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CCP Economist On EVE Online's 'Pure Capitalist' Market
by Mathew Kumar, Chris Remo
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August 26, 2008
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As economists struggle to come up with answers to the mortgage meltdown and credit crisis, developer CCP's lead economist Dr. Eyjolfur Gudmundsson oversees a very different, yet surprisingly complex, kind of financial market: the persistent, single-server online world of spacefaring MMO EVE Online.
"By 2008, the market has become completely player-driven, and that's where I came in," says Guðmundsson during an Edinburgh International Festival session. "The whole economic structure has become so complex, the data so vast, that a specialist was needed."
He has 15 years of non-virtual experience in his field, and holds a PhD from the University of Rhode Island. When hired last year, he described himself as "a sort of Alan Greenspan for...EVE Online," referring to the United States' former chairman of the Federal Reserve. Players, designers, and CCP executives alike benefit from real economic analysis of the in-game world, he argues.
After all, Gudmundsson says, EVE is a "pure capitalist" market -- its economy is emergent, not constrained to a fixed state like those of most MMO games. It was not always that way.
Earlier in the game's life, non-player characters participated in and partially drove the economy, as in nearly all such games. But as the population grew -- and, crucially for the sake of a robust economy, remained within a single server environment rather than being fractured into several realms as with -- the player based reached a critical mass that allowed the market to become entirely self-sufficient and player-driven.
"The number of possible one to one relationships grows like the square of a population, so a population of one thousand has a potential for one million unique relationships, while a population of 100,000 has a potential for 10 billion," says Guðmundsson, "and that's why it's so important that EVE is on a single server."
Corporations, EVE's equivalent of guilds, have long been a staple of the game. Though they can operate on a massive scale, and can be as organizationally intricate as their real-world counterparts, they proved insufficient to support the increasingly complex needs of the world. Like a real governing body might, CCP responded by enacting practical allowances to solidify constructs spurred by the "citizens" themselves.
"By 2005, with 50,000 players, some began to feel that corporations were not enough, so they themselves implemented 'alliances,'" which are larger confederations of corporations, Gudmundsson says. "[They] asked us to implement it officially, which we did, and they have since become the dominating political institution in the game. So you could already see emergent social structures with only 50,000 players."
EVE's population now exceeds 245,000. Guðmundsson calls it a "nation state, with all the institutions that come along with that." Players create political influence maps that illustrate political influence geographically -- much of that influence the result of diplomacy rather than by warfare.
Examples of economic flux are extremely similar to those that occur in the real world. At one point, increased supply of a certain mineral caused a considerable price drop. To try to balance it back, developers planned to make the mineral more difficult to obtain, implementing the change on the game's test server. When players caught wind of the plan, a speculative boom erupted, sending prices sky-high -- and then back to stability once the change was made permanent and the market settled.
In another instance, the mineral Tritanium was in enormous demand, and thus extremely expensive, so the developers enforced a price cap. "I as an economist didn't like the price cap," says Gudmundsson, and the cap was removed. "The market went berserk!" he says, with "people buying and selling waiting for the price to go up." Contrary to expectation, the price dropped -- just as in the real world, economic behavior does not always function like clockwork.
This year, CCP sanctioned a Council of Stellar Management, an elective voting body comprised of EVE players who had to campaign for their slots. Of 64 candidates, nine were elected (seven males and two females, roughly matching the population's gender makeup, with an age range of 17 to 52 years). The group debates a wide range of in-game issues, including such close-to-home topics as using ships as suicide bombers.
As much as possible, CCP prefers to leave EVE's markets to their own devices, entrusting them to the players.
But the development team still has to tweak things, and a trained analytical eye can be useful to that end. "My role is to ensure that there is a certain level of stability," concludes Gudmundsson, "and that no changes are made without understanding the economic impact."
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The only beef is that this game has enormous wall of entry, requires tons of *labor*, and lack of individual personality. I hope they drop *labor* part...
If the demand increases, price would tend to increase until the more difficult and expensive methods of aquiring the resource becomes economically feasable. If demand drops for some reason, then suppliers will stop aquiring the more expensive sources as it becomes econimically unfeasable.
If even the most expensive methods of obtaining a resource are being fully utilized, then a new method of aquiring the resource can be provided as a research or new discovery that allows more or the resource to be aquired for those willing and able to spend the cost. The key being that each new source should be harder or more expensive to aquire than the previous one, allowing the economy to reach a break even point.
I've personally been playing EVE now since its launch in 2003 even though I wasn't lucky enough of getting to participate in the Beta.
Industry in EVE is a tricky thing at best and can take years to master. First you have to thing about the tech levels which with the comming patch (10. Mars) will be divided into 3 levels; Tech 1, tech 2 and tech 3. Each of these are increasingly difficult to produce and require more exotic elements thus making them increasingly more expensive but better in all regards then theyr tech 1 or even tech 2 counterparts.
If I only consentrate on tech 1, which is the easiest type of hardware and ships you can manufacture, then the process is pretty simple. It only uses minerals which of are only 7 types, each of being increasingly 'hard to get'. To get these minerals you can either: Mine ore and refine it, do missions and refine loot which is droped in the mission (modules and such), go PVP and loot the ships and refine or blow up a cargo ship carrying minerals or Ore, Steal Ore/minerals from miners or go kill some Drone NPC's which drop compounds that you can refine into minerals.
Now the EVE universe is made up of 5500 systems roughly, and each has a security rating which does a number of things. The types of astreroids you can find in each system is dictated by the security rating as well of which of the four Empires own said system. The further down you go the security rating the more valuable ore you find but at higher danger. And offcourse the ore isn't in as much a supply as the high security ore. Since all astreroids have a specific number of ore in them you can mine out a belt and then have to wait untill it reaspawns. This can take from 1 day to a week in some places. But remember that the loot drops are always consistent, that is you can always do missions and get somwhat the same amount of loot. But you need to do more difficult types of missions to be able to get more loot.
So you see that if you want more of one mineral that is rare and needed in almost all types of manufacturing (Megacyte, Mexallon, Noxcium) then you have to take the risk involved in getting more of it fast or do less profitable things (lower lvl missions with less loot, mining less yield ore) more often to get the same amount. And this is what makes the price go up and down.
If an Alliance needs minerals to be able to build Capital ship components which are used in the construction of Capital ships then they need huge amounts of minerals plus other things. Since Tritanium is used in almost all (95% off all manufacturing) it is always in constant demand. But when a huge project or many huge projects (Station manufacturing, Titatn production and such) are underway at the same time as all the thousands of smaller manufacturing projects for cruisers, frigates, battleships, battlecruisers and all the other 20+ classes of ships there are in the game there is going to be a serious strain on the ready supply of minerals in the game. This pushes prices up since there is higher demand but only a certain amount of ready amount ready of minerals. This does not however mean that there aren't enough minerals in the game. It just means that we need more miners, mission runners or the like to create these minerals for us.
This is what EVE is all about. A PVPer can't live without the Carebear, and the Carebear can't live without the PVPer.