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EVE Online Economics – A Q&A with Dr. Gudmundsson

Updated Wed, Mar 24, 2010 by Ethec

Dr. Eyjolfur  Gudmundsson is CCP's lead economist. Ten Ton Hammer caught up with him at the 2010 Game Developers Conference, where he was on-hand to deliver a great talk about CCP's initiative to rid EVE Online of illicit currency, item, and account sellers. We spoke with Dr. EyjoG about these topics, and though he wasn't able to speak directly about the design and implementation of the Tyrannis expectation, we were able to hear his comments on his vision for EVE's economy during and after the May expansion.

Ten Ton Hammer: First, I think this is the first time we've interviewed a PhD at Ten Ton Hammer. How did you first become involved with EVE?

Gudmundsson: The university that I used to work at had a small seminar on experimental economics in 2004, which was lucky enough to have Dr. Vernon Smith, who had received the Nobel Prize for basically creating experimental economics. We discussed how we could use experimental economics to enhance our research in Iceland.

We also had this guy come from a computer company called CCP. He introduced us to this game that they had just published that had a lot to do with economics, and thought it would be exciting for us to experiment with. When I saw his presentation, I realized EVE Online would be the first online economy that functions on the same basic principles that real life economies do. We can learn a lot about real economics though EVE because we have a lot of data.

Economists never have high quality data, but in this case, we actually do. So that's how I was introduced to the game. When CCP started to look for an economist two and a half years later, I said I'd try it. It's such a unique thing that if I didn't try it, I knew I would always regret it.

TTH: Have you been approached by universities that want to use your data?

Gudmundsson: Absolutely. We have agreements with a Finnish university that we've done research with. We have some cooperation with Icelandic universities, including a philosophy department studying online democracies like the Council of Stellar Management. Here at GDC I've been talking with an American research group, the same group that has been looking at Everquest data. Hopefully, we'll be able to do something with them in the future. There's a lot of academic interest in getting into our world and understanding it.

To be absolutely clear, though, we do not allow direct research on the Tranquility server, or anything like that. This is all old data that we share, though it's anonymized, encrypted, and so forth. It's all about trying to understand behavior, rather than trying to figure out what individuals are doing.

TTH: Tell us what you do during a typical week at CCP.

Gudmundsson: I don't think I've had a typical week since I started. We have ongoing projects. I am the lead economist, but I am also the director of research and statistics. We have a unit of eleven people that is split into four groups. One group deals solely with the in-game economics, they help with the quarterly economic report, and help the development team to gather, interpret and give feedback on information during the development process.

TTH: They keep their findings relatively secret.

Gudmundsson: Yes, that's all internal communication for the company. But then, we also have external communication like this. We want to have as much of that as possible. The information in our quarterly economic newspaper, you won't find that kind of information about any other MMO. Another group deals with subscribers and market research. They look at trends in subscriptions, where players are coming into and leaving the game, and try to match them with in-game behavior. That's interesting and fun research.

Then we have the Council of Stellar Management, they visit twice a year. Their recent visit in February was really productive. It was a good meeting. We changed the format to talk about larger issues. To talk about where EVE should be heading in the future, rather than what we should fix now. Everybody liked the new format. We also talked about little issues, but more was spent on the bigger issues. We are also thinking of changing the format of the quarterly economic newsletter. Our development cycles are getting longer. We plan a year and half into the future. So we're thinking of making the CSM cycles longer, as well.

The last group is the internal affairs unit. They do nothing but monitor CCP and their in-game behavior to make sure that everybody is playing according to the rules. We put a very high standard on our employees. They can play, of course, but they not in the same ways as the regular players. We monitor that quite extensively. As the company is growing and we now have more than 470 people, it becomes more important that everybody is clear on why it is a crucial factor for our community to understand that we take it very seriously that nobody at CCP should have an advantage over anyone else.

TTH: Were you heavily involved with setting up internal affairs?

Gudmundsson: Basically, I was focused on the processes used rather than the unit itself. It works very independently. I am there only as support.

TTH: Let's talk a bit about the game, starting with the PLEX initiative. EVE is one of the first games to allow a form of legalized currency conversion...

Gudmundsson: Well, I wouldn't say legalized currency conversion. Once you decide that you want to spend fifteen dollars on a PLEX, you cannot redeem that and get it back. All you can do is put more time codes into the game.

So it's not legalizing the sale of currency. What we are doing is facilitating the exchange between time and currency, allowing players that otherwise couldn't have played because of their real life situations. Like, a player that doesn't have a credit card but has plenty of time to play, will have lots of in-game currency. If he doesn't have money to pay for the subscription, perhaps because he doesn't have a credit, he would be out of the game. Another guy, who has a lot of money but little time in real life, might not have much ISK. So these guys are actually trading. All we do is facilitate the exchange though the in-game market. That's what I think is so brilliant about all this. It's just like any other item in the game. The players are buying and selling it, and there's a market price for it completely controlled by supply and demand.

TTH: In addition to the obvious benefits to the players from the PLEX system, are there also economic reasons to do it for the game?

Gudmundsson: Not really. This goes a little more deeply into the philosophy of money being used in the system. If people have a lot of money but no stuff to buy, the money just accumulates in the system. You're not earning interest, and the money just sits there. Money doesn't give you anything. It's the stuff you get with money that gives you fun, utility, and happiness. PLEXs help money to flow faster. In economies, it's called the philosophy of money. It increases trade and production because you are buying something that somebody else is producing. In short, it helps the economy.


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