World of Warcraft gold and Auction House blog

Zero Sum Economics in World of Warcraft

Zero Sum Economics in World of Warcraft

I have been thinking a lot about Zero Sum today.  It started with reading a quote in a book:

“When faced with a choice between abundance and scarcity, choose abundance.  … Scarcity involves hoarding, and abundance involves sharing … the choice for abundance typically involves a refusal to view the world as a zero-sum competition.  No one else has to lose for you to win.” Chris Guillebeau, The Art of Non-Conformity, Penguin, 2010

In World of Warcraft, PvP is zero sum.  In order for you to win, you must kill your opponent.  Wiki: “a zero-sum game is a mathematical representation of a situation in which a participant’s gain or loss is exactly balanced by the losses or gains of the other participant(s)

The AH and WoW Economy at first appears to be Zero Sum.  Someone pays for an item and you gain their gold.  But that’s not all there is to the game.

In world of warcraft economics we have the extra factor “U” In my post How Much Gold are You Worth? I argued that Item + U (ie What You Do) = More Valuable Item . In other words, what you do in the game, increases your WoW Virtual Economy.   Your realm’s GDP, gross domestic product, if we’re taking the economy metaphor further, can only increase, depending on the value of U.

Now let’s factor in abundance.  Unlike the real world, farming in world of warcraft involves only bending down to pick up loot from a dead mob, or harvesting herbs or ore.  Quests award gold.  Quest rewards are vendorable for gold.  The average amount of gold per player is increasing.

In short, the only thing you can do to LOSE gold is to spend too much on gold sinks. Gold is typically added by in-game action, such as completion of a quest. These events are the major contributing factor to economic mudflation. Gold sinks are designed to permanently remove some of this money from the game to combat this effect. (paraphrased from wiki)

Ideas for Gold Sinks:

1) hurl yourself off a cliff so many times that your repair costs (known in virtual economics as a dynamic gold sink* ) becomes more than your income

2) purposefully destroy your items and sit around naked in Orgrimmar doing nothing

3) waste gold on buying items then vendoring them.  Alternately, buy some dalaran cheese and feed it to the Stormwind rats.

What happens to your gold when you spend it, instead of saving it?

It is given to the person from whom your bought the item.   Although the AH takes a cut, the gold is still in circulation.  And that player then has the ability to buy something from you.   If you had not bought the item from the player, he would not have the gold to buy from you.  This is a win-win situation, not a win-lose situation.

World of Warcraft economics is not zero sum. It is abundant.

You can achieve your dreams of gold riches in world of warcraft without taking away the enjoyment or the riches of other players.

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One Comment

  1. Very good article. I probably should have read it better before typing out 2 paragraphs lol. One of these days I will come up with a good analogy for a wow economy :P (maybe a waterways analogy…hmmm….)

    One of the things people probably over look as well in the game’s economy is besides from gold sinks (vendor items, repairs, reforge, flight paths, haircuts etc) the economy leaks gold. In the process of moving gold around or day to day business gold leaks from the economy, not into people’s pockets like real world, but just gets completely removed from play by things like listing fees, ah cuts, mail cost etc which are essential to keep the economy flowing. Every time gold changes hand on the ah it leaks at least 5%. For items processed by us you’re looking at closer to 10%: the 5% cut removed from the farmers sale, and the further 5% that gets removed from our sale (not evening mentioning any mailing costs or lost deposit fees). So even if we found a way to replace every gold sink with a player supply-able alternative, the economy still leaks. The wow economy is basically a water treatment plant with leaky pipes :P

    Hmm I think that was still a bit rambly….oh well