I am not intensely interested in MMORPG secondary markets that exist despite the operator’s wishes, and I certainly don’t have any agenda of legitimising them. But after the last SoP V workshops yesterday there was a rather lively coffee table debate on RMT in MMORPGs that resulted in a neatly economistic re-telling of that story. I’ll try to convey the tale without misrepresenting the particpants too much.
Already during one of the panels Joshua Fairfield reminded us of the positive aspect of RMT: trade creates welfare gains (“Every time you stop someone from trading, God kills a kitten”, as he politely put it). Richard Bartle obviously wouldn’t have any of that and brought up the negative aspects, centering on the violation of the achievement hierarchy associated with character levels.
As far as I know, whatever negative effects RMT has on other players can be modeled as a negative externality (as Castronova originally did). The net welfare gain from RMT is then the welfare gain from trading minus the externality. The result is often believed to be negative.
So far the usual story. But an important point that came up in the discussion is that both of these variables are a function of some measure of the prevalence of RMT in the game (the negative externality might also be a function of simply how visible RMT is).
In conditions of high prevalence/visibility, the negative externalities are usually assumed to be greater than any possible trade gains. But in lower degrees of prevalence, trade gains may well be greater than the externalities. A point where a marginal increase in prevalence results in more negative externalities than trade gains is the efficient level of RMT (Figure 1) (i.e. Pareto optimal, given a few assumptions). Where this point is depends on the preferences of the player base.
Can we link this neat construction with reality in any way? MMORPG operators have an interest in pleasing their customers. Assuming efficient pricing, player aggregate welfare correlates with the operator’s revenues. Joshua and others pointed out that MMORPG operators are not doing everything in their power to stop RMT. For example, they are not commonly banning players for buying, only for selling. A certain level of RMT is tolerated as long as it does not become too overt. This could indicate that there is indeed an above-zero efficient level of RMT towards which operators are gravitating.
A special case, a game where the efficient level of RMT is zero, I will call a “Bartle world” (Figure 2) (the term was used in the discussion to connote a slightly different concept, a world where the prevalence of RMT is zero). Joshua asked, do Bartle worlds exist at all?
If you enforced a ban on RMT with such zeal that every single trader would get caught and have their limbs removed (as per EULA), wouldn’t you be left with a player base that consist of 100% RMT haters, thus creating a Bartle world?
I think it was Dominic Zou who pointed out that it’s not like there are two populations out there, RMT lovers and RMT haters. Instead, people act with various degrees of schizophrenia, applying a different standard to themselves and to others. Gains are reaped by traders and costs borne by others. The same person can simultaneously both appreciate the gains and resent the costs.
Therefore, even if you were able to build a world with zero RMT, that might not be the efficient level of RMT. The player base might still be better off with a teensy bit of RMT. This is not to say that Bartle worlds are impossible, just that they seem unlikely.
Does this mean that designers should not attempt to build MMORPGs with zero RMT? Not necessarily. Operator’s costs like the cost of customer service time spent on RMT fraud and the cost of enforcing an RMT ban were not considered. The most important factor not included in the model was revealed by Richard Bartle when he said, “RMT is not part of the message I want to convey” or something to that effect. If you are creating a work of art instead of a commercial product, economic performance may not be a design criterion.
You may also be interested in a paper by Jun-Sok Huhh from last year that uses the same economic concepts of externalities and welfare in a completely different model involving RMT.