Studying Real-World Business in Virtual Worlds

Hello, Terra Novans!

I am delighted to have this opportunity to post some of my thoughts on TN, and look forward to reading your responses.

Let me start with a little self-promotion:  download Worlds For Study—Invitation, subtitled “Virtual Worlds for the Study of Real-World Business (and Law, and Politics, and Sociology, and…)”.  In that paper, I spell out my vision to create a platform on which researchers and educators can create serious games for studying real-world business and related topics.

                                    

That vision might sound familiar (at least to those who have followed academic discussions of how virtual worlds can be used).   But my goal seems to differ from what others are proposing.  So this first post will place relatively heavy emphasis on what I am not trying to do. Let me know if you think my impressions are correct, and what my apparently unusual focus might mean for structure and success of WFS.  (read more….) 

I want study the real world, not virtual worlds

The founders of Terra Nova (Ted, Julian, Dan and Greg) have written fascinating articles about how to think about economics, crime, intellectual property rights, and freedom in virtual worlds.  But my goal is not to study virtual worlds in their own right.  Instead, I want to use virtual worlds as a laboratory in which to examine the law and economics of the real world.  Is this impossible?  I don’t think so.  Virtual worlds are not so different that we can’t draw clear lessons from them to the real world.  I agree that it is hard to study the airline industry in Second Life, where everyone is teleporting or flying as they please….but if we had our own platform, we could give avatars and goods both mass and size, so that transportation is expensive. 

I am an experimentalist, not an econometrician

In his hugely popular article on the economy of Everquest, Ted Castronova approaches virtual worlds as a traditional empirical economist, observing what occurs “naturally” in the virtual world and drawing conclusions.  In contrast, I want to create new worlds for controlled experimentation. To me, this is a tremendous advantage of virtual worlds.  After all, it is hard to experiment in the real world.  (The SEC is unlikely to settle the dispute over insider trading rules by saying “insider trading is legal for these randomly selected firms, but not for the others.”)  But it would be possible to create one world in which insider trading is legal, and another in which it is not.

I am primarily interested in the suits, not the talent.

In many industries, people distinguish between “the suits” and “the talent.”  The talent are the artists, architects, engineers, programmers and musicians who design and create the stuff that the suits invest in, package, market, distribute and compete over.   My impression is that the vast majority of educators in Second Life (and there are lots of them) focus on the talent.  Then there are a lot of suits, but they are not particularly interested in education—they are too busy making trying to make money.

But virtual worlds are ideal for studying suits, because they have robust economies, even when game developers don’t want them, and because you can capture all of the data on how the suits interact to allocate capital, make decisions, etc. 

Are there really so few business educators in SL, or have I just not found them?

                                                                                                                  

I want structured RPGs, not unstructured ones.

Although you never hear the term “serious games” in academic circles, experimental economists are essentially serious game designers.  (Vernon Smith earned the 2002 Nobel Prize in Economics for “for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms.”  Would he have gotten the Nobel Prize if he said he was designing games for people to play?)

But it doesn’t look like there are many people in the virtual world community who want to create a platform that would support serious games. As I look through the landscape of virtual worlds and middleware platforms, I see

Neither model will work with academics, because academics want control, and lots of it, whether they want to conduct games for education or research. I would argue that Smith won the Nobel in large part because he thought so carefully about how academics could impose controls to test economic theory more carefully. Experimental economists have basically created( very) tiny structured RPGs for research and teaching.  So the unstructured games ‘Lion’ games aren’t going to be very popular among those who are closest to bring current research and teaching practice into virtual worlds.

Structured RPGs allow lots of control.  But there really isn’t a way to get large numbers of academics to play someone else’s game.  Everyone is going to want to create their own, to address their specific research question, to teach a favorite topic their way, or to meld the details of the game to their textbook.  So what is needed is a platform that makes it relatively easy for academics to create their own RPGs within virtual worlds.  Think “World of Bizquest” where any academic can set up their own quests and dungeons (instances).  The academics would be demi-gods who could create content, but the students/subjects would be players with only limited ability to do so.  Something like this (described in WFS-Invitation):

Now, maybe they would earn inworld currency for their performance in the dungeon (which they could use as they pleased in the larger persistent world), but experimental economists would simply pay participants cash.  Since players are not coming out of the dungeon with an all-powerful Vorpal Sword of Ludemia, I don’t see much interference with the economy of the larger world.

Is this simply impossible?  Do Active Worlds or Multiverse provide an answer? 

Tying it together

OK, I have come right out and said it: I am limit limiting my interest in virtual worlds to what they can tell us about the real world, rather than emphasizing how interesting they are in their own right; I want to control those worlds to run experiments, rather than letting people do as they please and observingt the results; I want to focus on the suits instead of the talent; and I want to create structure in RPGs. 

So some final questions for Terra Novans:  am I just too Luddite, conservative and unimaginative for virtual worlds?  Am I describing a valuable niche product that will blend well with all of the other far more outré directions being taken by those with broader vision?  Do others share my interests?


Comments on Studying Real-World Business in Virtual Worlds:

Timothy Dang says:

Howdy-

I'm going to reply partly to what you say here, and partly to what's in your invitation paper. I'm still trying to figure things out--I think my reading of your project is colored by my research desires, and so I might misidentify things as problems which are actually exactly what you want.

Mostly your identified interests above match my own (and, honestly, I believe Castronova's as well):

"study the real world"--yep; "experimentalist"--me too

"interested in the suits"--Not actually sure what you mean here. I'm interested in economies, and participants in the economies. I've never been focused much on accounting and finance, which might be why I don't particularly make a distinction between a "suit" and someone else who's participating in the economy.

"I want structured RPGs"--Here's where I believe what you describe (here and in your paper described as "bounded games") diverges from the points of interest to me. It seems to me that by deliberately removing persistence as an aspect of the game in question, you lose most of what's valuable about VW research, while still taking on some of the weaknesses of VW research as opposed to traditional laboratory experiments (and there are serious weaknesses).

One aspect which can be seen about VW's as opposed to standard laboratory games is their complexity. But this is fairly incidental. The core of what's interesting is that in a laboratory experiment the game in question is isolated from context. That's not necessarily bad, but it's only one way to look at a question. For instance, a tragedy of the commons setup is likely to play much differently in the laboratory versus put into the context of a persistent society. For your interests, putting different reporting rules into a true PW could affect the price of pixie dust as players realize that pixie dust is a great place to hide assets.

This difference also gets to your suggestion of using traditional laboratory induced valuation. Again, for most purposes, the home-grown tastes of MMO players for their +32 Blaster of Zotting makes for a "truer" economy than arises when a researcher tells someone "if you acquire a BoZ, I'll pay you $5".

One other thing struck me about your paper (not mentioned here) is your desire for physical fidelity. This is a place where I believe one can cheat in world design. Many players will keep their minds in the game fictions, but researchers should not. A house in SL which can be replicated at zero cost should be thought of as akin to an MP3, rather than a house. A "bind on equip" axe in WoW is more akin to human capital in RL than it is to a physical axe. Realistic travel time are likely to be irrelevant to most questions you or I would want to research.

So, I guess this brings me to this. By no means do I want to talk anyone out of doing VW research. However, it doesn't sound to me as if you really want to do VW research. It sounds as if you want a platform for complicated laboratory-style experiments with a ready pool of subjects. That sounds extremely valuable, but I suspect it's a different thing.

I hope I'm wrong ;) !

Posted May 31, 2007 9:30:33 PM | link

Douglas Thomas says:

My first impulse upon reading this is to wonder if you haven't managed to strip away just about everything that is interesting about virtual worlds. In my own work, I find the emergent properties of play, community, managing contingency (ala Dr. Malaby) to be the most fascinating thing about these spaces, which seems to be precisely what you want to do away with. The most interesting things happen when players wrest control away from the devs or create independent spaces for negotiating the meanings of games.

I have also found that in many cases (though not all), people play with identities and behaviors in virtual worlds that they don't necessarily engage in in RL. The point is to do things you either can't or never would do in RL.

Finally, I am not so sure the borders you want to enforce between inside and outside or virtual and real exist in the way you suppose. The lines between these spaces are blurry and complicated (as TL and others have pointed out)

It seems like you want to create virtual labs for experimenting and controlling , which I think has very little to do with virtual worlds. One thing to be wary of. If players sniff out that you are experimenting on them, they are likely to do everything in their power to undermine the experiment or, even more likely, set goals for themselves which are outside of your control (e.g. selling as little as possible, alienating customers, or trying to make the bots do things they shouldn't).

Anyway, you lost me the minute you wrote "I want to control those worlds to run experiments, rather than letting people do as they please and observing the results." I think when you start thinking that way, you miss all the innovating, creative, and amazing things that players do and that gamer culture brings to virtual worlds.

I also hope you qualify the results of your experiments with a disclaimer saying "This is exactly like real life except a) you can't die b) the money isn't real c) you are completely anonymous d) there are no significant or lasting consequences for your actions and e) you can exit the community at any time with no cost or consequences. But other than that, it is *exactly* like the real world."

Posted Jun 1, 2007 12:48:28 AM | link

Michael Hough says:

It does seem like a natural place to do experiments: so many of your thought experiments take the form of games and toy worlds anyway.

Tim has a good point, though. Players will come to value things in the game on their own if you give them good enough ingame reasons to. (I think it would be hilarious if people started selling your experimental foozles on eBay.) Similarly, people enjoy discovering the rules of a new world (and, yeah, how to game them) so getting people wouldn't necessarily be a problem. If it's fun. Even professionals have a hard time delivering on that one, and it's their primary focus.

I'm not as concerned as Doug about random and arbitrary rules changes taking all the joy and serendipity out of virtual worlds. It already happens! It's not some dude in a lab coat who makes an adjustment to Paladin healing and then jots down on his clipboard how raid composition changes, though cynics would retort that World of Warcraft had its joy and serendipity sucked out a long time ago. Ha ha!

And I think when push comes to shove, play play beats out identity play. Not completely, of course, but underneath the pointy ears almost everybody is role-playing homo economicus.

Posted Jun 1, 2007 4:07:04 AM | link

Ola Fosheim Grøstad says:

Do you really need a 3D real-time engine to do this? Can't you create a web-based game and achieve the same goals?

Posted Jun 1, 2007 7:08:51 AM | link

Robert Bloomfield says:

Thanks so much for several detailed and thoughtful comments so quickly...this is exactly why I am happy for this opportunity to be a guest blogger on TN. I don't have time to respond to everything right now, but let me make a few points. (I hope my weighing in doesn't somehow signal the end of comments on this post. Keep'm coming!)

A key point running through all of the comments so far is Douglas's concern that I may have "managed to strip away just about everything that is interesting about virtual worlds." Timothy also concludes that "it doesn't sound to me as if you really want to do VW research. It sounds as if you want a platform for complicated laboratory-style experiments with a ready pool of subjects. That sounds extremely valuable, but I suspect it's a different thing."

I actually agree with both points. I was at Linden Lab yesterday, and heard about all sorts of fascinating user-created content on the horizon (more on that in another post). But even if WFS uses only a small portion of the potential of VWs, and isn't of interest to everyone, I will view it as a success if it give business academics a new and wonderful tool. "Extremely valuable" is good enough for me! (I will deal in another post with concerns about how reliable inworld results would actually be.)

I would also like to respond to Timothy's concern that "by deliberately removing persistence as an aspect of the game in question, you lose most of what's valuable about VW research." Actually, my hope is to make extensive use of persistence in WFS. However,much of that content will be related to commerce.

For example, contracts between parties, scripts that process and report information, and scripts that regulators use to control behavior are themselves persistent goods that could be user-created content. These could be used to allow the "arms race" that often arises when, for example, the IRS sets new laws, business find ways to arrange their affairs to avoid taxes, so the IRS responds, etc.


Finally, Ola wonders whether my proposal would actuall need VW technology, rather than doing it on the web. I suspect that by the time we sort out all of the other issues, there won't be much difference. My understanding is that Ogoglio already makes the distinction between VWs and the web pretty murky.

Posted Jun 1, 2007 8:21:41 AM | link

Ola Fosheim Grøstad says:

Well, my wondering was more this: What is the advantage of a real-time versus a turn-based world? Seems to me you get a lot of increased costs without any real benefits (unless you want to force players into making rash decisions)?

You can create a multi-user lunch-break-virtual-world today using Flash and a webserver. Or even using basic web-technologies (e.g. Planetarion). That would make it much easier (faster and cheaper)to implement advanced logic which you can change on the fly. And you would increase your chances of getting a large sample with a more representative demographic spread since access would be instant.

Just curious about what the advantages are.

Posted Jun 1, 2007 9:37:43 AM | link

Edward Castronova says:

I think you can use game worlds to find out important things about the real world. You can use a rat maze to find out important things about mammalian cognition. All that matters is the proper match between the question being asked and the experimental environment. Could I use LOTRO to explore how Amoco will respond to the risk of war in Iran? No. Could I use it to explore how profit-making firms respond to changes in political risk? Absolutely.

Robert is looking to explore some very specific things about contemporary financial markets. There aren't any worlds that have those kinds of markets in them - yet!

Posted Jun 1, 2007 3:36:00 PM | link

Tom Hunter says:

One of the things I love about Terra Nova is that people actually read the papers before they start commenting. Not so on some of the other forums I participate on.

A few comments:

If your really interested in the suites you may be creating something that has value to them. I also see the current bias in favor of the talent in current discussion on this site, in the games for change community and in the serious games and games for health communities. I see it in your proposal as well (we are all sinners here) in that you make the suggestion that this be built by a (if I remember the line correctly) corporation, possibly not for profit. Though it is possible that your saying that because you know the reading audience is largely academic.

When I look at proposals for this sort of more serious use of game technology I see a bias toward academic projects and relatively little cross fertilization between the academic efforts and business outside of academia.

In medicine many research project lead to the creation of companies, or to the technology moving into commercial applications. The same is true in IT and many other fields. In many cases the research project starts in academia with the intention that it eventually turn commercial. The Federal Government and the Commonwealth of Massachusetts both have special government programs to assist in this process. Many other states do as well, but I live in Massachusetts so I know about the ones here.

Where are the similar projects coming out of games? Dr. Castronova has one, he has been an advisor (maybe still is?) to www.seriosity.com/. How many more are there? How many should there be? Probably lots more, but until we give a bit more value to the suites it will be difficult to get things going, and of course the talent loses out as well because (in this definition) the suites are the people who turn the creations of the talent into cash.

I will suggest that a properly built version of this platform could be hugely valuable to business in a number of ways. That in the process of building value for business you will be forced to build interesting experiments. Finally the data from these experiments could be of great value for academics.

For example you could recreate the incentive system that caused ITT to sell classified night vision equipment to the Peoples Republic of China. They new this was illegal, did it anyway and were fined $100 million by the US government. There is an argument that a game based system that helps ITT avoid a similar situation in the future could be worth millions. Since finding the key factors takes multiple runs of the model (game) with different variable you effectively have a big experiment going on while you create substantial value.

We are building a game designed to assist behavior change in Type II diabetics. We plan to accumulate a lot of data and sharing it with academia is part of our business strategy. It the ITT case we want to use variables within the game to discover which variable caused the behaviors leading to the sale and fines. In the diabetes game we want to discover which variable within the game cause the greatest change in diabetes management related health. In both cases right answers to the question generate savings, in the ITT case savings for either ITT or its investors, in the diabetes case savings for the medical insurer.

This is the creation of significant economic value, which justifies significant budgets. Significant budgets could enable better games (though God knows they don’t always) and more rigorous research as well.

So I would say study the suits, but start by thinking of a study with an answer so valuable that the suits will spend a lot of money to get it.

Structure is a natural outgrowth of interest in the suits, they will want it. I do think you need a different sort of structure from WoW. Ola has an important observation that I agree with, I would not reject turn based play out of hand. A corporate environment is not conducive to spending a long period of time focused on a single task, no matter what it is. If it was Picasso would have had a corporation, not a studio. (Damien Hirst does not count.)

I also think your missing a great opportunity if you focus on academics. Nick Yee’s work is interesting in part because he is gathering information from humans, not academics. If you can build something with commercial applications in the workplace you can get a very interesting data set.

I think much of Douglas Thomas’s post is a red herring for a project like the one you propose (sorry Douglas) but he gets at something of great importance in his last paragraph. If a game is built that fails to address the issues he is concerned about the outputs will be garbage, and I think many people would build exactly that experiment because of a lack of game design experience. As Raph Koester said during his address at games for change last year “there are a lot of really bad games for change.”

Again bigger budgets are part of the answer, because then you can hire talent. But so is the team you send out to crack the problem, if it does not have its own fair share of suits then the result is very likely to miss the mark.

Creating something like this could be of great value to a broad array of academics and suits. Good luck with it.

Tom Hunter
Compass Interactive Therapeutics

Posted Jun 1, 2007 3:47:07 PM | link

Douglas Thomas says:

@Tom: "I think much of Douglas Thomas’s post is a red herring for a project like the one you propose (sorry Douglas) . . . ."

Well, I took him seriously when he asked "am I just too Luddite, conservative and unimaginative for virtual worlds? Am I describing a valuable niche product that will blend well with all of the other far more outré directions being taken by those with broader vision? Do others share my interests?"

And my answers would be Yes, No, and No.

Colored fish aside, I think my post was responsive to those issues. I think the project is conservative and unimaginative that does not blend well with the broader vision many people working on VWs have.

Not saying anyone else has to agree, but the question was asked. So I answered it.

I tend to think that most of what is interesting that happens in VWs is co-created in the virtual and physical worlds at the same time, not a product of transfer between them. So the question for me is a tautology, a bit like asking if how people play football can teach us anything about sports played with oblong balls.

There is some equivocation here too on what you mean by games. I am not sure that virtual worlds are *necessarily* games. But that is another post/thread/discussion, I am sure.

@Ted: "All that matters is the proper match between the question being asked and the experimental environment."

Yeah, I think that is true. The issue is that you need to make sure you are actually measuring what you think you are measuring. And I am not always sure that that happens. Social science research makes category errors all the time in this way (not the good people of TN, mind you, but you know those Others). But there is crappy research everywhere, I suppose. I just think it is risky to assume one can pick up measures that work in the physical world and plunk them down in a virtual world and think that the transition is not problematic. I know I behave very differently as an undead warlock than I do as a college professor.

Anyway, you know what I mean.

Posted Jun 1, 2007 7:36:33 PM | link

Amarilla says:

"I know I behave very differently as an undead warlock than I do as a college professor."

I wont be that sure...no sir ! :-) Now don't kick me , i'm just having fun :-) Btw, the " category errors " are emergent all the times as facts of life when about virtuality. That's the beauty . Maybe the only .

Posted Jun 1, 2007 8:23:33 PM | link

Prokofy Neva says:

You have a basic contradiction here, obviously. On the one hand, you want to "study the real world". On the other hand, you insist on "control" and you insist "I want structured RPGs, not unstructured ones."

What a waste, and a loss. It's the real-money economies and open-ended worlds that need study, and need study with real-world stuff in mind.

The game industry has enough games -- they overlap, they're all the same, they work on the same well-worn and known principles, over-studied.

It's the open-ended worlds that will have more to tell us about how the future will shape up.

I think that this exercise is futile. You cannot learn about the real world with closed-circuit games with rote routines. And the idea that you can't set up a controlled experiment in an open-ended virtual world is curious -- scientists do this all the time, setting up controlled experiments in *the real world*.

And no, I don't feel I have to be hijacked off to read a paper, when it's readily apparent that there's a basic and troublesome internal contradiction here that invalidates the whole experiment.

That is, sure, one can take a closed circuit game and insert certain guinea-pig pellet-dispensers and draw some conclusions. How interesting is that, however?

Posted Jun 2, 2007 4:22:14 PM | link

Kambei says:

watch out for the sharks too like rigrunner rang uncovered http://www.rigz.be

Posted Jun 2, 2007 7:52:21 PM | link

Miriam says:

Hello

I’m Miriam, an MSc student in Aston Business School, UK, and I am currently conducting my dissertation which is a study about how effective Second Life is as a branding tool, focusing on avatars’ attitudes and opinions towards advertisements of brands from real world.

Could you please do me a favour?
If it dosent bother you, could you please post this online survey link on your blog and encourage your audience to do this survey.

http://my3q.com/home2/168/ilmiriam/1201.phtml

I will really appreciate your help and your help will significantly contribute to my study.

Thanks in advance!!

Regards,
Miriam

Posted Jun 7, 2007 3:18:01 PM | link

Miriam says:

Hello

I’m Miriam, an MSc student in Aston Business School, UK, and I am currently conducting my dissertation which is a study about how effective Second Life is as a branding tool, focusing on avatars’ attitudes and opinions towards advertisements of brands from real world.

Could you please do me a favour?
If it dosent bother you, could you please post this online survey link on your blog and encourage your audience to do this survey.

http://my3q.com/home2/168/ilmiriam/1201.phtml

I will really appreciate your help and your help will significantly contribute to my study.

Thanks in advance!!

Regards,
Miriam

Posted Jun 7, 2007 3:18:02 PM | link