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Dec 27, 2007



Corporations in Eve Online seem more like partnerships than corporations. Both organizations arise in RL when people wish to pool their funds to engage in a profit-seeking endeavor. Aside from issues of limited liability and tax status, the two big issues driving people to choose a corporate structure are the easy transferability of ownership, and a desire to separate owners from managers. The owners of a large corporation are typically not the managers. Corporations in Eve Online seem more like partnerships, in which the partners are both owners and managers.

Both corporations and partnerships face 'moral hazard' issues that arise when people have divergent incentives. In corporations, the problem is that profits go to the owners, not to the manager. Corporations therefore need to figure out how to compensate their managers, which (from a classic paper by Bengt Holmstrom) usually becomes a matter of balancing risk and incentive. Providing too much incentive compensation gets the manager to work harder, but also exposes them to more risk. If they wanted risk, they would be an owner, not a manager!

In contrast, partnerships face a different problem. A partner who works a little harder may not benefit enough, because other partners share in the gains. This is where the tax policies come in. The problems are very severe in the corporations with 100% taxes, and they probably have other methods of ensuring hard work, from providing prestige and power, or by booting those who don’t work hard enough. There is a different problem with low taxes, however…how would a corporation with a 0 tax rate provide any benefits to its members?

So here are a few follow-up questions for Nate.

Are there many instances of corporations hiring people and providing contractually guaranteed incentive compensation? Or is it always of the form 'do your thing, and you get to keep all but the taxed portion of the gains you got from using corporate assets'?

How do the corporations with 100% taxation get their members to work on the corporations behalf? Economic theory would predict that the corporation would require some sort of monitoring and enforcement mechanisms.

How much is my economic perspective flawed because the corporations are really just created for fun, not for profit? On the other hand, the job listing you provided ('accountant….auditor….factory manager…personnel manager') don’t seem that much more thrilling than real life jobs. How are these people compensated for taking on possibly thankless tasks?

Finally, I notice that in the analysis by Eve's economist (Eyjólfur Guðmundsson...my brain feels better when I think of him as 'Dr. G'), that the average number of experienced players per player-created corporation is only about 5 or 6. Are there a few very large ones worth focusing on in particular? They would probably have the most interesting moral hazard problems.


Hi Robert,

Let me start with a small case. This evening, at 10pm EST I sat in Jita (what has come to be the largest market station in EO*) and looked up corporate bios of the first 24 players (out of 700 or so located there). Here is what my very unrepresentative sample said:

Player 1, member of a declared "business oriented" corporation with 111 members and 10% tax rate.

Player 2, member of a bounty hunter corporation with 41 members and 10% tax rate.

Player 3, member of a "0.0 corp" of 51 members and 10% tax rate.

Player 4, member of a "invite only" corp of 9 members and 0.0 tax.

Player 5, member of a 2 person corp with 0% tax and no corporate purpose declared.

Player 6, member of 5 person corp of RL friends, 0% tax.

Player 7, member of "PvP/Mission running" corp of 37 member corp, 18% tax rate

Player 8, member of pirate corp of 42 members, 10% tax rate.

Player 9, member of corp of unclear purpose with 72 members, 25% tax rate.

Player 10, member of Pvp/pirate corp of 16 members and 10% tax rate.

Player 11, member of corp of unclear purpose with 75 members and 45% tax rate.

Player 12, member of corp of unclear purpose with 56 members and 10% tax rate.

Player 13, member of pirate corp with 38 members and 20% tax rate.

Player 14, member of corp of 5 members and 0.0% tax rate.


10 Players, members of NPC corporation.

A. Most of the corps are probably mixed purpose - supporting number of industry/mercantile/mining activites.

B. Some of the smaller corps are RL friends (social corp as opposed to a functional one).

C. Many of the NPC corp members are probably trading/buyer alts for other players. Jita is a large market and players often locate a character there for presence. Why NPC corp? Anonymity to some extent, as well as cannot be hassled by player corporatons.

One way I think Dr G's article simplifies what I think is in fact a rather complicated corporation shell game has to do with the role of alts. I suggest this in A culture of mistrust.... By CCP's quarterly report, the average player in EO has 2.2 characters. Often those characters may be divvied up into different functional areas which may include different corporations. Thus it may be hard to read without a bit of sifting, exactly what is going on. For a later discussion.

Yes, as you can imagine. Larger corporations are more difficult to manage. Security plays a more important role. The 5 person corp of RL friends (above) likely has few internal worries.

As for the nerdy/fun factor. What fun is there in spreadsheeting... we'll you'll be surprised. Many players really go for the management / bookkeeping play over the gate camping PvP life, say. In fact, given that likely most players prefer to mine than do PvP, that speaks volumes.

(*) Jita is one of those mysteries to the likes of me: how did this system/station become the market "place to be" it has, why not any number of other stations nearby?


In trying to understand Corporations in Eve, I think it's more useful to compare them to Feudal governments rather than real world corporations. The nomenclature in Eve may be misleading but you have to allow for some poetic license to create the modern military-industrial mood of the game environment. Corporations in Eve are more of a governance mechanic and plot device than actual "corporations".

Many aspects of Eve fall neatly into the feudal government model. Corporations have figureheads that take the role of a king or lord, where they assume full control and responsibility for the kingdom. The corporation members then can be seen as land owning knights. They pay taxes to the kingdom, trade with the kingdom, contract work to the kingdom in exchange for money, care for parts of the kingdom, and of course, don their armor when the banners are called.

Eve politics also mirror Feudal politics, and I'll spare you the list of analogies this time. If you examine Nates continuing series (referenced above) you'll find myriad examples.

In summary, the Eve construct of "corporation" may be more like real world corporations than WoW guilds are to real world corporations. However, the Eve and WoW constructs are more like one another than either of them are to real world corporations. The heavy economic nature of Eve tends to color everything in shades of modern industry. Getting people to play a sci-fi MMO with "kingdoms", "Kings", and "Lords" would be a tough sell, but I still feel that the Feudal model better fits Eve game mechanics.


Svgr - Feudal

I think I am more inclined to believe that the corporation-to-alliance relationship is more feudal in nature than the corporation-to-player one. For exammple, as was discussed in earlier topics, the whole "puppet" / vassel arrangement with some alliances, where landless corporations pay rent (*) to alliances for the right to mine ("farm") a bit of 0.0 space (sod) is particularly conspicuous.

I'm less certain "feudal" is a good analogy for the player-to-corporation relationship. In large part because players/pilots are often highly mobile - moving between corporations frequently is an option many will easily exercise if they felt put upon. Mobility can empower players in ways serfs in the middle ages did not have available to them.

This could tie-back to Robert's question about incentivizing corp members. A few incentives that are at the top of my head:

1.) Cooperative relationships helps you function and profit in the eve-online universe - e.g. protection, asset sharing, coorperative profiteering, etc. In Scarcely rare we discussed value of the rarest commodity in Eve - security. Corporations are building blocks in the security architecture that players build.

2.) In some cases (e.g. with elite corporations), membership carries some esteem.

3.) There can be explicit intra-corporation payments/services arrangements that can be lucrative. For example, some corporations explictly pay members for participating in corporation operations such as mining (whereas perhaps it is more common for it to be handled as a social arrangement - quid pro quo). More common is for corporations to subsidize (or outright salary) expensive activities that players are asked to perform on corporation's behalf - e.g. carrier pilots who run schedule transport runs to empire into 0.0. There are likely other examples.

4.) Power positions do apply. Trusted and loyal players may get rewarded with officer positions in corporation - that can be an incentive for some. As I suggested earlier, however, it is not for everyone - officers will tend to be players who invest a lot of time/effort.

5.) Of course the classic MMORPG pattern of social network stickiness applies: once players join an corp and feel comfortable with members, they are less likely to leave.

Added: 6.) Other economic subsidies/insurance such as ship reimbursement (paid for from tax revenue) etc.

(*) Some of the numbers I heard were in order of billions isks/ month - a substantial sum.


Limited liabilities is a tricky concept to try and apply to Eve Corporations but it can work.

Limited liability is important because it prevents shareholders from being affected by the financial hazards of the corporate entity such as meeting the conditions for bankruptcy and lawsuits. So anything the make within the corporation for financial gain can be lost but anything made outside that can't be touched.,

Another important point is that people join corporations in the real world in the hopes of gaining more money which allows them to enjoy more of the tings they want to enjoy in life.

These underlying principles hold true for some corporations and most if not all aliances.

Players join corporations and alliances because they hope to gain more fun in whatever it is they enjoy doing in Eve. But if one is to look at the majority of corporations they most likely aren't structured to protect the individual's investments (the investments they made to entertain themselves before they joined the corp). Once they join a corp everything essentially belongs to the corp and is put at risk to advance the goals of the corp which may or may not not fully advance the goals of the shareholder. In other corps and more notably alliances a shareholder can be fully reimbursed for whatever they put into the alliance or corp, which in its own way protects the time and isk the individual spent before joining the group.


1. Corporations in EVE are social rather than legal instruments. Someone else pointed out the similarities to partnerships, that's a much more appropriate way to think of an EVE corp than as a corporation proper.

2. When they dissolve, it's more like a ghost town than a dead corporation. Assets go to the last active characters with the roles to take them, generally. Or they just sit there. Some corps do pay dividends*, but in most ways it's more fruitful to treat corps as partnerships (with senior partners having extensive roles and access to corp resources, and junior partners/employees having less extensive access) rather than corporations proper, since corp assets are held in trust for the corp rather than for shareholders.

3. I don't think the concept of "owner" has much relevance here. Corps don't generally have shareholders in the real-world sense (there are game-mechanical shares but they're essentially a means of final control over the corp, as they can be used to vote out the CEO, and since there's no in-game way to tell who has them it's just too dangerous to have them floating around with members leaving the corp and so on, particularly in light of the alt problem previously discussed in these pages). CEOs and directors can be replaced for nonperformance, generally through social means (with the ultimate sanction over a CEO being that the membership can simply leave and form a new corp). In a functional corp it doesn't come to that, inactive or underperforming leaders generally step down voluntarily.

4. I'm not sure what you mean by this. Do corps have rules? Sure. Of course.

5. Yes, of all the usual formats (but no hostile takeovers in the usual sense). My corp has taken several other corps into the ranks, with several members of the leadership staff of those corps joining our command group. Their corp assets were largely redistributed to their members, with some capital investments coming across to become our corp assets. There are also more equal mergers, but without personal experience I can't say much more.

* Generally dividend-paying corps aren't well-populated because they're "holding corps" used exclusively to control assets and disburse funds. This is very similar to real-world shareholding (though usually with a focus on dividends rather than on increasing share price.) For instance, an alliance might choose to have a holding corp control the stations. This allows the alliance to sell shares in the stations and pay out through the holding corp (this is sometimes like a bond issue and sometimes like part ownership, depending on the setup).


Dr G isn't terribly popular with the player base at the moment due to the whole mineral compression nerf insanity. I can only hope he was advocating against that one.

Hey we'll introduce heavy dictors so 0.0 really IS impassable, AND we'll make transport into a nightmare by making carriers worthless. HEY WHY ARE THE PLAYERS QUITTING?


Sorry, I never got past EVE's tutorial, but.... it sounds like what you're describing is less a 'corporation' as we in RL think of it, and more like a Greek city state. They harvest resources instead of wheat and olives, is all.


Actually Rivenshield, your almost on the money there. I know some of the bigger alliances see them selves as almost nations, rather than corporations or what ever, and many corporations are for all purposes tribes rather than 'businesses'.

The fact that the 'themes' of many of the corps really don't represent any sort of business entity we'd recognise, such as Morus Mihi (Minmitar liberation front guys), or Jericho Fraction (Space anarchists) gives some hint to that.


dmx, heavy dictors, carriers -

To my view, I think what is intended is to force more specialization and bit more space between combat ops and logistics and pipe related security ops in 0.0.

Introduction to Logistic Pipes in Eve-Online

If anything, I think the story of EO has been about increasing specialization of its player base. At what point will players find themselves too specialized? E.g. will a mechanic for a class II cruiser still feel part of the big picture game world? I think the "geek ghetto" phenom drives it - the experienced players want to be masters of a niche, and it is probably good so long as it works: drives more interdependence.


Yeah. The problem is, the carrier nerf misses the reality for the Super alliances of POS logistics. One of the recent effects of the changes is that POS's need to be attended to very regularly. No probs for a small corp with a few POS's right? Sure.

The problem lies for the big guys. Goonfleet probably has maybe 3 or 4 hundred pos's required to keep its empire afloat. BOB would have similar numbers, as would I assume Triumverate and Red Alliance.

Solution: Hire more guys to do the work? Well no, not really. See the problem is, if you give someone rights to fuel the tower, you also give them rights to unanchor your Supercap pos, and run off with a hundred bil worth of corporate tears. And the bigger you get, the more enemys you get. So the work goes to the same small number of personally trusted people, who might be given motherships or carriers to do the work.

We have maybe 4 guys who do this. And they all put in the equivilent of a part time job (Maybe 20 hours each) just jumping from POS to POS putting fuel in.

Aaaaaaannnnd then CCP go and nerf stuff , presumably to make life more difficult for mineral importers (Which makes *NO* economic sense at all, no matter what Dr G thinks. Trying to force veld mining in 0.0 just angers players into wanting to quit.).

The end result of this is pretty much everyones angry. No fun is created in this project, and all it does is break very important parts of Alliance life in some harebrained macroeconomic fix for something that wasn't actually broken at all.

I dunno. Half of us are left with that old Arts school taunt of "Economics is the Queen of Humanities. She writes compelling fictions" ringing in our ears. Of course its not that economics is wrong. Its just that the the good doctor apparently hasn't been asking the deep space guys the right questions. And what a mess its made.

CCP *really* needs to fix this.

I am aware of the Jump freighters. Problem is , they shouldn't of introduced this simultaneously. They should of forewarned us and given us a month to train up the skills.

Now heres a fun question. CCP have nerfed Carriers logistic role. And They've also nerfed the Carriers Combat role. Why DOES think Carrier pilots are pissed off? A years training wrecked for a misguided economics nerf is a hell of a blow..

And its immersion breaking as hell.


from DMX: "And its immersion breaking as hell."

LoL, yeah. I can imagine sitting in role of carrier pilot and saying to myself "hmm, that's strange. I'm sure that hauler full of ore could fit inside my carrier last week."

Yeah, we're scrambling to get ourselves a jump frieghter too, but the soonest we could get one built will see it completed in about another 2 weeks (and since it requires a regular freighter as an ingredient, we have to do without one of those as well). Till then we're kinda on hold with a lot of the things we'd all like to be doing in the game. The final result of the changes they've made could be positive, but the timing was poor to say the least. They could have let people start building jump freighters months before nerfing the carier, so that there's a market for jump ships first.


Hmm. Re-reading my comments, I'm being a bit hard on the good doctor here. Yeah, I guess the carrier thing has left a few of us a bit grumpy. but thats not really Dr G's fault.

Derail ends here-----------8<---------


dmx> Goonfleet probably has maybe 3 or 4 hundred pos's required to keep its empire afloat... reality for the Super alliances of POS logistics... We have maybe 4 guys who do this (Maybe 20 hours each) just jumping from POS to POS putting fuel in.

Nicely full-circle to couple of worth-highlighting earlier points:

1.) problem of social scale: why bigger is often disadvantaged with respect to issues of trust management and internal security, especially in paranoid worlds like EO.

2.) how really tiny the top of corporations (and alliances) are. CEO's and their directors of Eve Online corporations, for example, require a heck of a lot of work: so few that shape so much! Scale that up to alliances...

One the one hand a knee-jerk reaction is that it might be better to find a way of broadening the top (trust), on the other hand it does provide a natural check in large sand-boxes like EO against, say, the super-alliances winning strictly on might. Design or accident?


Ah, now there's an interresting question: "Design or accident?" I've never thought about it from that point of view. When I look at a game mechanic that doesn't seem to work as well as it should, I immediately think "don't they know how to fix that?". Actually, I always have the idea that it's deliberate in the back of my head, but it's still annoying sometimes.

Since it's a sandbox game, a large portion of Eve is generated by players themselves. eg: If players hadn't created Goonswarm, then there wouldn't be a need for that small group of people to fuel all thos space stations, or figure out who to trust.

Raph has an interresting post about game design, where he talks about different puzzle and questing techniques that game designers use. His point is that when you use static information people can cheat by looking up the information ahead of time. So, a designer would like to have information that is unpredictable enough that the puzzles aren't just a grinding exercise.

I think the alliance "game" inside eve is a good example of how sandbox games allow players to create the ultimate game content (from a certain point of view). So here I'll go back to my earlier point in this thread: Corporations are a plot device (as opposed to a financial organization resembling RL corporations), and further they could even be looked at as a mini-game inside eve. Running an alliance or even a corporation is like a complex puzzle where the solution will be different every time you try it.


Corporations are a plot device (as opposed to a financial organization resembling RL corporations), and further they could even be looked at as a mini-game inside eve. Running an alliance or even a corporation is like a complex puzzle where the solution will be different every time you try it.


I think this is an interesting way of looking at it. From my point of view I might spin it a tad more as follows. Consider this question. If "corporations" did not exist in Eve would the players invent them? To what form?

As a number of comments above have suggested and as has been written up elsewhere in this series, "alt culture" is likely a particular idosyncracy of Eve (as it exists now) that changes how "corporation" in Eve will emerge and look like. Something will be lost in translation. What? For example, as has been pointed out, a translation of the RW paradigm of issuing stock/shares to characters hasn't really worked to date in large part because of the alts.

Returning to "accident versus design" - I tend to view alts in Eve as an emergent outcome (the degree to which they are used was unintended by the original sandbox design). I think they are product of a number of factors: extreme (and growing) specialization of characters (*), a very large sandbox (on a scale unique for MMOGs: travel distance, organizational separation, political boundaries), to name a few. All this, of course, is mixed into the cocktail of player entertainment - which often revolves around insuring a bit of diversity in their functions.

I also feel that as a phenomenon "alts" beyond a simple thumbs up or down evaluation (from a game world perspective), it is something that seems to have emerged over a while and in its own right is extremely fascinating (**). The question is what can you build on it or whether one might want to change it (at some cost - likely to ripple throughout the entire game).

(*) updated: specialized in terms of role/function/location/within some context (organization, political situation etc). Looking at characters superficially - skillpoints - Eve is actually very much a game of generalists.

(**) Just consider it from the POV of a massively distributed workflow. All these players are cooperating and competing in very intricate ways to make a Goonswarm, for example.

It is hard enough to think of the problem if everyone had just 1 character. Now consider representing the same functional environment with players using multiple characters some appearing (ostensibly) at cross-purposes of other ones. But it gets worse, consider the reactions of players to your alts: "i know that you know that I know ... recursion here... you are an alt."


Your actually sort of right about "if alliances/corps didnt exist, players would invent them".

For reference see the "Release Sovreignty skill" campaign from last year (or maybe it was 06). Basically the goons had grown to such a size they wouldn't all fit inside a single corporation, at the time I think it was limited to maybe a thousand members or thereabouts. So the goons formed 2, and eventually 3 corps. Goonfleet, Goonwaffe, and Goonplatoon. After a campaign that involved a really funny flash animation "The sad little bee" , I think it was called. I cant seem to find it anymore, CCP finally budged and the skill was seeded, allowing corps to bust outside the previous size limit. This caused all sorts of problems with access to things like POS resources or the classic (at the time), where an empire wardec would occur on one of the goon corps, but not the other, causing all sorts of shenanigans when only part of a gang could engage in an empire fight.

Furthermore, there have been a few occasions where 'alliances' have been formed without actually being a formal alliance. Case in point, "The OSS" was an informal alliance that existed for quite some time before being formally 'incorporated'.

So yeah, Players will find informal ways of organising outside of whats nominally provided in the software, at least until the software changes to better acomodate it.


from DMX: "So yeah, Players will find informal ways of organizing outside of what’s nominally provided in the software, at least until the software changes to better accommodate it."

Exactly. So, from the point of view of a game designer it really creates a paradigm shift from proactive to reactive (and that's a good thing in this case). In a theme park game like WoW, designers create most of the content and the players react to it in a relatively predictable way. In a sandbox game, the designers provide toys and then have to adjust the rules of the game world based on how the players use the toys (goons and sovereignty, jet can mining, and using 'dense' modules to 'compress' ore for shipment, are examples of how designers reacted to unpredicted player behavior).

Sandbox games are the sliver bullet that Raph was looking for in the article I linked to above. There can't be a cheaters' guide to most of eve because most of eve is created on the fly by player actions. When you look back this wonderful series of articles, you'll notice that the things we're talking about are the best parts of Eve, and it's all player generated content. Even the most complex economic, military, or political single player game can't come close to the content that has "grown" in Eve.


Just as a suggestion Nate. I've been going thru Youtube, and watching eve O vids. It'd be interesting to see some thought on how the 'meta game' affects eve. In particular the (occasionally horrible) CAOD forum , video propaganda, and the sort of 'hearts and minds' and 'your alliance sucks!' sorts of shennanigans that happen out of game.

Some of the Video propagandists are actually really talented. I know form our side, Stalhregen (Christian ethic)'s videos have been really influential, as well as a few 'classics' such as "Goonswarm dreams". Likewise , MC had some pretty amazing videos, and BOB's 'vacuum' (And the 'virus' response) are both pretty amazing.

The parallells with historical propaganda making is what interests me. Theres a joke saying that "eve wars are won on the forums". Its a joke, but theres something to it. Morale is everything in the big 0.0 wars.


There are a couple of logical flaws in this article.

First, the claim that "corps" in EVE are like "guilds" in other mmos. This is accurate to a significant degree. However, do "guilds" in those virtual elves and goblins campaigns actually look anything like their historical counterparts in social or market context?

Second, the assertion that the absence of a dominant protective agency to regulate contract enforcement has a negative impact on the game is a profound oversight. Participants are free to uphold or renege on contracts as they desire. As a result, choices attain consequence. Persons that do uphold their contracts are awarded a property that cannot be obtained any other way: trust. Other participants in markets that elect to overlook a history of trust as a commodity may either be rewarded by new business opportunities, or they may be punished by being parted from their spoils.

All the same, it's true that CCP has mostly devised a simple faucet economy. It is difficult for a proper bourgeois culture to arise in this context. Properties like moon ore mines rarely put out more than facility-sustaining wealth outside of a few rare assets. Meanwhile, the nearly limitless income from private interaction with NPCs requires little or no prior infrastructural investments in material, management, capital, or defense. This is an abiding problem for the future development of that game.

One gleaming, though rarely considered aspect of the game is that participants CAN elect to implement unique services. CCP would appear to have gradually turned against this policy over the years rather than head off the root of "isk-selling" which results from a direct NPC interfacing faucet accessible to individuals. Corporations and private individuals can spy, trade in knowledge, steal, or sell "non-material" (still virtual) goods. People can trade on their relationships, they can trade on their reputation. People can invest excess capital in other people's projects. People can sell their artistic talent, and technically literate people can market webspace, OOG communication software, market tracking software, and an unknown range of other internet services. CCP has taken to tracking large isk transfers between private characters, and has adopted a disturbing "ban first, ask questions later" policy due to staff shortages for dealing with a failed prohibition policy regarding the OOG exchange of grinded, NPC faucet isk or in general simply opposing the market trying to right itself. As an EVE veteran, it's really very sad.

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