Emergence of networks and market institutions in a large virtual economy

Curtis Kephart, Daniel Friedman and Matt Baumer

Discussion Papers, Research Professorship Market Design: Theory and Pragmatics from WZB Berlin Social Science Center

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.

Keywords: Multiple Money as Medium of Exchange; Market Makers; Virtual Economy; Market Efficiency; Network Analysis (search for similar items in EconPapers)
JEL-codes: B41 C45 D49 E42 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-mac, nep-net and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbmdn:spii2015502

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