In virtual worlds, does the price of goods matter, even if the currency is not "real"? The answer, according to Edward Castronova of Indiana University, is yes.
Castronova has published a working paper called A Test of the Law of Demand in a Virtual World: Exploring the Petri Dish Approach to Social Science. In the study, Castronova studied two different groups of users playing Arden, a fantasy game with a virtual economy. Both groups could buy items in-world, but one group's prices were set higher than the other group's. In the study of economics, the Law of Demand suggests that demand for a particular item decreases as the price goes up. Castronova's study suggests that the Law of Demand also applies in a virtual world, even with a virtual world economy.
The results of Castronova's study really aren't that surprising; even in a casual games setting such as Electronic Arts' Pogo, the number of users who accumulate virtual tokens without spending them would indicate the same principle applies across any virtual economy. The Pogo tokens can only be spent to enter drawings and outfit an avatar with clothing accessories, and backgrounds, yet many users are reluctant to spend the tokens on avatar items. Pogo even offers periodic sales and items with limited availability windows, much as a real-world retailer would to entice users.
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