The Economic Impact of Automation and Botting in EVE Online: Inflation, Deflation, and Real-World Parallels

This podcast episode delves into the complex economic dynamics of EVE Online, specifically focusing on the pervasive issue of botting and its profound implications for the in-game economy. It highlights how automated programs, or 'bots,' are employed to perform repetitive tasks like hunting hostile NPCs for 'bounty prizes,' which are the largest source of in-game currency (ISK). This constant, 24/7 money generation by bots acts as a 'currency faucet,' leading to significant inflation within the EVE Online universe, observed at an alarming rate of approximately 10% annually over the last five years, far exceeding the 2-3% target inflation rate for most modern nations.

The episode further explores the ongoing 'arms race' between game developers and botters, with developers implementing measures to counteract botting, such as making it harder for robots to detect hostile ships. It then introduces a hypothetical scenario, 'Reality Offline,' where automation is not only permitted but encouraged. In this alternative model, if bots were primarily used to produce goods rather than generate currency, the economic outcome would be deflation. This distinction is crucial: while botting for currency causes inflation (more money, same goods, higher prices), botting for goods causes deflation (same money, more goods, lower prices).

The discussion meticulously explains the concepts of inflation and deflation, clarifying that inflation is measured by the Consumer Price Index (CPI) and reflects how expensive things are, not just the amount of money circulating. It draws upon the insights of John Maynard Keynes, who argued that while both inflation and deflation are detrimental, controlled inflation (2-3%) is the lesser of two evils. Deflation, surprisingly, can be equally or more damaging, as it discourages spending and investment, leading to economic stagnation, because money gains value over time, incentivizing hoarding.

Ultimately, the podcast positions EVE Online as a valuable real-world economic model. The virtual economy's responses to automation, policy changes, and the interplay of currency faucets and sinks offer profound insights into how real-life economies might react to similar forces. The episode underscores the critical importance of understanding these economic principles, whether in a virtual world or the global economy, to maintain stability and foster growth, highlighting the staggering similarities between the challenges faced by game developers and real-world economic policymakers.

machines are really good at doing repetitive and tedious tasks and so they may just make the world's best MMO player

The largest source of esque the in-game currency is from this section here bounty prizes for non EVE players

at any time in the EVE Online universe there are teams of robots printing money 20 four hours a day 365 days a year through these bounty prizes

running at about a 10% inflation rate per year over the last five years

at the end of the day it's an an arms race of the borders versus the game developers

inflation despite what most people assume is not actually a measure of how much money there is floating around an economy but rather how expensive things are

deflation can be just as bad if not worse for an economy which doesn't really make sense on paper goods getting cheaper how is that a bad thing

Keynes concluded that inflation is actually the lesser of the two evils if kept to a controlled level and that is why today the world's over developed countries target a two to three percent inflation rate

EVE Online is a great model to look at to see how economic changes like automation or policy changes like restricting automation will affect a real-life economy