Friday, April 3, 2009

WoWenomics on Deflation

To my delight there are now more and more blogs treating the economics of virtual worlds, especially of World of Warcraft. Many of them currently have posts up on what to invest in before patch 3.1, assuming that some trade goods will go up in price. Well, I'm still sitting on two stacks of Dream Shards I've been told would go up in price in patch 3.0.8., and never did. Up to now patches at best stopped deflation for a while. So I was asking the guys from WoWenomics, who have a financial background, on their take on deflation.

They think that it is a typical example of mudflation, which is an inflation in the number of items, leading to a deflation of item prices. Added to that is an effect that everything was overpriced when the expansion came out, and prices are falling to a more reasonable level. And Blizzard created more money sinks like mammoths for 20k or motorcycles for 15k material cost.

My own theory is still that at least one element of WoW deflation is that people simply stop grinding for money when they have enough, something that isn't often observed in the real world. But then, in the real world there isn't really a limit to how much money you can spend. In WoW there is.

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