effects on the Linden Dollar’s exchange rate in order to confirm or refute a hypothesis.
The information gained would be a boon to economics, and when applied to the real world, we could cultivate all sorts of wealth. Cool, huh?
Join me next time when I talk about a Seattle school’s Lego society.
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