Hyper Inflation in Diablo III! | Exploring Markets

Hyper Inflation in Diablo III!

Here's a table showing the price change of goods in the Diablo III video game virtual marketplace:

One look at the chart above and the rampant inflation is evident. The Radiant Star Amethyst has moved from its 2013 average price of 17.4M to a May 7-8 price of 85.8M.

Inflation is a mysterious force and few truly know how and when it comes into full effect. Central banks are most responsible for the rate of inflation as they, through several tools, control the money supply. The funny thing here is that in Diablo the money supply also has forces that control it – from Mises.org:
  • Drops — When a player defeats a foe, they often receive a reward of virtual gold or a good saleable into virtual gold;
  • Rewards — The game involves the player undertaking “Acts,” and within each act are a number of “quests.” For completing these, players are typically awarded virtual gold;
  • Buyers — Players can sell items to “in-game” (computerized, non-human) buyers, receiving virtual gold.
  • Repairs — Over time, a player’s equipment will become damaged in combat and suffers wear-and-tear, requiring periodic restoration from an in-game craftsman in exchange for virtual gold;
  • Forging — Players pay virtual gold to an in-game blacksmith for weapons;
  • Rakes — Using the gold auction house costs players both a listing fee and a transaction fee, removing virtual gold from the economy;
  • Consumables — Players can purchase potions, scrolls, and other items from vendors for virtual gold.

Read more: http://mises.org/daily/6435/A-Virtual-Weimar-Hyperinflation-in-a-Video-Game-World