Several months ago I noted that a virtual world, Eve Online, had hired a real economist. Here is his first report. What makes virtual worlds important for economics is that for the first time ever, macro-economists will be able to do experiments. I predict that we will see some very interesting experiments in the near future. In the meantime here is an interesting bit from the report – the laws of supply of demand work in many worlds.
EVE consists of more than 5000 solar systems in 64 regions. The solar
systems are connected in a complex web allowing for goods to be moved
from one end in the Universe to another. Pilots have to be careful
because in low sec and zero-zero security zones there is always the
danger of being attacked by gangs of pirates looking for easy prey….
EVE is so large it is difficult for anyone to grasp what is going on
in all the regions at any given time. Yet the markets seem to be very
efficient at distributing information resulting in symmetric prices
throughout Empire space (and even further). This is clearly visible in
figure 11 which shows the price for zydrine in three different Empire
Examining these time series in more detail reveals the price
difference between regions is declining over time and price
fluctuations within regions are also decreasing. This can be seen as
evidence for increased efficiency in arbitrage trading over time
resulting in symmetric prices and an overall more efficient market.
Thanks to Ambrose for the pointer.
Addendum: Be sure to check the comments for insightful details from Mike K., solarjetman and others.