MMORPG sweatshops

A while ago, I’d posted on some papers and articles on the Internet as a research lab, and had pointed to studies that measured the real world value of MMORPGs (massive multi-player online role playing games).  Edward Castronova, who pioneered this research, had estimated that the average wage of the Everquest world of Norrath was US$3.42 per hour, a value that could be measured through the phenomenon of trading items such as virtual magical swords on e-bay. 

John Quiggin at Crooked Timber reports on a related but unsurprising phenomenon.

“At the Creative Commons conference last week, I heard a story to the effect that when the owners of one of these games tried to prohibit item trading they were sued and, in the course of litigation discovered that the plaintiff ran a sweatshop in Mexico where workers participated in the game solely to collect salable items. Clearly as long as the wage is below $3.42 there’s an arbitrage opportunity here. More technically sophisticated arbitrageurs have replaced human workers by scripted agents, working with multiple connections. Either way, arbitrage opportunities can’t last for ever, and are likely to be resolved either by intervention or inflation.

The positive economics of all this are interesting enough. But how about policy analysis? Who benefits and who loses from this kind of trade, and do the benefits outweigh the costs?”

Read on.