Virtual goods are now being exchanged for real money, creating an economy that is very complex. In the gaming world, developers and gamers alike trade avatars, power-ups, virtual weapons, and other game or avatar components in significant enough volumes to warrant a close look into the world of this economic segment. And that is exactly what this book, inspired by an anonymous participant of a gaming conference, does: it looks into the design and analysis of virtual economies.

The 14 chapters resemble an introduction to economics textbook with a focus on virtual goods. After the introduction, the second chapter outlines theories of human behavior, followed by a chapter on classification of goods (material, information, and virtual goods). It includes people that own things, digital or real, and decide what to do with them. Chapter 4 studies supply and demand. Chapter 5 focuses on regulating markets, and chapters 6 and 7 cover market power and pricing and methods of exchange. Like in any market, an equilibrium may exist, and the supply and demand define the pricing.

Externalities, or unanticipated behaviors, and secondary market trade are the emphasis of chapter 8, and institutions and non-market allocation are the focus of chapter 9. Chapter 10 focuses on the topic of money, followed by an elaboration on macroeconomic design and another chapter on macroeconomic management. The policymaking essay and the elaboration on why the real world needs virtual economy design conclude the book, with questions around what we can learn from the virtual economy that can be applied in the real economy to resolve current and future crises. Digital goods have characteristics often uncommon to real goods, as information can be replicated virtually indefinitely. But a deeper look reveals that scarcity can and is a problem in the virtual worlds, as limitations exist and/or are imposed by the applications users use. Some elements of the virtual economies are almost identical to real economies, while others can be embedded deeply behind the scenes so that they may go unnoticed while driving economic exchanges.

Written in an easy-to-read style, with illustrations and references to current content, this book is informative, educational, and inspirational. It invites the reader to think and draw parallels between what they have known about the economy and what is emerging, and draw parallels between the two economic segments. While the things in the virtual economies change and emerge quickly, the book focuses on concepts that are likely to morph a bit slower, thus making the toolkit presented on the design and analysis of virtual economic realities useful, current, and relevant.

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