Wednesday, 23 July 2008

Of Microeconomics and Tales of Pirates

I find this book by Gans, King and Mankiw very appealing. Deep in my head, I had always wanted to know what on earth it is that economics has to offer as an academic field (to the extent that it has an honorary Prize in Economics, a Nobel-equivalent).

It starts off with "Ten lessons from economics", divided into three 'types' of lessons. I'll focus on the first one: How people make decisions.

Lesson 1: People face trade-offs
At the most basic level, this lesson is illustrated by my decision whether to play the MMORPG Tales of Pirates or not. Once I decide to play, more trade-offs surface: Should I pick Lance, Carsise, Phyllis or Ami? What stats should I add? What skills to learn? Because I can't be a Lance-Carsise-Phyllis-Ami universal soldier who has maximal stats and knows all skills.

Lesson 2: The cost of something is what you give up to get it
So I selected Lance because I want to be a dual-sword-wielding Crusader. It looks cool. But I start out as a Novice who has no offensive and defensive skills at all! Then I can turn into a Swordsman at level 10. A Crusader is available only once I hit level 40.
To be a Crusader, I need to level up.
To level up, I need to kill monsters (or do quests...but most quests still involve killing monsters anyway. And I want to do this quickly).
To kill monsters more quickly, I can either add strength or agility. Strength increases the damage that I do when I swing my sword. Agility increases my rate of swinging the sword. Every character gets 1 point per level up (5 points every 10th level).
I decide to add my agility first, because the swordsman that I have in mind is a fast-swinging warrior. What I've given up (the opportunity cost) to increase my attack speed is an increase in my other attributes, which are strength, constitution, spirit and accuracy.

The book cover

My crusader

Lesson 3: Rational people think at the margin
Swordsmen have a skill called Illusion Slash. It is an "air wave" to attack enemies from a distance. It increases tremendously if my attack speed reaches 140, and increases even more if it reaches 210 (and no more after that).
I was a swordsman when my attack speed reached 139. My agility at that time was 40, and I had a few points to spare. So I added one more point into agility, and my attack speed reached the magical number 140. The monsters which previously survived 2 Illusion Slashes could now survive only one. By the way, after casting an Illusion Slash, I have to wait for 5 seconds before delivering the next one. Killing rate was significantly increased by just 1 mere status point.
The marginal benefit exceeded the marginal cost.

Lesson 4: People respond to incentives
To be really blunt, the opportunity cost of playing this game is my time. I could be reading. Or writing. Or thinking. Or doing something else other than staying stuck to the computer. But playing this game takes all of that away, and while playing, all I can do is read, write (type), and think within the boundaries of the game. Yes, deciding what monsters to kill and what items to collect are thinking processes.
And all I want to get is a lot of fun. Which usually relates to achieving high levels and getting lots of powerful equipment.
That's why, during the 2x exp event (experience gained by killing monsters is doubled - effectively making leveling up faster), I didn't mind spending one whole day slashing and hacking monsters (also called grinding). I used the mini-amplifier of strive to again double the experience, and partied with a newer character to get the 3x experience boost from Star of Unity. Each level 19 Killer Shroom which would normally give 226 experience points gave me 2,712 instead.
Having 2x, 3x and 4x exp events are indeed incentives to play and level up.

So yes, observing the links between economics and my gaming habit does intrigue me.

1 comment:

chanck said...

very profound economic lessons u have there... haha
I see... so how's life overall at there so far?
Life at ACCA's great. Now doin my my 2nd year already...
By chance if i get to go to Melbourne do be my tour guide ya. haha