Terra Nova

Save the Whales! And exploit them I guess.

A report just out from the fine folks at Playnomics confirms that much of the money spent in digital economies is spent by a fairly small share of the players. Vegas calls them "whales." Playnomics says that fewer than 1 percent of players spend any money at all in games, on average. Most of us free ride on the top 1% of spenders who contribute a third of the money.

I still like the game Lord of the Rings Online. It's free to play. When I look around in there, I see a very cool version of Middle Earth. It is interesting to know that one-third of everything I see there has been built because of the support of just one person out of 100 that I meet. And, if the power law holds throughout, I can fairly say that just about everything in that place exists because of the ten percent or so who love it enough to pay for it.

Here's the rub, the political economy problem. Given the above, what rights do I have as a player to express opinions about the environment? Suppose the entire thing is run for the benefit of those 10 percent. Does my voice count? Should it?

Brought to you by the 10 percent

Diablo III Hyperinflation

Diablo III's real-money auction house had some potential to be a major innovation in virtual economies. Instead, it looks like the designers failed to grasp lessons of virtual money management that are now more than a decade old. Namely, make sure you have enough sinks.

There's a wonderful, well-informed, economically expert write-up over at Mises.Org, by Peter C. Earle. Mr. Earle knows his econ and he knows the game as well. It's some of the best virtual economy analysis I ahve seen in a long while.

Thanks to Waiyen Tang for the heads-up!

The Clausewitz Engine: A Major Scientific Advance

Wittingly or no, the folks over at Paradox Development are making an amazing scientific instrument. It's called the Clausewitz Engine. I know almost nothing about it, other than having been its victim over and over again.

The Clausewitz Engine is apparently a gigantic autonomous agent model. Tens of thousands of agents act according to a sophisticated set of instructions. These instructions are apparently very flexible. In Hearts of Iron, they drive divisions, armies, and countries to war against one another, whereas in Crusader Kings, the instructions drive men and women to seek marriage partners. The information on which the agents act is incredible. The agents respond to grand strategic considerations, political concerns, territory control, economic resources, personality traits, and past actions of other agents. Yes, they have memory. They also have variable goals and strategies. Not everyone is offended that you executed your brother's children. Some generals want to capture ground, others want to avoid looking bad.

In playing against these teeming worlds of code-people, I find myself feeling immersed in a genuine society. The whole thing responds in a way that feels right; my reputation and prospects rise and fall in a very natural way.

One interesting aspect of the Engine is that it allows you to take the place of almost any of these actors. You can be Stalin, or a commander of a single division outside Stalingrad. You can be the Holy Roman Emperor, or the Earl of Argyll. It doesn't matter who you choose, because every other agent in the game is handled by an AI. If you want to play as America but don't want to bother with politics, the AI that would handle American political actors if you had chosen Germany just takes over. Of course, if you do that, you might end up working for President Lindburgh, fighting for the Master Race. But you can do it if you want.

Why is this scientifically relevant? The brilliant mathemetician Stephen Wolfram has written about the need for a revolution in scientific practice, away from experiment and toward computational modeling. Do I know if he's right? Not a chance. I have no idea whether the natural sciences are moving in this direction or not. I do know that the social sciences are not doing much with this idea.

Yet over in games, we find a computational model of human society that is orders of magnitude more advanced than anything I have seen done on campus. The Clausewitz Engine could be modded to study how norms propagate through society, how political factions rise and fall, how crowds try to get out of disasters, how diseases spread, how religions influence shopping. I say that, not knowing anything about the guts of it. I have only been smacked around again and again by the darn thing. But my sense of it, as a machine of the human world, is that it is vast, flexible, accurate, comprehensive, and infinitely malleable.

What does the Clausewitz Engine reveal about us? I do not know. Much, I imagine. I suspect that the devs could have made all agents independent of one another, little islands, self-reliant. I wonder what would happen to total economic product then? What happens if all agents slavishly follow the commands of superior agents? What if resources are redistributed equally across the agent population, what happens to economic growth? Wow.

To Paradox Development: Bravo!