Let us look at this phenomenon on a familiar micro-scale… the video game. In Wired’s article the economics of today’s larger scale games, specifically its MMORPGs such as World of Warcraft, were examined for their effect on the mental captivity of their audience… the player. It was found that scarcity, not abundance, was a key ingredient to an engaging experience. Now, while every gamer loves a challenge, why would rich and fantastical environments with limitless resources not attract everyone who’s dreamed of making Trump Tower look like a taco stand? It’s not attractive because it’s not hard… and as it turns out, hard is fun.

Economics is loosely defined as choice under scarcity. After all, in the real world, there’s only so much to go around. You can’t always get what you want, and unfulfilled desires give rise to markets. But in a game world, there’s no inherent reason for scarcity. Game designers have given us plenty of utopias where we can have all the mithril we want, to buy whatever we want whenever we want it. Problem is, those worlds turn out to be dull. For example, the developers of Active Worlds made everything in the game free. Players built enormous houses – in which there was nothing to do. The game never quite caught on. That’s why today’s newer massive synthetic worlds make life hard. It’s why we have to scheme, fight, and occasionally beg for food, shelter, transportation, and great big flaming swords.
- Geekonomics, Wired Magazine – April 06.

Take a game like World of Warcraft… when you’re not fighting bands of enemies (or following the foolhardy Leeroy Jenkins into a deathtrap) you’re fishing, leatherworking, skinning, tailoring, or any of several otherwise mundane tasks. If you want choice armor and weapons you have to earn them. If you want a sweet ride of a mount you need to pay some mad duckets. And if you want the gold you have to earn it, lawfully or otherwise. It’s not easy, but this game is growing in players and servers every day. It’s hard, but it’s fun.

So why is hard fun? I’m not much for the rambling of psychologists, but a clue may be found in the seminal work of former University of Chicago psychology professor Mihaly Csikszentmihalyi. He has a theory called Flow.

Flow is a mental state of operation in which the person is fully immersed in what he or she is doing, characterized by a feeling of energized focus, full involvement, and success in the process of the activity.
- Flow, en.wikipedia.org

While the full concept is no doubt complex (and not without its more dubious assertions) the basic premise is simple. Activities that possess “flow” usually share a few common characteristics: clear goals, focus, loss of the feeling of self-consciousness, distorted sense of time, direct and immediate feedback, balance between ability level and challenge, sense of control, and intrinsic reward. If we look at this list we can quickly see the parallels with successful online videogames.

More than just in massive multiplayer games, there are smaller bite-size examples as well. Recently a small Flash game aptly titled Flow (created by Jenova Chen for his University of Southern California thesis project) gained notoriety when word of it quickly circulated through the blogosphere. In true Digg or Slashdot fashion Chen’s thesis website was flooded with online visitors in just a few days. Why, you ask? Is this game some gargantuan leap of Flash ActionScript technology? Nope. It’s small, simple, and patterned after Csikszentmihalyi’s principles of flow… making it unquestionably fun. There’s no record of high scores (there’s no score at all), but more than a few curious surfers found themselves engrossed in the wonderfully entertaining and aesthetically pleasing world of a small sea creature. Diving deep into the ocean to nibble little bright wisps of nutrition while out-swimming competitors was never so much fun!

Economics in games… flow in games… what’s the point? In the safety of the video game microcosm the behaviors of people reveal themselves in ways applicable to the “real” world. The same flow theory principle of ability-challenge balance that buries a fast-money-MMORPG is the principle that makes games like World of Warcraft flourish. This is, consequently, the same entrepreneurial drive that powers real-world capitalist economies over socialist or communist structures. The same lethargic undertones of the government collection of resources and subsequent reallocation can stifle the creativity and ingenuity of a people just as easily as reckless riches can kill a game. Think this is all a stretch? Think again.

This classic risk-reward model has proved itself over and over. Who would argue against the fact that the drive to excel is greatest where there is much to gain through excellence and nothing to gain through inactivity? This gain can be in the form of needed bread and water or a fleet of luxury cruise liners. If you were getting free food, would you then feel the need to grow it? Of course not… not unless your food source was going away sometime soon. If you got unlimited free healthcare would you have any incentive to stay healthy and make good choices? Of course not… we’d have a whole society of Keith Richards competing in the X-Games. If you knew your report card would be straight A’s would you study as hard? Not likely. And If you knew your concerted efforts towards a lofty career goal were sure to gain you nothing would you reassess your goals and reallocate your efforts? Of course you would…and you’d be right to. It’s all about the balance… the flow… the scarcity of resources… the risk and reward. What we demonstrate in our virtual worlds only mirrors our real instinctual behavior… and flow will engage us regardless of the venue, digital or actual.

So the next time someone asks what things would be like if everything was free, cleave them in twain with your battle axe and take their gold… because hey, if you survive you’ve earned it.

• Geekonomics, by Edward Castronova, Wired Magazine – April 2006
• Flow (psychology), en.wikipedia.org
• World of Warcraft, en.wikipedia.org
• http://www.jenovachen.com/flowingames/