Auction house driven digital economy

To understand the basics behind the three games I’m going to use as examples with auction based economy I provided links to read about the core mechanics:

Diablo III

Path of Exile(PoE)

World of Warcraft(WoW)

I also provide a basic introduction to online auctions where I will concentrate on the Vickrey auction:

Online auction

Now one might ask themselves why a digital economy is worth researching. The answer I found is that the difference between a digital economy and real world economy is fleeting. There are professional “farmers” that gather digital currency that can be used to sell for real life currency, in the case of WoW there have been websites where you can buy digital currency for real world currency for ages.

Chinese prisoners forced to farm WoW currency

More recent news stated that the digital currency of WoW has reached a level where the digital currency is more worth than a country’s own currency compared to the US dollar.

Venezuelan currency worth less than WoW currency

Now what can a WoW player do with this currency one might ask. There are a lot of items one can buy for digital currency from non player characters. But mostly the economy is based around WoW’s auction house where players bid on other players items which could help the buying player progress in the game. Some players can manipulate the auction house to increase their own profit by buying items cheap and then flooding the market with higher priced items.

The current system of WoW auction house is mainly based on a buy out option, but could a Vickrey auction be a better option? The answer would probably be no since most transactions is instant, but with a Vickrey style of auction would be more time consuming.

 

The Diablo franchise is long lasting game franchise that put it’s genre on the market, hack and slash. The two first games in the franchise did not have any form of auction house and trading where done with people using chat and finding people wanting to buy what people where selling. But the last game changed it with an auction house where one could spend real life money to gain an advantage. The loyal fanbase of the Diablo franchise did not approve of this new system and after a year after release the developer closed the auction house for good. The reason is as stated:

 

“When we initially designed and implemented the auction houses, the driving goal was to provide a convenient and secure system for trades. But as we’ve mentioned on different occasions, it became increasingly clear that despite the benefits of the AH system and the fact that many players around the world use it, it ultimately undermines Diablo’s core game play: kill monsters to get cool loot. With that in mind, we want to let everyone know that we’ve decided to remove the gold and real-money auction house system from Diablo III.When we initially designed and implemented the auction houses, the driving goal was to provide a convenient and secure system for trades. But as we’ve mentioned on different occasions, it became increasingly clear that despite the benefits of the AH system and the fact that many players around the world use it, it ultimately undermines Diablo’s core game play: kill monsters to get cool loot. With that in mind, we want to let everyone know that we’ve decided to remove the gold and real-money auction house system from Diablo III.”

(https://us.battle.net/d3/en/blog/10974978/diablo%C2%AE-iii-auction-house-update-9-17-2013)

Diablo 3 auction house

Now a similar game in the same genre as Diablo called Path of Exile has managed without a auction house. Instead people use a third party site for trading without using party system or chat to trade like in the older Diablo games. There are discussions in PoE forum on why there aren’t any auction house but the developers want people to find their items or trade by contacts instead of instantly buying themselves items to progress in their game. It is also worth mentioning that the currency in PoE is more dynamic than in the other two mentioned games. PoE use the concept of leagues that starts at a regular intervall every other month. With a new league every player starts from scratch and then the rare currency is worth a lot more than a month old league.

Trade site for PoE

Trading in PoE

 

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