The Economic Meaning of Play: Ludology and Praxeology in Video Game Worlds

Abstract

This chapter explores the economic meaning of video games and virtual worlds. Section 2 outlines the scope of video game economics and several different types of research included under this umbrella term. Section 3 then explores one of these types in more detail by examining the relationships between action, choice, and economics on the one hand and games and play on the other. Section 4 builds on this insight by exploring the economics of gameplay, especially how the structure of video games implies a series of economic problems that players solve: scarcity, choice and tradeoffs, opportunity cost, specialization and division of labor, trade, and entrepreneurship. Section 5 then discusses virtual worlds and their relation to real-world economies. Section 6 concludes with some thoughts on the purpose, value, and limitations of video game economics.

Keywords: Praxeology, ludology, video games, virtual worlds, scarcity, choice, tradeoffs, opportunity costs, specialization, division of labor, trade, entrepreneurship

JEL Classification: B52, D01, L82, Z11, Z18