CCP Economist On EVE Online's 'Pure Capitalist' Market

Author: by Mathew Kumar, Chris Remo

As economists struggle to come up with answers to the mortgage meltdown and credit crisis, developer CCP's lead economist Dr. Eyjolfur Gudmundsson oversees a very different, yet surprisingly complex, kind of financial market: the persistent, single-server online world of spacefaring MMO EVE Online. "By 2008, the market has become completely player-driven, and that's where I came in," says Guðmundsson during an Edinburgh International Festival session. "The whole economic structure has become so complex, the data so vast, that a specialist was needed." He has 15 years of non-virtual experience in his field, and holds a PhD from the University of Rhode Island. When hired last year, he described himself as "a sort of Alan Greenspan for...EVE Online," referring to the United States' former chairman of the Federal Reserve. Players, designers, and CCP executives alike benefit from real economic analysis of the in-game world, he argues. After all, Gudmundsson says, EVE is a "pure capitalist" market -- its economy is emergent, not constrained to a fixed state like those of most MMO games. It was not always that way. Earlier in the game's life, non-player characters participated in and partially drove the economy, as in nearly all such games. But as the population grew -- and, crucially for the sake of a robust economy, remained within a single server environment rather than being fractured into several realms as with -- the player based reached a critical mass that allowed the market to become entirely self-sufficient and player-driven. "The number of possible one to one relationships grows like the square of a population, so a population of one thousand has a potential for one million unique relationships, while a population of 100,000 has a potential for 10 billion," says Guðmundsson, "and that's why it's so important that EVE is on a single server." Corporations, EVE's equivalent of guilds, have long been a staple of the game. Though they can operate on a massive scale, and can be as organizationally intricate as their real-world counterparts, they proved insufficient to support the increasingly complex needs of the world. Like a real governing body might, CCP responded by enacting practical allowances to solidify constructs spurred by the "citizens" themselves. "By 2005, with 50,000 players, some began to feel that corporations were not enough, so they themselves implemented 'alliances,'" which are larger confederations of corporations, Gudmundsson says. "[They] asked us to implement it officially, which we did, and they have since become the dominating political institution in the game. So you could already see emergent social structures with only 50,000 players." EVE's population now exceeds 245,000. Guðmundsson calls it a "nation state, with all the institutions that come along with that." Players create political influence maps that illustrate political influence geographically -- much of that influence the result of diplomacy rather than by warfare. Examples of economic flux are extremely similar to those that occur in the real world. At one point, increased supply of a certain mineral caused a considerable price drop. To try to balance it back, developers planned to make the mineral more difficult to obtain, implementing the change on the game's test server. When players caught wind of the plan, a speculative boom erupted, sending prices sky-high -- and then back to stability once the change was made permanent and the market settled. In another instance, the mineral Tritanium was in enormous demand, and thus extremely expensive, so the developers enforced a price cap. "I as an economist didn't like the price cap," says Gudmundsson, and the cap was removed. "The market went berserk!" he says, with "people buying and selling waiting for the price to go up." Contrary to expectation, the price dropped -- just as in the real world, economic behavior does not always function like clockwork. This year, CCP sanctioned a Council of Stellar Management, an elective voting body comprised of EVE players who had to campaign for their slots. Of 64 candidates, nine were elected (seven males and two females, roughly matching the population's gender makeup, with an age range of 17 to 52 years). The group debates a wide range of in-game issues, including such close-to-home topics as using ships as suicide bombers. As much as possible, CCP prefers to leave EVE's markets to their own devices, entrusting them to the players. But the development team still has to tweak things, and a trained analytical eye can be useful to that end. "My role is to ensure that there is a certain level of stability," concludes Gudmundsson, "and that no changes are made without understanding the economic impact."