A Test of the Law of Demand in a Virtual World: Exploring the Petri Dish Approach to Social Science

A Test of the Law of Demand in a Virtual World: Exploring the Petri Dish Approach to Social Science

Edward Castronova (Indiana University, USA), Mark W. Bell (Indiana University, USA), Robert Cornell (Indiana University, USA), James J. Cummings (Indiana University, USA), Will Emigh (Studio Cypher LLC, USA), Matthew Falk (Indiana University, USA), Michael Fatten (Indiana University, USA), Paul LaFourest (Indiana University, USA) and Nathan Mishler (Studio Cypher, LLC, USA)
DOI: 10.4018/jgcms.2009040101
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Abstract

We report results of an experiment on prices and demand in a fantasy-based virtual world. A virtual world is a persistent, synthetic, online environment that can be accessed by many users at the same time. Because most virtual worlds are built around a fantasy theme, complete with magic, monsters, and treasure, there is considerable skepticism that human behavior in such environments is in any way “normal.” Our world, “Arden,” was designed to test whether players in a typical fantasy environment were economically “normal.” Specifically, we tested whether fantasy gamers conform to the law of demand, which states that increasing the price of a good, all else equal, will reduce the quantity demanded. We created two exactly equivalent worlds, and randomly assigned players to one or the other. The only difference in the two worlds was that the price of a single good, a health potion, was twice as high in the experimental world than in the control. We allowed players (N = 43) to enter and play the environment for a month.

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