World of Warcraft and RMT

I have been researching the Real Money Trade with respect to the MMO World of Warcraft for about 8 months now.  I will try to post the current draft of the resulting paper in the near future.  Today, I read this entry at PlayNoEvil about a recent problem of hacking in World of Warcraft accounts.  Further down is a summary of an article (the text of which, I admit, I have not read), by a Prof. Castronova, an economist who has written much of the seminal work in the field of RMT, including the description of  simple demand model for RMT. 

Personally, I am somewhat turned off by Castronova’s incessant diatribes against RMT, especially as a (fledgling, a.k.a undergrad) economist.  Simply renouncing RMT does not provide any new information that game companies may use to combat it, and invoking government intervention is a cardinal sin of economics of the first degree.  I think economists and game companies interested in RMT need to research the incentives that gamers face with respect to RMT, and use the resultant models to devise solutions that are both effective and cheap to implement.  Supposing that we see RMT as a the result of a failure of a game to fully enclose players in its Magic Circle, then the demand for RMT might ultimately be chalked up to game design flaws, not the incursion of cheating, criminal elements.  The impetus is then on the game company to improve/innovate in their games, instead of on the government to devise and impose more laws and create more waste. 

I’ll write about this again if I can get a chance to read the text of the actual article.

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