Archive for June, 2007

The Cancer of Corruption

June 28, 2007

Last weekend, my research partner and I agreed that we would work collaboratively on a thesis that deals with corruption, especially in the third world.  Political corruption, which gets defined in numerous ways, receives a great deal of blame (not necessarily unwarranted) for the failure of many aid programs, as elites and authorities siphon funding and resources into their own coffers for personal use. 

So we make a rather radical suggestion:  Suppose that corruption, as we call it, is integral and functional within the system; that is, were a “corrupt” official or institution to be suddenly removed from the equation, this would create a gap that would actually act to interrupt otherwise positive-growth activities.  Furthermore, corrupt practices are manifestations of the universal phenomenon of a person or organization that uses its vested power to prevent access to resources unless payment is made to them.  Under this perspective, whether you are paying a bribe or an income tax, you are participating in the same generalized system where access is restricted to those who pay the bribe/tax/fee/etc.

Taxes as glorified bribes?  In a sense, yes.  If you don’t pay your taxes, do you still get access to the system?  No.  In extreme cases you go to jail.  Analogously, if you don’t pay the armed officer on the road in Kenya a bribe to get through his roadblock, will you still get your goods to market?  No — or yes but only with a great deal of effort (travelling off road, which will take longer, be more dangerous, and make market activities less profitable). 

We grant there are differences, but the analogy is too valid to be ignored. 

The possibilites for research are three:

1) Fit corrupt practices into a more general theory of state formation, such as the roving/stationary bandit model developed by Mancur Olson and other institutional economists.

2) Identify particular practices that are labeled as corrupt and demonstrate that they are not.

3) Develop a methodology for testing the theory utilized in 1).

 More on these later.

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Culmination of my World of Warcraft Research

June 5, 2007

This is the last draft of my paper on RMT.  It was last edited in late February, and unless there is some great interest from the outside it will remain in its current form.  I post the link here for all to view and comment at their leisure.

World of Warcraft: Further Research

June 1, 2007

Unfortunately, my WoW research is on hold indefinitely until I get up the gumption to do it again.  In the meantime, I’ve been thinking of ways to go about looking at the real money trade (RMT) and prices that would yield excellent examples of real life economic phenomena. 

For instance:  Suppose it were possible to differentiate between gold acquired through intended mechanisms and gold acquired via RMT.  In other words, suppose there were a way to “tag” RMT.  This would make it possible to examine the flow of RMT as opposed to regular gold.  Does RMT acquisitioned gold circulate in the same general pattern as does normal money? 

 Why?  Because we could use such information to look at the effects of fluctuating currency markets have on an economy.  The exchange rate with dollars is so small that the effect on the American economy is negligible.  But as my previous research has shown, RMT can have a profound effect on the price level in the virtual economy of World of Warcraft.  Embedded within fluctuations of the price level we may find evidence of any number of economic phenomena taking place.  For instance, we may see RMT gold as foreign direct investment, and to the extent that RMT causes short run increases in economic activity (as when the federal reserve increases the money supply), we may see the virtual economy produce more as well until prices adjust. 

 There are two ways to go about getting data from and about the game.  The first is through user-interface add-ons like Norganna’s Auctioneer, which can collect information from the auction house.  I have a great deal of data from the April 2006 to October 2006 and could reexamine for certain fluctuations.  However, it would be extremely difficult to control for the account eliminations Blizzard was enacting at the time.  So better off perhaps getting someone to modify the code to collect data and index it by date and time. 

 The other possibility which I was considering for this summer but which did not pan out was an actual in-depth panel study utilizing interviews with individual players.  I think this should be explored by researchers with more time and resources than are currently at my disposal.