Is World of Warcraft a Game or a Story?

It is both, of course. But my impression is that, over the years, it has become increasingly less a game and more a story.

For those who are not familiar with WoW, player characters have a level, increased by gaining experience—killing monsters, doing quests. The level has a maximum. Each time Blizzard does a major revision of the game—the latest is the fourth—the maximum level is raised and players who were at the old maximum set out to level up to the new. 

In the original game, as best I remember it, leveling was fairly hard—you were doing quests that at least sometimes stretched your abilities,  requiring ingenuity and/or patience to complete. In at least the last two versions, that was no longer the case. Almost all of the quests were easy, with the result that a competent player's character would almost never get killed—and death in WoW is not permanent, merely a minor inconvenience. 

The player was being walked through an elaborate (and, in the most recent expansion, gorgeously illustrated) plot. Only when he got to the top level did it become necessary to do more difficult dungeons and raids in order to win better gear to equip the character with. In effect, the game has been split into two halves, with everything up to top level primarily a story. The top level offers the opportunity for those who wish to do relatively hard things to do them, provided they do them in groups. So far as I can tell, the only opportunities for someone playing solo to face real challenges come either from trying to skill up very fast, which can involve fighting lots of enemies at once instead of one at a time, or going solo into dungeons intended for lower level groups.

Aside from the lack of high level solo content, I'm not sure the current structure of the game doesn't make sense. It lets the designers focus their attempts to create difficult and interesting content on the top level, which is where most serious players end up spending most of their time. On the other hand, it also means that getting to that top level doesn't stretch the player and so may not teach him what he will need when he gets there.

My most serious criticism, however, is not of the structure but the content. Blizzard's designers do a fine job as artists, even if their tastes in armor and weapons are a lot farther in the comic book direction and farther from realism than mine. They do a good job as programmers. 

But if any of them writes a novel, I don't think I want to read it.

Middlemen, Specialization and Birthday Parties

A child's birthday party as I remember them, both as child and parent, consisted of the child's friends and acquaintances coming over to his house, entertaining themselves with squirt gun battles in the back yard and/or party games or board games inside, singing  "Happy Birthday" and consuming (at least) cake and ice cream. The final stage was the opening of presents, followed by the retrieval of the guests by their parents,  the whole process more or less organized or chaotic according to the tastes and abilities of the hosts.

This afternoon I attended my grandson's birthday party. It was held at a facility obviously designed for holding children's parties. The entertainment, preceded by a safety video, consisted of playing on and in large inflatable structures—slides, a bouncy room, an obstacle course. That was followed by cake and pizza, after which everyone went home, the birthday boy accompanied by a bag of unopened presents. 

Looking at it as an economist, it is clear that the change from then to now represents an increased use of the division of labor, something that, as an economist, it is hard for me to object to. And yet I do, and I do not think the reason is entirely a conservative preference for the way things used to be. For somewhat similar reasons, I find having guests over for dinner a different, and better, practice than taking them out to a restaurant. Homes have an emotional dimension to them. To invite someone into your home, whether an adult colleague or a child's friend, is to some small degree to treat him as part of your family.

Increased specialization, the substitution of commercial for home production, appears in a variety of other contexts. Another that I have observed is the Society for Creative Anachronism, a group that does historical recreation of the Middle Ages and Renaissance. In the early years of the Society, thirty or forty years ago, if you wanted medieval clothing you researched it yourself and made it yourself or, if you were lucky, got a friend who was better at it to make it for you. The same applied to most of the rest of what you had—rattan swords, most or all of your armor, jewelery, tents, even shoes if you wanted something more period looking than you could buy in a shoe store.

Nowadays, you can go to the Pennsic War, the Society's largest annual event, or  online, and buy clothing, swords, armor, jewelery, tents, shoes. In some ways, it is a great improvement—the quality and authenticity of what you can buy, sometimes at quite reasonable prices, is considerably better than what most of us managed to make for ourselves. The best work now, done by specialists, is better than the best was forty years ago, and available to many more people.

Something is gained, but something else is lost. Part of the fun, in the early days, was having an excuse to learn and practice a wide variety of crafts, research things for yourself instead of depending on what other people told you.

At the most recent Pennsic, I made the acquaintance of a group that camped near us but that, for some reason, I had not previously encountered. Many of their tents, much of their furniture, they had made for themselves. They called themselves the clockmaker's guild, and one of their members had indeed built a clock, which he showed me. It was made of wood and worked without a pendulum, the pendulum clock being, he told me, an invention that appeared just after the SCA's cutoff of 1600 A.D.

All of which is how I knew that they were my kind of people.

A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.

-Robert A. Heinlein

The Capcha Question

A commenter recently complained that the capchas, the images that you have to type in when posting a comment in order to show that you are a person and not a program, are too difficult—a problem I have seen elsewhere online. The obvious problem with not having them is that it makes spam comments easier, since they can be done wholesale by software instead of one at a time by a human being.

As an experiment, I turned off the capcha requirement, with mixed results. Judged by the comments sent in—I have blogger set up to email me copies of all comments—spam increased considerably. Judged by the comments that actually appeared, it didn't. Blogger did a sufficiently good job of filtering out spam so that most of the additional ones got eliminated.

There is still a cost, however—if I want to keep track of comments, including comments on old posts, by reading the emailed copies, I have to wade through a lot of spam. And one reason to keep track of them is that blogger sometimes makes mistakes, in both directions. If I never read the posts that it thinks are spam, some real posts get eliminated.

Suggestions welcome—for the moment I'm leaving capchas off.

Towards Better Test Taking Software

Almost thirty years ago, when I was teaching at Tulane Business School, I had a project to develop software to let students take exams, and professors grade them, on computer—the name of the product was going to be "Electric Blue Book." Unfortunately, it never got to completion--something that has happened with a number of my projects. But many years later, other people did create such software. The version I'm familiar with, because my law school uses it, is Computest.

What is depressing about the software is that all of the ingenuity has gone, not into making it easier to take and grade exams, but into making it harder to cheat. From the standpoint of the user, the software is clearly inferior to what I designed but never got programmed. For example ...

In my version, the student would see a page listing questions and showing, for each question, whether he had done it and whether, if so, he wanted to go back to it if there was time. In my version, the professor would be able to have the software feed him all the answers to question one in random order, then all the answers to question two, and so on. Doing it that way makes it easier to remember what you are giving how much credit for than if you graded all of exam one, then all of exam two, then ... . 

It also eliminates an important bias in grading—the tendency to form an opinion of a student based on his answer to one question and then let that opinion distort the grade you give him on another. As my wife pointed out when I was discussing this recently with her, that is a problem discussed by Daniel Kahneman in his (very good) Thinking Fast and Slow. He actually did an experiment, and found that grading question by question instead of exam by exam resulted in the performance of students coming out less consistent—made it less likely that the student who got a good grade on question one also got a good grade on question two. He concluded that he had a strong bias towards imposing consistency on his grading, even when it wasn't there.

Unfortunately, none of this is present in Computest. It would be nice if someone involved in producing the program happened to read this post and did something about it, but not very likely.

But not all of it has to be done by them. It should be possible to write a program that would take the output of Computest, the files representing what each student wrote on the exam, and reorganize it so that the professor doing the grading could grade by question instead of by exam. I cannot think of any comparable way of fixing things at the other end, of making it easier to take the exam, but perhaps one of my readers can.

What started me thinking about this was the recent experience of getting exams that had been taken using Computest on a flash drive from my school, grading them on my computer and returning them by giving the flash drive with graded (and commented) exams on it to the students to pass among themselves, with each copying his exam. It would have been  easier if I could have emailed the exams to them—for one thing, that would have given them a chance to look at them before class and see if they had questions. But Computest requires the student's ID number, not his grade, and under my school's blind grading system that means that I don't know the name and so cannot email the exam back. I can imagine a number of ways of fixing that problem, but do not know if any will prove workable.

Economists and Virtual Worlds

I've just been reading an interesting article on economists and video games; it seems that a fair number of other economists have thought about the research potential provided by virtual worlds, and at least two gaming companies—Valve (Steam) and the company that runs Eve Online—have found it worth hiring economists to help run their virtual economies.

I tried putting in a comment, but their registration software seems to be broken at the moment, so I decided to put the comment here instead, in the hope that my readers may include other economists with similar interests. Here it is:

----

Interesting article. I'm both an academic economist and a game player--WoW not EVE--and have been intrigued by the possibilities for years. Some time back, I had a blog post on the possibility of designing an economics course for students already active in WoW or something similar, using the game to teach economics.

Several years back my wife, who also plays, encountered a cartel on the auction house, was invited to join, declined, was threatened with predatory pricing—apparently the cartel operator wasn't familiar with the economics literature on the problems with that tactic. The attempt lasted for a couple of days before the cartel gave up. But I've observed continued, and apparently successful, efforts by the same player to push up the prices of various goods by buying up whatever anyone else puts up at a low price, then relisting it at a high price. Both my wife and I have engaged in occasional "auction house wars" with that player, undercutting her prices on something we produce in an attempt to drive the market price down.

On the general issue of arbitrage, it's worth noting that time is a cost and markets are often thin. So there may well be apparent profit opportunities that don't get exploited, due to the fact that the profit isn't enough to motivate someone to engage in arbitrage unless he also has fun doing it.

Reading your article, it occurred to me that someone ought to set up an email list for economists interested in virtual worlds.

Why did Airlines Start Charging for Bags and Meals?

Twenty years ago, it was taken for granted that the price of your airline ticket covered checked luggage—and a meal if the flight was long enough to justify one. Today most airlines—the major exception is South-western—charge for each checked bag. All airlines within the U.S., in my experience, charge for meals. Soft drinks and peanuts are still usually free.

Looking at it as an economist, charging for extras that cost the airline something to produce seems like a sensible enough policy. If it costs the airline five dollars to provide dinner in the air, passengers who want the meal should be indifferent between the current fare and a free meal and a fare five dollars lower, accompanied by a five dollar charge for eating. Passengers to whom the meal is worth less than five dollars should prefer the latter arrangement. So charging for a meal, or any other costly add-on, while adjusting fares accordingly, benefits some customers, hurts none, and costs the airline nothing.

Bag charges may be an exception. As my wife likes to point out, the result of charging for checked bags is that people carry more as carry on, making it harder for everyone to board. At least one small airline I know of solved that problem by charging for carry on luggage as well, but, so far as I know, none of the majors have imitated it.

Charging for things makes sense now. Not charging for them made sense forty years ago. Under airline regulation, the industry functioned as a cartel; an airline could not lower its price without CAB approval. That held fares well above their competitive level, making it in the interest of airlines to compete on non-price terms—including free meals.

If the airlines had switched to charging for meals and luggage in the late seventies or early eighties, shortly after deregulation, there would be no puzzle—but they didn't. As best I can determine by a quick google, the first airline to do so was American, which only started charging for checked luggage in 2008. Airlines started dropping free meals earlier, about 2001, and started offering meals for sale a few years later. Why then?

One possible explanation for when free meals started to disappear might be 9/11, which caused considerable financial problems for the airlines—perhaps they decided they could no longer afford them. But that does not make sense from an economic standpoint. After deregulation, the airlines were free to raise or lower their fares. If meals cost the airline more than they were worth to their customers, why not abolish them earlier and lower prices accordingly? If not, then dropping the free meals was a less attractive alternative to raising fares, so why do it?

The closest I can come to an explanation of this puzzle requires me to replace the economic assumption of rational behavior with a form of predictable irrationality—the widespread belief in just prices, a subject I discuss in an old article linking economics to evolutionary psychology. 

Many people act as if they believe that they have a moral right to continued transactions on whatever terms they are used to having them in the past—that a seller who raises his prices is somehow trying to cheat them. It is not an unqualified belief—evidence that the seller's cost has increased may sometimes rebut it—but it is at least a presumption. And one way of acting on it is to avoid doing business with sellers who act that way, who offer you the same transaction at the same price for a period of years, then suddenly raise the price or reduce what they are giving you in exchange. 

For instance, airlines that stop providing you with free meals.

Of course, airline prices change all the time. But then, they also vary according to where you are flying, when you are flying, and how long in advance you bought your ticket, a pattern complicated enough so that the average passenger cannot easily keep track of whether the airline is offering the same fares this year as last. He can notice if the airline stops offering free meals or starts charging for checked luggage. And resent it.

If this analysis is correct, an airline that stopped offering meals with no obvious reason would suffer a reputational loss. Customers would decide that that airline was not their friend, was trying to exploit them, and would avoid it when possible. 9/11 offered an excuse. I do not know what set off the later switch to bag charges, but it may be significant that, within a fairly short period of time, most airlines were doing it, perhaps because the later ones had the practice of the earlier movers to justify their charges. And it may be significant that South-western, a very successful firm, continues to carry bags for free and makes a large point of that fact in their advertising.

This is a possible, partial, explanation of what happened, but not a very convincing one. Readers with better answers to my puzzle are invited to offer them.

When Costs Aren't

From the standpoint of an economist, the logic of global warming is  straightforward. There are costs to letting it happen, there are costs to preventing it, and by comparing the two we decide what, if anything, ought to be done. I am fairly sure, however, that  many of those who are sure we should be doing something about it do not see the question that way. What I see as costs, they see as benefits.

Reduced energy use is a cost if you approve of other people being able to do what they want, which includes choosing to live in the suburbs, drive cars instead of taking mass transit, heat or air condition their homes to what they find a comfortable temperature. But it is a benefit if you believe that you know better than other people how they should best live their lives—know that a European style inner city with a dense population, local stores, local jobs, mass transit instead of private cars, is a better, more human, lifestyle than living in the anonymous suburbs, commuting to work, knowing few of your neighbors. It is an attitude that I associate with an old song about little houses made of ticky-tacky—meaning houses the singer didn't like and was therefore confident that other people shouldn't be living in, occupied by people whose life style she thought she knew and was confident she disapproved of. A very arrogant, and very human, attitude.

There are least three obvious candidates for reducing global warming that do not require a reduction in energy use. One is nuclear power—a well established, if somewhat expensive, technology that produces no CO2 and can be expanded more or less without limit. One is natural gas, which produces considerably less carbon dioxide per unit of power than coal, for which it is the obvious substitute. Fracking has now sharply lowered the price of natural gas, with the result that U.S. output of CO2 has actually fallen. The third and more speculative candidate is geoengineering—one or another of several approaches that have been suggested for cooling earth without reducing CO2 output.

One would expect that someone seriously worried about global warming would take an interest in all three alternatives. Of course, in each case, there are arguments against as well as arguments for. But if one believes that global warming is a very serious problem and alternative solutions are costly, one ought to be biased in favor of each of them, inclined to look for arguments for, not arguments against.

In my experience, that is not how people who campaign against global warming act. They are less likely than others, not more, to support nuclear power, to approve of fracking as a way of producing lots of cheap natural gas, or to be in favor of experiments to see whether one or another version of geoengineering will work. That makes little sense if they see a reduction in power consumption as a cost, but quite a lot of sense if they see it as a benefit.

I have focused on global warming, but the pattern exists in other contexts and across the political spectrum. When 9/11 happened, a lot of the people who insisted that the threat of terrorism now made it unfortunately necessary to restrict individual privacy and civil liberties in a variety of ways were people who were in favor of the same policies before 9/11.

The general approach is perhaps best summed up in a quote attributed to Rahm Emanuel, back when he was working for Obama: 

 You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before.

The argument for sharply increasing federal spending and doing it with borrowed money was that it was an emergency measure made necessary by the economic crisis. For Emanuel, and presumably his boss, it was an opportunity to do things they would have wanted to do whether or not there was a crisis. The argument for using regulation or carbon taxes to reduce the output of carbon dioxide is that it is made necessary by the threat of global warming. For many of those who make that argument, it is an opportunity to make other people live the way those people think they should.

Good News, Bad News

The bad news is that it looks as though Obama is going to win. The good news is that it looks as though Romney is going to lose.

As I commented a few elections back, the problem with electing a Republican is that he does about the same bad things the Democrat would have done, with about the same bad consequences—for which we, people who believe in the free markets he pretends to believe in, get blamed.

Physics, Economics, and Hurricane Arguments

I just finished an interview, via Skype, that will eventually be up on the web. One question I was asked was how knowledge of one field feeds into thinking about another. It occurred to me that I had an interesting example, a case where two unrelated fields, both of which I have worked in, showed that two different arguments for a conclusion in a third field were both wrong.

The three fields are physics, economics, and climate science. The conclusion, widely repeated, is that global warming will result in either more frequent or more violent hurricanes, or both. The conclusion may, for all I know, be correct. Two common arguments for it, however, are both wrong.

The first argument is that hurricanes get their energy from heat, so can be expected to be more violent or more frequent if there is more heat to feed them. That sounds plausible—provided you don't know the relevant physics. A hurricane is a heat engine, converting thermal energy to mechanical energy in the form of moving air. A heat engine does not, indeed cannot, simply convert thermal energy to work—one that did that and nothing else, say a ship that ran without fuel on the heat of the ocean, would be what is called a perpetual motion machine of the second kind and is impossible because it violates the second law of thermodynamics.

A heat engine works by taking heat from a high temperature source, turning some of it into work, and dumping the rest into a lower temperature sink. The amount of work it can get out depends not simply on the temperature of the source but on the temperature difference (if my memory from long ago studies is correct, actually the difference in 1/T) between source and sink. So if you warm both source and sink, air and sea in the case of a hurricane, there is no particular reason to expect that more work will be available, hence no particular reason to expect hurricanes to get either more frequent or more violent.

The second argument is empirical. It is claimed—I presume correctly—that on average you get more hurricanes in hot weather. The obvious conclusion is that if earth's climate gets warmer, we will have more (or more powerful) hurricanes. This time it is economics, in particular the history of ideas in economics, that points out the mistake.

Quite a long time ago, William Phillips, an economist from New Zealand, noticed an interesting empirical relation—on average, when inflation was high, unemployment was low. The relation got labeled the "Phillips Curve." The obvious conclusion was that one could hold down unemployment at the cost of tolerating some inflation. A variety of governments tried to implement such policies. Their failure in the U.S. got labeled "stagflation," a situation with both high unemployment and high inflation.

What was wrong with the Phillips Curve was not the empirical evidence but the causal conclusion. What was really going on, as the evidence is now widely interpreted, was that unemployment tended to be low when inflation was higher than people expected. That makes sense on a fairly simple model. If workers underestimate inflation, they will see wage offers as more attractive than they really are and so be more willing to accept them, less willing to wait for a better job, than they would be if they correctly estimated future inflation. If employers underestimate inflation, they will observe high demand for their products at current prices and see that as a reason to hire more workers and expand production.

Times when inflation is high are also, on average, times when it is higher than people expect, giving you the empirical relation Phillips had observed. But if a government tries to exploit the relation by maintaining an inflation rate of (say) five percent a year, after a while people adjust their expectations accordingly and the unemployment rate goes back up. Raise it to ten percent, unemployment falls briefly, people adjust their expectations, and unemployment goes back up again.

The same argument applies in the case of temperature and hurricanes. On average, times when air temperature are higher than normal are also times when the temperature difference between air and sea is larger than normal—the sea, after all, has enormous heat capacity, and so tends to average out short term fluctuations in air temperature. So the observation that hurricanes are more likely in hot weather does not imply that they would be more likely if both sea and air got warmer, as, in a global warming scenario, they do. 

None of this implies that global warming does not make hurricanes more frequent or more violent. I have seen empirical claims in both directions—both that hurricanes are and are not increasing—and do not know enough about the field to evaluate them. But it does mean that two apparently persuasive arguments for why we should expect such a relation are wrong. 

And in each case, I spotted the error because of my background in a different, in one case entirely unrelated, field.

Libertarian Books: Sales vs Downloads

I recently came across a web page listing libertarian books in order of their rating on Amazon.com; my Machinery of Freedom was number 70, not surprising given its Amazon rating.

The book is also available as a free pdf from my web page, so I checked the download statistics and was pleasantly surprised to find that it is being downloaded at a rate of almost two thousand downloads a month, plus about 300 more of the .prc (ebook) version. That got me curious—what would the list look like if it was restricted to books available as free downloads, ordered by the rate at which they were downloaded?

The Mises site has a lot of libertarian books on it. Are there any of my readers who are connected with that site and willing to report download rates, or who know of public information on the subject?

The Half-life of Euphemisms

For no particular reason, I was recently thinking about the futility of the euphemism strategy—replacing a word that has negative connotations in the hope that the change will get rid of the connotations. The problem  is that if, as is usually the case, the connotations are based on what the word means not how it sounds, they will rapidly transfer to the substitute. The record for sequence length may be held by what we now usually refer to as a toilet. I do not know what the earliest term was, but the string includes "privy," "guarderobe," "WC," "lavatory," "bathroom," "toilet," and probably more that I have missed.

A different example that I noticed a few years ago was "gay." It was introduced as a substitute for "homosexual" on the theory that the latter was an insulting term. The problem, as usual, was that what made it insulting was that many people regarded what it described as immoral, disgusting, or both—and although  such feelings may weaken over time, they are not eliminated by a change in label. 

Not only did the negative connotations spread to the new word, the effect was not limited to its euphemistic use—a fact I discovered listening to casual chatter on World of Warcraft. Posters routinely used "gay" as a general purpose negative term, often with no connection to homosexuality. "That's gay" meant, more or less, "isn't that terrible."

There used to be a theory known as the Sapir-Whorf hypothesis, according to which language shaped thought. As best I can tell, the supposed evidence for it was mostly bogus. The euphemism strategy is the applied version.

And doesn't work.

Anyone in Europe Want a Talk?

It looks as though I'm going to be visiting Spain sometime early next year. Given how long the trip is, I would like to combine that visit with something else, and one obvious possibility is giving a talk or talks somewhere else in that part of the world--which, seen from California, covers most of Europe. 

It occurred to me that a blog post might be one way of seeing if anyone was interested. Some of my talks can be found online.

Macro and Micro Predators, Territorial Behavior and the Tragedy of the Commons

There are no large organisms that support themselves primarily by preying on humans; so far as I know, there have been none for several thousand years. There are lots of microscopic organisms that do so. Why the difference?

One possible answer is that macro predators face a tragedy of the commons—the deer I don't eat today will not be around, and fatter, next season because someone else will have eaten it. Micro-predators, on the other hand, have an "incentive" to preserve their food supply, both because the bacteria or viruses on me are all close kin to each other and so face evolutionary pressure to act in their common interest and because I am much larger and much longer lived than they are, so that many generations of them are dependent on a single me. From which it follows that a lethal disease is a mistake. From an evolutionary standpoint, diseases want to live off me while doing as little damage as possible.

When I made this point to my wife, she pointed out that some macro-predators solve the problem the same way humans do—via property rights. Their version is territorial behavior. If a single tiger succeeds in monopolizing his chunk of jungle, it is in his interest to let the fawn grow up today to be a better meal next year. 

Which leads to an interesting conjecture. Territorial behavior solves the tragedy of the commons only if the prey species is not too mobile—if the fawn spared today is likely, as an adult deer, to still be within the range of the tiger that spared it. It would be interesting to know whether there is an inverse relation between the probability that a species is territorial and the mobility of its prey.

All of which gets me some distance from my original point, which was about humans, not deer. One special reasons macro-predators have reason not to choose humans as prey is that humans fight back. Until recently, we have had no similar ability with regard to micro-predators.

With regard to fighting back, the tragedy of the commons point is still relevant. A prudent macro-predator might hunt humans in a fashion sufficiently selective not to provoke any major retaliation, tiger hunts or the equivalent. But doing so means giving up today's meal for a benefit shared with the rest of his species, making the incentive for prudence a weak one.