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Emergence of networks and market institutions in a large virtual economy

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Listed:
  • Kephart, Curtis
  • Friedman, Daniel
  • Baumer, Matt

Abstract

A complete set of transactions, more than 40 million within a 1.8 year span, allows us to track the evolution of the trader network and the goods network in an on-line trading community. The computer platform was designed to make barter exchange as attractive as possible; money was not part of the design and all players were created equal. Yet, within weeks, several specific goods began to emerge as media of exchange, and not long after that various sorts of specialized traders began to appear. We track their progress using network-theoretic metrics such as node strength, assortativity, betweenness and closeness. By the end of our sample, virtually all trade was money-mediated and market makers played a major role.

Suggested Citation

  • Kephart, Curtis & Friedman, Daniel & Baumer, Matt, 2015. "Emergence of networks and market institutions in a large virtual economy," Discussion Papers, Research Professorship Market Design: Theory and Pragmatics SP II 2015-502, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbmdn:spii2015502
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    References listed on IDEAS

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    More about this item

    Keywords

    Multiple Money as Medium of Exchange; Market Makers; Virtual Economy; Market Efficiency; Network Analysis;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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