What if everything in life were free? You'd think we'd be happier. But game designers know better: We'd be bored.

Economics is loosely defined as choice under scarcity. After all, in the real world, there's only so much to go around. You can't always get what you want, and unfulfilled desires give rise to markets. But in a game world, there's no inherent reason for scarcity. Game designers have given us plenty of utopias where we can have all the mithril we want, to buy whatever we want whenever we want it. Problem is, those worlds turn out to be dull. For example, the developers of Active Worlds made everything in the game free. Players built enormous houses - in which there was nothing to do. The game never quite caught on. That's why today's newer massive synthetic worlds make life hard. It's why we have to scheme, fight, and occasionally beg for food, shelter, transportation, and great big flaming swords. Games show us that scarcity can be fun.

The lessons of Game Economics 101 pop up in unexpected places. To spice up life in Habitat, developers added money and pawn machines. For a while, you could buy crystal balls at one machine and sell them for nearly twice as much at another. Of course, someone coded his computer to run a character between sellers, quintupling the money supply overnight. Can you say inflation? In the early days of Ultima Online, storage space was unlimited. Eventually, a guy decided to hoard 10,000 shirts, utterly borking the market for cloth. In Shadowbane, players became convinced that higher-ups moved the entire population to a new server sans money because the economy got so out of hand. When gold farmers began to leach the precious metal out of EverQuest to sell elsewhere, Sony ordered eBay to close all currency auctions related to the game. Within days, online auctions sprang up in even greater numbers elsewhere.

What we're learning is that scarcity itself is an essential variable. We just haven't needed to worry about it before. Thanks to God, the Man, or whoever's running this show, we're used to taking scarcity for granted. The emergence of virtual communities means that we have to make it explicit.

In the end, the best game economies are not radically different, just a little weird. Yet one built-in, unavoidable limit remains: time. Designers can control the abundance of all other resources, but the number of hours in the day is a constant. Games make money by occupying time - grabbing eyeballs and holding on to them. The point of economic policy in a game isn't to simulate reality; it's to make the synthetic scarcity so entertaining that the truly scarce good - players' time - goes toward solving problems in the game, not in the outer world.

Edward Castronova (castro@indiana.edu) is associate professor of telecommunications at Indiana University, where he specializes in the economic and social impact of multiplayer online videogames.

credit: Feric Animation Design Studio

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