Manual Labor in Virtual Worlds: How Fair Are In-Game Auction Houses?

One of the most frustrating times in an MMORPG player's digital life is "grinding" for experience to attain a game's highest levels. This often entails killing hundreds – if not thousands – of enemies over the course of days and weeks to obtain a small advance in the character's level and vital statistics.

But what happens when in-world auction houses like those in World of Warcraft, EVE Online and other games allow time-strapped players to contract out portions of quests to be completed by others in exchange for money?

Pixels and Policy looks at some interesting emerging research on the subject.

Working in the Virtual Salt Mines

There are two main ways to bypass the drudgery and time investment of "grinding" for higher character levels. One involves illicitly (or perhaps legally, if you're playing a game from a South Korean developer) purchasing gold, items, or entire characters from third party vendors. These "real money transactions" are generally frowned upon by developers, and games like World of Warcraft ban players caught engaging in RMT.

But there is a second, more formalized means of contracting out the hard work of leveling a character, and it shows an interesting relation to real-world government contracting. Players can use in-game auction houses to exchange their game currency for virtual items needed to complete quests, thus eliminating the time-intensive need to search for often rare items.

Not only does this speed up leveling for those with the in-game currency to purchase such luxuries, it also creates fascinating market forces for those selling the items and weapons to impatient gamers. Depending on aggregate demand for a certain product, sellers can pull a much larger profit than usual on the items, creating a makeshift arbitrage system with parallels to real-world stock and futures markets.

The Virtual Economy Research Network recently did some work on this fascinating topic, and found that the use of virtual auction houses peaks at times when special quests or limited-time events make the possession of normally common items very valuable. As an example, VERN contributing writer Jennifer Martin looked at how the price of small eggs increased during special events where the eggs were essential quest items.

We came upon an interesting conclusion Martin draws from her research, which could easily be tested in other quest-based subscription virtual worlds:

In general, these are not big-ticket items. While there are profit
margins, they are so small as to likely be of little interest to gold
farmers with large quotas and others looking to make an offline profit.
These activities are therefore more likely to be those of players
looking to make a bit of extra money by picking up items, either from
vendors or killing low level mobs, that are relatively accessible to
them.

Martin has hit upon something very interesting, a potential loophole in the economic coding of expansive games like World of Warcraft. If a player can purchase a common item from a non-player vendor for 5 silver pieces and then successfully sell that item to a human player at the auction house for 10 silver pieces, the player has essentially uncovered an arbitrage opportunity of infinite value, as most common items replenish after a set number of minutes.

This also raises a real-world economic question: If a player can make an unlimited in-world profit on an item such as the "small egg" during a set period of time (the period of a quest that makes the egg a must-have item), what stops the player from turning the mountain of virtual gold into a real-world moneymaking opportunity? Taking the leap from a virtual fortune to a real-world financial gain is not without risks, but as we've seen, the third party virtual goods market is a multi-billion dollar industry.

More importantly, what does this mean for game design? If a handful of players can create outsized in-world fortunes thanks to their knowledge of price differences, is this fair to other players? Should their earnings be considered similar to exploiting an unintended bug in the programming, or would that punish players who did the research and took advantage of an opportunity available to any other player willing to put in the footwork?

The fundamental question of fairness is one that should be addressed quickly but thoughtfully, as every new special event and festival raises the chances for events like Warcraft Egg-mania and the frustration it can stoke in gamers who missed the opportunity for massive profits. We'd love to hear your comments – let us know using the comments link below!

3 thoughts on “Manual Labor in Virtual Worlds: How Fair Are In-Game Auction Houses?”

  1. They could make all quest items character bound. They could also not sell any items that are craftable.
    Black shirts are a perfect example. I know someone who buys them in a shop round the corner from the AH for 50s, then sells them on the AH for 6g. She sells at least 2 of those a day because the person either doesn’t know you can buy them at the shop or assumes, as a Tailor, she made them and they can’t be bother to train and hunt the reagents themselves.
    Other times, for example, certain items become available at a vendor once your character has reached a specified reputation level. You can buy these items then sell them on, those are good money makers.
    Other items are things that only appear at vendors for limited times or in limited numbers.

  2. I am trying to understand your logic, but I simply have not seen any character ever become rich selling small eggs. A character still has to spend TIME gathering the small eggs. Even based on the fact that you might pay “50 silver” for a small egg during the holiday quest period according to your source, something conveniently overlooked is the fact that 50 silver has virtually no value in World of Warcraft to anyone who has played characters into any expansion content.
    To take a leap from players selling small eggs for two weeks at a markup to making the claim that someone could garner genuine real-world financial gain via manipulation of seasonal demand is slightly ludicrous, especially when you consider the math involved:
    50 silver (cited in source) per egg * 2000 = 1000 gold (minimum quantity of gold most gold farming sites will sell you) = ~$6.
    Yes, that’s right, the time it takes to get 2000 small eggs might make you about $6, if you get very lucky and find someone who will buy gold from someone with no reputation at prevailing market rates. You can store 20 eggs in one stack, which might make you a total of 10 gold. You only get about 100 bag spaces total, which doesn’t factor in the fact that you have to pay for your bags and the bag slots in the bank inventory system. On the other hand, high-end item enhancements will regularly garner a 25-200 gold profit PER ITEM SOLD, and will often stack similarly, and will sell consistently well year-round as long as they remain the best available bonus in one way or another.
    Nothing needs to be addressed, quickly or thoughtfully, in regards to the fluctuations in the price of the small egg. It’s supply and demand. Demand spikes because people want to experience the holiday event with a minimum of wasted time. It’s the same reason why people usually buy eggnog at the grocery store. You can make your own eggnog, but it takes a lot more time.
    I understand the desire for sensationalism to drive some page views, but you really should try to get a more complete perspective on the game you’re criticizing before issuing an off-base condemnation of a well-functioning system of fairly naked capitalism.
    As someone who has actually experienced the aforementioned holiday quest period, and has a great deal of knowledge of the in-game auction system, I have to say that your article does not hold water.
    There are many ways in which the system might be “exploited” for speed of advancement and/or financial gain, but this article does not even get close to them.

  3. Alex —
    Thanks for the comment, good to see you back on the site. The point
    VERN is making and that Im building on is that the items are also
    available direct from NPC vendors at a much smaller cost than the
    potential realized profit from an in-world auction house. Since NPC
    vendors replenish their stocks, a smart player is faced with an
    unlimited supply of guaranteed profit during the event window. Farming
    the items yourself will definitely cut down on the profit margin.
    Like I said in the article, this doesnt apply to every item.

Comments are closed.