Price Dynamics In Virtual World Auctions

Virtual worlds like World of Warcraft and Second Life are slowly becoming recognized by researchers as ideal testing grounds for their theories. The unprecedented control over the world’s dynamics and the easy access to its data make them ideal for observation and controlled experiments. Do results from these worlds, however, have bearing on the physical world? While the agents in these worlds are indeed controlled by humans, the characteristics of these worlds differ from the physical world in many ways, not the least of which is in physics. One way to begin to answer this question is to analyze the behavior of bidders and sellers in virtual currency auctions. Specifically, this paper examines auctions in World of Warcraft and argues that buyers and sellers both value the game’s currency and price items consistently. The paper then briefly explains why the auction mechanism differs from eBay’s enough to render useless the techniques employed to analyze eBay auctions, and it concludes with a justification of why researchers should pay more attention to virtual worlds.