An Economical Perspective

by Teresa Lynch

Isaac’s WoW avatar.

In 2006, Isaac Knowles was working night shifts in a retirement home during the summer. “To pass the time at night…I bought WoW [World of Warcraft]. And I started playing and I was terrible at it. But, I loved it and I played it and it was amazing. I had never played an MMO [Massive Multiplayer Online game] before and it was my first virtual world,” he says. Although Isaac had played some console games before in his earlier youth, he hadn’t considered himself a gamer until that time. That was when his love for economics collided with his newfound hobby.

“Two weeks into playing WoW, I went to the auction house and I thought ‘wow – there’s a lot of information here, I wonder if anyone’s ever studied this before.’” After a bit of digging, Isaac found Ted Castronova’s work, though he admits he was joining the bandwagon for virtual economies a bit late. An economics project later that year kick-started what would ultimately become his program of research, although Isaac says that many “mainstream” economists don’t quite share his captivation with virtual economies. Fortunately for him, there are folks in our department who do.

An example of a WoW Auction House.

An example of a WoW Auction House.

Isaac describes the type of research he does as video game telemetry – tracking player behavior using very large data sets and sophisticated statistical analyses. Big data sets such as the type Isaac utilizes can be terabytes in size and composed of lines of data numbering in the millions, billions, or even trillions.

In this kind of work, Isaac says that unlike more traditional experimental settings (which are controlled and designed) naturally occurring events allow him to theoretically assume causality. “You have to look for opportunities for quasi-experimentation. If I’m watching World of Warcraft economies and I see a server go out, that’s a random – no one’s expecting a server to go out…that’s a major disruption. And, we want to exploit disruptions to the normal play and that’s how you produce the most interesting findings.”

When asked about what he sees himself branching to research in the future, Isaac said “I’m really interested in learning more about the business side of games. It’s a unique market. It’s got some weird competitive aspects to it. I’d love to learn how we can use information from game economies to actually tell us about the success of a game company. If I can use your game economy to predict whether or not your games is successful or your stock price…I’m really interested in doing that.”

Additionally, Isaac is interested in why people play games and what it means to enjoy gaming – possibly because of his enjoyment that let to finding his niche area of research. “One of the great puzzles from the economic perspective is that scarcity is fun. In games, you don’t like to have everything, supposedly you play games to be challenged. What we take to be a standard assumption outside of the game world – in economic theory – we have to toss out the window with games and that leads to a lot of perplexing questions.”

Of course, as Isaac says, “The great irony of studying video games if how little time you have to play video games.” But, he makes time when he can to play because “playing games gets [him] thinking about games, in ways [he] never did before…it makes you think about how complex it all is.”

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