The first economic study of virtual world economies and markets is by Castronova (2001), involving the virtual world of Norrath. At the time, Norrath was the most market-oriented virtual environment. Today, Second Life is the most widely covered virtual world in the business press, with numerous S&P500 companies, including IBM and Sun establishing presence online. Other examples of business applications in virtual worlds are hotels that allow their customers and business partners to walk through the virtual hotel, thus providing useful and inexpensive feedback; clothing companies that enable customers to try out clothes and furniture based on their avatar’s specifications, as well as intercultural sensitivity simulations (Piller and Salvador, 2007).
Over150 educational institutions own land, hold events or collaborate in Second Life. Companies and universities use it to test concepts and designs, conduct work meetings, seminars, lectures, recruiting, advertising and any kind of collaborative activity. It has a functioning and active stock exchange and numerous businesses that sell virtual and real products and services to residents. Second Life users come from all walks of life and are there for various reasons, including socializing and role play. Many of the residents spend a sizable portion of their time in the virtual world, own or rent virtual real estate and many have virtual jobs.
Often when people find out that I study economic behavior in Second Life
they have the initial impression that somehow this is not as serious a
research topic as some of my other research. They often ask: "How do
you play this game?" and "How do you win?"
Virtual worlds are by definition not games. They are persistent state environments.
That means that they exist whether or not you are there, which is
different from a game. You can occasionally play games in them and some
people do. In some of the more adventure oriented worlds
(WoW and Everquest), you can go on adventures. But at the end,
you exist in these worlds with all that this entails. You work,
socialize, invest, and yes ... play (when you play games, hopefully
these are dictator, ultimatum and trust games-- they are fun!).
In
Second Life, which is the only world I truly studied, there are
relatively few games (although Poker is technically a game). There is a
lot of socialization (bars, restaurants, dance clubs, resorts),
shopping (lots of shopping malls), sight seeing (you can go to Rome,
Paris, Tokyo, ...), investing (there are active stock markets and lots
of profitable businesses), running businesses, various interest and
discussion groups, many real-world corporations (I recommend
visiting the
Sun campus) that find this mode of interaction useful, many educational
instituions (including, very likely, your own university), and many
other useful activities. It is a mode of interaction and
communication that is more fun, more efficient (teleporting is fast),
and richer than other modes. So it is not surprising that it is
catching on. But reducing it to a game is totally missing the point,
and hopefully this little discussion made it clear.
When I make
the claim that studying economic games or economic behavior in Second
Life gives you access to a real-world environment over which you
have some control, people often get argumentative. Most people agree
that the laboratory can be an seen as an artficial setting, thereby
distorting behavior, but they don't think that a fantasy world is any
more "real" than the lab. You will never convince these people. Don't
bother (unless they are refereeing your paper, in which case do
bother). But any of the major virtual world has millions of
residents. These residents spend much of their real time and real money
there and have true friendships there. To them, this is real, just as
Facebook or MySpace are real. If a referee is argumentative you might
want to try and make that point somehow.
Researchers in the
field:
Robert Bloomfield is the most passionate and active advocate of virtual world research in experimental economics. He is an active author on Terra Nova which is a blog about virtual worlds. He has written the very influential "Worlds for Study: Invitation - Virtual Worlds for Studying Real-World Business
(and Law, and Politics, and Sociology, and....) "
Louis Putterman has studied the trust game on Second Life.
Martin Spann has studied the dictator game in WoW
John Duffy has provided the most elegant critique of Second Life experiment, titled Trust in Second Life. You should not run Second Life experiments without reading it.
Thomas Chesney, Swee-Hoon Chuah and Robert Hoffmann wrote a paper titledVirtual World Experimentation: An Exploratory Study which examined dictator, ultimatum, public good, guessing, and minimum effort games in Second Life.
Marina Fiedler
is my co-author for all my Second Life works. With the exception of a
few sessions I helped with or monitored, she ran everything.
Other common questions/critcisms
1. Do you pay fake money for virtual world experiments? Are the stock markets make-believe?
No. Linden dollars are convertible to dollars in a real exchange
market, with price changing by the second (this is not an exaggeration)
and based on demand and supply. As far as I can tell, there is no fake
money. Stock markets in Second Life tradeshares in companies that earn
real money.
2. Can you run experiments for less money on Second Life?
Yes you can. Since the average salary on Second Life is lower in dollar
terms and since subjects don't travel physical distances to get to your
lab, you can get subjects for less money. If you or your students
are low on funds you (or they) can get data for cheap. However, if you
truly want to compare results to the lab or want confidence in your
results, you probably want to pay a comparable amount to the lab in
real dollar value. Remember that the field of Experimental Economics is
based on real economic incentives. Balance these considerations
accordingly.
3. Can subjects lie to you about their identities or misrepresent who they truly are?
Of course they can. They can also do so in surveys outside of the
virtual world, but we still find these surveys useful. We just treat
some answers with caution.
4. Can subjects do tricky things they can't or won't do in the lab?
Yes. Subjcts can try to create multiple avatars and pretend they had
never participated before. Subjects can try to contact other subjects
through ways not visible to you in a way that will mess up your
results. There are a lot of other bad things subjects can do. As you
gain experience with running experiments in virtual worlds, you will
anticipate many of these things and will devise ways to minimize or
eliminate them. As the field matures, these techniques will
become standard. If you want to communicate your own technique on this
page, I would be happy to post it here. At the end, this environment
involves some loss of control, but I think it is well worth it.
5.Do people in Second Life engage in inappropriate R-rated behavior?
People do, but not during the experiment. Second
Life restricts such behavior to restricted areas in the World.
If you have additional questions you have encountered please send them to me.