Virtual Worlds for Fun and Research We mentioned Arden, the university-design MMO, a few times; a working paper has just been released that looks at economic behavior in MMOs using the game. The interesting thing here isn't so much the fact that people replicate real-world behaviors online (in this case, they purchased less of an item when it was more expensive), but that it's yet another piece of a growing literature explaining the utility of virtual worlds in actual research:
... 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. We found that players in the experimental condition purchased 43.1 percent fewer of the potions, implying a demand elasticity of -0.431. This finding is well within the range one expects for normal economic agents. We take this as evidence that the Law of Demand holds in fantasy environments, which suggests in turn that fantasy gamers may well be economically normal. If so, it may be worthwhile to conduct controlled economic and social experiments in virtual worlds at greater scales of both population (thousands of users) and time (many months).
This is kind of a less cool version of the WoW plague research, still my favorite example of academic research utilizing MMOs. As noted by the WoW researchers, virtual worlds may offer the potential to conduct research that would be impossible using real people (like, say, unleashing a plague upon the world). A Test of the Law of Demand in a Virtual World: Exploring the Petri Dish Approach to Social Science [via Terra Nova]