Work in Progress

Last December I read about gift economy on Wikipedia. It was an interesting article. Gift economy didn’t looked very sustainable to me and, hence, I was shocked to find multiple instances of gift economy in the real world.

Gift economies work primarily on the idea of social prestige and warm glow. If I gift a coffee mug to a person in this period, it would increase the social prestige and the amount of gifts I will receive in subsequent periods. Apart from this selfish motive, the gift of coffee mug would also provide warm glow to my heart and make me feel better.

These ideas excited me. I started a search for theft economy. This theft economy would be identical to gift economy, apart from the fact that economic agents would be primarily stealing rather than gifting. Unfortunately, I reached a dead end. Apparently there’s not much, if any, text on this topic. Distraught, I was about to give up when I suddenly remembered a game I used to play when I was in my teens. It was King of Thieves (KoT).

KoT is an online PvP game where the objective is to steal gems to increase one’s social status. If we ignore some unrealistic game mechanics, KoT is a very good practical demonstration of theft economies.

Here are my observations:

The economy of KoT is sustainable

KoT, with little or no modifications to the core game play mechanics, was able to sustain a dynamic system of players on its platform.

In the world of KoT, the net absolute wealth of the economy keeps increasing at an non-exponential rate. It is difficult to measure the trends in wealth inequality due to dearth of open data, but considering KoT’s rather stable player base we can say that it is not horribly bad.

Theft economies have demand and supply

In theft economy, each economic agent is both a supplier and demander of risk. For a given increase in wealth, their would be demand for a subsequent decrease in exposure through the purchase of defenses. This would correspond to a downward sloping demand curve between wealth and risk. On the supply side, an increase in wealth would lead to an increase in risk of thefts faced by the players. This would correspond to an upward sloping supply curve. The amount of aggregate wealth and risk of theft would be determined by the intersection of these two curves. Hence, a general equilibrium is acheived in theft economy.

This points to one of the causes of the enormous success achieved by KoT: transperancy. In KoT, a player can measure the success rate of theft while choosing among multiple dungeons with a quick glimpse of the map. Similarly, players can work on those defenses which contribute more to the marginal decrease in risk by easily teasting their dungeons. This transparency makes the general equilibrium possible in the game.

Of course these assumptions won’t hold in reality: a thief will often be unable to measure the risk without a huge expenditure, and a principal-agent conflict would soon crop up as the ‘dungeon’ becomes too difficult to be managed by one person. Hence, theft economy might not be possible for a large economy.