Adventures in Punditry

First Virtual Economy Market Report Released

2007-09-23T00:35:00.000-07:00

As previously blogged, virtual economies, specifically the kind found in massively multiplayer online role playing games (MMORPG), are making large advancements. The science fiction MMORPG EVE Online is one of the leaders in advancing virtual economics (below is a sample screenshot of EVE Online, highlighting market data available for a certain piece of technology).

Not too long ago, EVE Online was the first video game developer to hire it's very own full-time economist, Dr. Eyjolfur Gudmundsson, promising he'll monitor inflation and markets. Earlier this month, Dr. Gudmundsson released his first 'market report'. In it, he provides an in-depth examination of EVE's mineral market (minerals are the basis for everything in EVE Online). His conclusion:

Overall trade quantity and volume has increased dramatically over the last 3 years and the price of minerals has fallen considerably due to increased mining efficiency through better tactics and improved technology. The price formation has also improved showing that price difference between regions is becoming minimal in Empire space and reflects only the time value of moving minerals in low sec. However, smaller population and the risk of piracy in zero-zero space results in less efficient markets with low volumes and great fluctuations in prices given an arbitrage trade opportunity for the brave entrepreneur.

This descriptive account has revealed several interesting facts which will warrant further examination in the future. Doing a wide scale comparison of prices in different regions, calculating implied travel costs and risk premiums for individual regions would be interesting for the professional trader who wishes to maximize his profits when margins are dropping. It will also be interesting to further examine exactly how the demand for capital ships affects the mineral market and to look into inventory numbers of minerals in order to see if traders are trying to manipulate the market by stockpiling and dumping minerals.

I applaud EVE Online's effort in collecting and analyzing it's in-game data. I predict we will be seeing more economists hired by online gaming developers as the next generation of MMORPGs are developed. Or even better, perhaps developers will start releasing full in-game statistics to allow economists to perform their own research. Macroeconomics is one of the few sciences where it is far too costly to experiment in 'real life'; large-scale virtual economies appear to provide the solution to this problem.

Jessica Hagy's Indexed

2007-09-23T00:20:00.000-07:00

Who would've thought simple Venn diagrams or relational graphs on index cards could prove to be so funny? In case you haven't seen it already, be sure to check out Jessica Hagy's blog Indexed. Two of my favourite include:

Stay tuned for her book Indexed, due out in stores February 2008.

Eat Your Happy Meal

2005-11-17T01:20:00.000-08:00

In response to a LTTE in the National Post:

Re: Young McCrusaders: refreshing or misguided?, Edmund MacLeish, Nov. 16.
Re: Eat Your Happy Meal, John Geiger, Nov. 15.

In Mr. MacLeish’s letter, he is correct in stating that our current public school system lacks in proper political philosophy education and should be encouraged outside of school, but actually implementing boycotts with real world consequences is best not left to children.

On the boy’s website, they state that the US doesn’t care about the software lumber dispute since Condoleezza Rice, in her recent trip to Canada, said that we were over-reacting. They seem to ignore the fact that the House Republicans have recently proposed to scrap the law and Mr. Bush supports repealing it. It appears Ms. Rice was correct.

Perhaps their retaliatory, anti-American thoughts should be forgiven. After all, if their government, with threats of diverting Canadian energy to China, thinks that sort of behavior is okay, why shouldn’t they?

Letter Published in The National Post on November 18, 2005

BCTF and their breaking of an "unjust" law

2005-10-20T01:51:00.000-07:00

The teachers, in their illegal protest, when asked what sort of message this sends to students respond with saying that they believe the law is unjust so they don't have to follow it. But what sorts of laws do many students find unjust? Laws such as age-limits on the purchase of tobacco and consumption of alcohol, and limits on novice drivers and other motor vehicle laws quickly come to mind. Now teachers, whom are supposed to act as role models, are encouraging students to disobey such laws simply because they are viewed as unjust in their own mind.

Letter Published in The Vancouver Sun on October 23, 2005

Martin-Layton Deal pushes the Liberal Party left of center

2005-04-26T19:42:00.000-07:00

Liberal Prime Minister Paul Martin and New Democratic Party Leader Jack Layton have arranged a deal to move $4.6 billion dollars of proposed corporate tax cuts in the budget to social spending. Canada's corporations are already much more heavily taxed then their counterparts to the south. This lack of tax cut does nothing to promote economic growth in a time where our economy is just starting to look prospective. It's hard to encourage companies to expand and higher more workers when corporate taxes are high. It also further alienates the center and right-of-center liberal party members and pushes the the party as a whole left of center. This proposed social spending is also coming from "expected" surpluses. It's one thing to collect less tax when you expect to run a surplus, and quite another thing to spend money before you collect it.

Link

Current Angus-Reid Election Poll

2005-04-25T23:10:00.000-07:00

Conservatives are still in the lead this week with NDP making gains.

What party would you vote for in the next federal election?


                   Apr. 24   Apr. 17   Apr. 10

Conservative          32%      35%       21%

Liberal               27%      28%       31%

New Democratic Party  21%      18%       19%

Bloc Québécois        15%      14%       14%

Source: Decima Research
Methodology: Telephone interviews to 1,000 Canadian adults, conducted from Apr. 21 to Apr. 24, 2005. Margin of error is 3.1 per cent.

Canada to Bono, "Leave us alone"

2005-04-24T19:38:00.000-07:00

It seems like everyone in the news lately is ripping on Prime Minister Paul Martin. Some of it seems well deserved, while some of it maybe less. However, the most annoying person of late to be ripping on Martin is U2's lead singer Bono. What's his grip? Apparently Canada isn't spending enough on foreign aid as Bono likes. That's right, our government, which we all pay taxes to, isn't spending enough of our money as Bono likes. Kind of odd since he's a millionaire on the other side of the pond, trying to tell average income earning Canadians how their hard earned money should be spent. Perhaps if Mr. Bono is so altruistic, he would donate all his income and assets beyond what any normal person would need to live on to foreign aid. Then maybe we'd be a little more willing to listen to his complaints. It would also probably help if he would stop traveling by limousine and private jet all the time.

Gun Registry

2005-04-23T14:17:00.001-07:00

I realize this is a little dated now, however, this remains one of my all time favorite political cartoons.

Videotron turns its back on subscribers

2005-04-23T13:19:00.000-07:00

"Videotron, a Canadian Internet Service Provider said it is willing to hand over personal details of its customers to the Canadian Recording Industry Association and doesn't understand why so many other ISP's would choose to fight it."

Link

It's nice that Videotron doesn't care about it's subscribers. Not even so much to try. If they don't understand why so many other ISP's choose to fight it, perhaps they shouldn't be in business. Personally, I like companies that value my personal information, not admit that they're willing to give it away before even asked for it.

My recommendation, stay away from Videotron. There's plenty of large ISP's (Rogers, Shaw, Bell and Telus) that are willing to put up the fight.

Missile Defense

2005-04-23T12:53:00.000-07:00

There's the ongoing debate in Canada about whether we should opt in or out of the US's missile defense system. Being a fairly liberal country, many Canadians believe that we should not go along with this system. My question to them is why not? The benefits seem to far outweigh the costs.

First, the Americans are willing to fully pay for this system. Initially, the only thing they're interested in is building a radar detector on our east coast (since it can detect incoming Atlantic missiles a few minutes faster then any radar on the US east coast). This translates into more jobs for the (seems to be) jobless east. If another federal government wants to spend money to make jobs there instead of our own, I'm all for it.

Second, people say this is the American superpower using their might to continuously try to control the world. Well, I hate to break it to these people, but the Missile Defense system will happen regardless of whether Canadians want it to or not. A couple million people from the north are not about to stop the US from getting its way, which leads me to my next point.

If we do include ourselves in this program, we have a little bit of say in what it does and is used for. True, likely not a lot of say, but if we opt out the US isn't going to listen to one word from us. Personally, I would like a rational Canadian voice in the boardroom of US generals when deciding future goals for this system.

And lastly, we have a small military. This is good for us since we're a pacifist nation, but there's a reason why we get away with a small military. We happen to have a very powerful neighbour to the south that would protect us in a time of aggression against our fair nation. We are freeloading off the US's military, not that I think this is a bad thing. However, one thing that would help us contribute back to the US is help them out with there domestic military needs when we can (i.e. Missile Defense). Canada-US relations have been very rocky as of late, and an effort to build up our relations could go a long way.

Video Games - A New Model for Economics?

2005-04-22T01:48:00.000-07:00

            When economists want to create complex models using people’s actions as inputs, they have a problem; it is very difficult, if not impossible, to continuously monitor every individual’s transactions in any given model. However, a new way to interpret human behavior may soon reach academia. Over the last half a decade, game developers have been building more complex economic models into games as many players have derived entertainment from producing and trading goods within massively multiplayer online role-playing games (MMORPG’s are worlds where thousands of players play the game online simultaneously together).
            One of the most interesting economic models in a video game lies within a MMORPG called Project Entropia. This futuristic sci-fi game has set a fixed exchange rate: 10 Project Entropian Dollars (PED) is equal to 1 US Dollar. When players initially set foot in this world, most will choose to make an initial investment in PED in order to further their skills in a chosen profession (be it producing, mining or hunting/gathering).
            The currency, however, is convertible both ways, so players can actually earn money playing the game through producing and trading goods, and through renting land that they may acquire. The game created a large media buzz last December when a player bought a virtual island in the game for 265,000 PED ($26,500 US). The player plans to recoup his costs through his exclusive rights to the taxation of mining and hunting activities on the island, as well as the sale of waterfront properties.
            Players in this game act in accordance with many assumptions currently used in modern economic models. Each player is well aware that their in-game goods and properties are worth real-world dollars, thus players act as maximizing individuals. Goods are traded in-game, via an auction house, or the ‘standing on the street yelling out your prices’ method.
An interesting event has been occurring over the last few months in the game. The media buzz about the sale of the island has lead to an increase in player enrollment, which in-turn has lead to an increase of total PED dollars. Thus, as theory would predict, the virtual world is experiencing inflation, and the players are well aware of this.
            Another MMORPG on its way to the market (it’s currently in its open-beta stage) is Faces of Mankind. In FOM, there are three types of factions you can join: government-enforcement agencies, outlaw gangs and corporations. The basic role of the government-enforcement agencies and the outlaw gangs is simple, the former, to uphold the laws, the latter, to break them. It’s the corporations in this game that make things interesting.
            The four corporations in the game are the main suppliers of goods. The capitalist state of the world is unregulated oligopolistic competition between these four firms. Examples of price-fixing, price-collaboration, and dumping are rampant in the different colonies in this virtual world.
            It’s interesting to note that although usually expected from rational firms, the corporations in this game are far from the expected Nash equilibrium (an optimal strategy, whereby the corporations reach an outcome to mutual advantage). By simply reducing supply, they could easily claim high market prices. It, however, appears that producing large amount of goods and gaining small cost advantages through economies of scale and then dumping the goods on the market has become the favored strategy, even though this outcome is not of a mutual advantage.
            These sorts of models, where every individual’s transactions are recorded and stored, could be of great use to economists in the future. By developing a game, with one of the primary goals being to create an economic model usable by academia, it would allow for economists to analyze how changing exogenous variables would affect the economy in real-time. Perhaps it’s time for economists to lighten up, play some video games and learn something about human behavior in the process.