Posts filed under "Theory"

November 6, 2006

A Contrarian View of Identity — Part 2: Why is this confusing?

This is Part 2 of a multi-part essay on identity. Part 1 can be found here. Part 1 ended with a promise that Part 2 would be up soon, but, as John Lennon once said, life is what happens to you while you’re busy making other plans. But at long last here we are; enjoy.

Part 1 talked, in broad strokes, about the kinds of things that identity gets used for and why, but ended with the assertion that identity is being made to carry a heavier load than it can really support given the character and scope of the Internet. Here I’m going to speculate about why discussion of this seems to generate so much confusion.

One area of confusion is illustrated by a long-standing split among philosophers over the fundamental nature of what an identifier is. They’ve been chewing on the whole question of identity and naming for a long time. In particular, Bertrand Russell and his circle proposed that a name should be regarded as a form of “compact description”, whereas a line of thought promoted by Saul Kripke asserts that names should instead be viewed as “rigid designators”.

The “compact description” point of view should be one that is familiar from the physical world. For example, if you are pulled over for speeding and the police check your driver’s license, they consider whether you resemble the person whose photograph and description are on it. The “rigid designator” perspective is more familiar in the world of computer science, where we use such designators all the time in the form of memory pointers, DNS names, email addresses, URLs, etc.

Without delving into the philosophy-of-language arcana surrounding this debate, you can at least note that these are profoundly different perspectives. While I personally lean towards the view that the “rigid designator” perspective is more fundamental, this is basically a pragmatic position arrived at from my work with object capability systems and the E programming language. In the present discussion you don’t need to have a position yourself on whether either of these positions is right or wrong in some deep, essential sense (or if that’s even a meaningful question). All you need to recognize is that people who come at the identity issue from these different directions may have very different notions about what to do.

Another wellspring of confusion is that different people mean different things when they speak of “identity”. Moreover, many of them seem unaware of or indifferent to the fact that they are talking about different things. While I generally think that the Parable of The Blind Men and The Elephant is way overused, in this case I think it’s a wildly appropriate metaphor. Identity is a complicated concept with a number of different facets. Depending on which facets you focus your attention on, you end up believing different things.

Let’s look at the relationship between two entities, call them Alice and Bob, interacting over the Net. I diagram it like this:

We call them Alice and Bob simply because anthropomorphizing these situations makes them easier to think and talk about. We don’t actually care whether Alice and Bob are people or computers or processes running on computers or websites or whatever. Nor do Alice and Bob both have to be the same kind of thing. All that we care about are that each is some kind of discrete entity with some sense of itself as distinct from other entities out there.

When Alice interacts with Bob, there are (at least) four different distinct acts that are involved, each involving something that somebody somewhere calls “identity”. (1) Bob presents some information about himself, in essence saying “this is me”. (2) Alice, using this information, recognizes Bob, that is, associates the entity she is interacting with with some other information she already knows (remember that we said in Part 1 that relationships are all about repeated interactions over time). (3) Alice, to take action, needs to make reference to Bob. She designates Bob with some information that says, in essence, “that is you”. (4) Bob, based on this information, plus other information he already knows, accepts that Alice is referring to him and provides access to information or services.

At various times, various people have referred to the bundle of information used in one or another of these acts as Bob’s “identity”. However, there are four, potentially different, bundles of bits involved. These bundles can be considered singly or in combination. Depending on which of these bundles your view of things takes into account or not, there are fifteen different combinations that one could plausibly label “identity”. Furthermore, you get different models depending on whether or not you think two or more of these bundles are actually the same bits — the number of possibilities explodes to something like 50 (assuming I’ve done my arithmetic correctly), before you even begin talking about what the rules are. Absent awareness of this multiplicity, it is not surprising that confusion should result.

Observe too that this picture is asymmetrical. Most real interactions between parties will also involve the mirror counterpart of this picture, where Alice does the presenting and accepting and Bob does the recognizing and designating. Note that though the two directions are logical duals, the mechanisms involved in each direction might be radically different. For example, when I interact with my bank’s website, I present a username and password, while the bank presents text, forms, and graphics on a web page.

Those of you of a more technical bent are cautioned to keep in mind that I’m describing an abstract model, not a protocol. In informal discussions of this diagram with techie friends, I’ve noticed a tendency for people to latch onto the details of the handshaking between the parties, when that’s not really the point here.

This model now gives us a way to get a handle on some of the muddles and talking at cross purposes that people have gotten into.

Consider the many people making claims of the flavor, “you own your own identity” (or should own, or should control, or some similar variant of this meme). If you are focused on presentation, this makes a degree of sense, as you are thinking about the question, “what information is Bob revealing to Alice?” If you are concerned with Bob’s privacy (as Bob probably is, let alone what privacy advocates are worried about), this question seems pretty important. In particular, if you adopt the “compact description” stance on names, it seems like this identity thing could be probing pretty deeply into Bob’s private business. On the other hand, if you are focused on recognition, the “you own your own identity” idea can seem both muddled and outrageous. Recognition involves combining the information that was presented with information that you already know; indeed, in the absence of that pre-existing knowledge, the information presented may well be just so much useless noise. From this perspective, a claim that Bob owns his own identity looks a lot like a claim that Bob owns part of the contents of Alice’s mind. It should not come as a big surprise if Alice takes issue with this. Note that this is distinct from a political position which positively asserts that there should be (or believes that there could be) some legal or moral restrictions on what Alice is allowed to know or remember about Bob; there’s an interesting debate there but also a distraction from what I’m talking about.

Note that although the model is explained above in terms of just Alice and Bob, the most interesting questions only emerge in a world where there are more than two actors — if your world only contains one entity besides you, the whole question of the other’s identity is rather moot.

Let’s introduce Carol, a third party, into the picture. Setting aside for a moment discussion of what the identity relationship between Alice and Carol is, consider just the issue of how Bob’s identity is handled by the various parties. Recall that there are four bundles of information in the identity relationship of Bob to Alice:

  • the information that Bob presents to Alice
  • the information that Alice holds, enabling her recognize Bob from his presentation
  • the information that Alice uses to designate Bob
  • the information that Bob holds, enabling him to accept Alice’s designation

What is the scope of this information? Is the information that Bob presents to Alice meaningful only in the context of their particular two-way relationship, or is it meaningful in some broader context that might include other parties? In particular, is the information Bob presents to Alice unique to Alice, or might Bob present himself differently to Carol? If Carol already has a relationship to Bob, do Alice and Carol have the means to know (or to discover) that they are talking about the same Bob? More generally, which, if any, of the above listed four pieces of information does Carol see? Where does she get this information from? From Bob or from Alice or from some third (er, fourth) party?

Similarly, is the information Bob presents to Alice unique to Bob, or might some other entity besides Bob present the same information to her? In the latter case, is she really recognizing Bob or just some abstract Bob-like entity?

Each of these questions, and countless others which I didn’t explicitly raise or perhaps am not even overtly aware of, defines a dimension of the design space for an identity framework. The explosion of possibilities is very large and quite probably beyond the scope of exhaustive, systematic analysis. Instead, it seems more useful to pay attention to the purposes to which an identity system is being put. Any particular design can’t help but embed biases about the ways in which the designers intend it to be used (in and of itself, this is only a problem if the design has pretensions to universality).

I’m not prepared to go into all of these questions here. That’s probably the work of a lifetime in any event. However, there is one very important consideration that I’d like to highlight, which hinges on the distinction between the information that Bob presents to Alice and the information with which Alice designates Bob.

The presentation information seems naturally to fall into the “compact description” camp, whereas the designation information seems to just as naturally fall into the “rigid designator” camp. Indeed, the very language that I’ve adopted to label these pieces contains a bias towards these interpretations, and this is not an accident.

From Bob’s perspective, the information that designates him is far more dangerous than the information he presents. This is because a designator for Bob is the means by which an outside party acts upon Bob. Such action can range from pointing him out to other people in a crowd to sending him email to charging his credit card, depending on the context. Any of these actions might be beneficial or harmful to him, again depending on context, but Bob is fundamentally limited in his ability to control them. Presentation, by contrast, is more clearly under Bob’s control, and the risk posed by presentation information is closely related to the degree to which that information can be reverse engineered into designation information.

Much of the risk entailed by these interactions stems from the fact that in the real world it is rarely Bob himself who does the presenting and accepting; rather it tends to be various intermediaries to whom Bob has delegated these tasks in different contexts. These intermediaries might be technological (such as Bob’s web browser) or institutional (such as Bob’s bank) or an amalgam (such as Bob’s bank’s ATM). Such intermediaries tend to be severely limited in the degree to which they are able to exercise the same discretion Bob would in accepting a designator on Bob’s behalf, partially because they tend to be impersonal, “one size fits all” systems, but mainly because they cannot know everything Bob knows. Analysis is complicated by the fact that they may be able to compensate for some of these limitations by knowing things that Bob can’t. The ubiquitous presence of these intermediaries is a major difference between our modern, online world and the evolutionary environment in which our instincts for these things emerged.

Note that designation is generally associated with specific action. That is, there is usually some particular intent that Alice has in mind when designating Bob, and some specific behavior that will be elicited when Bob accepts the designator. This favors the “rigid designator” perspective: highly specific, with little tolerance nor use for ambiguity. In particular, different designators might be applied to different uses. In contrast, presentation may be open-ended. When Bob presents to Alice, he may have no idea of the use to which she will put this information. The information may, in some contexts, be quite general and possibly entirely ambiguous. This favors the “compact description” perspective.

All of the above leads to the following design prescription: these two bundles of information ought not to be conflated. In particular, Bob most likely will want to exercise much greater control over designation information than over presentation information. In any event, the contexts which these will be used will be different, hence the two should be separate. Furthermore, designation should not be derivable from presentation (derivation in the other direction may or may not be problematic, depending on the use case).

In Part 3 (about whose timing I now know better than to make any prediction), I’ll take a look at some of the more popular identity schemes now being floated, and use this model to hold them up to some critical scrutiny.

March 26, 2006

A Contrarian View of Identity — Part 1: What are we talking about?

I was approached a few weeks ago to begin thinking about identity, the first time I’ve had the chance to get seriously into this subject for several years. In the time since my last big confrontation with these issues (at circa 1999-2000, when we were worrying about registration models for The Palace) there has been a lot of ferment in this area, especially with problems such as phishing and identity theft being much in the news.

As I survey the current state of the field, it’s clear there are now enormous hordes of people working on identity related problems. Indeed, it seems to have become an entire industry unto itself. Although there are the usual tidal waves of brain damaged dross and fraudulent nonsense that inevitably turn up when a field becomes hot, there also seems to be some quite good work that’s been done by some pretty smart people. Nevertheless, I’m finding much of even the good work very unsatisfying, and now feel challenged to try to articulate why.

I think this can be summed up in a conversation I recently had with a coworker who asked for my thoughts on this, and my immediate, instinctive reply was, “Identity is a bad idea; don’t do it.” But unless you’re already part of the tiny community of folks who I’ve been kicking these ideas around with for a couple of decades, that’s probably far too glib and elliptical a quip to be helpful.

The problem with identity is not that it’s actually a bad idea per se, but that it’s been made to carry far more freight than it can handle. The problem is that the question, “Who are you?”, has come to be a proxy for a number of more difficult questions that are not really related to identity at all. When interacting with somebody else, the questions you are typically trying to answer are really these:

  • Should I give this person the information they are asking for?
  • Should I take the action this person is asking of me? If not, what should I do instead?

and the counterparts to these:

  • Can I rely on the information this person is giving me?
  • Will this person behave the way I want or expect in response to my request? If not, what will they do instead?

Confronted with these questions, one should wonder why the answer to “Who are you?” should be of any help whatsoever. The answer to that is fairly complicated, which is why we get into so much trouble when we start talking about identity.

All of these questions are really about behavior prediction: what will this person do? To interact successfully with someone, you need to be able to make such predictions fairly reliably. We have a number of strategies for dealing with this knowledge problem. Principal among these are modeling, incentives, and scope reduction. Part of the complexity of the problem arises because these strategies intertwine.

Modeling is the most basic predictive strategy. You use information about the entity in question to try to construct a simulacrum from which predictive conclusions may be drawn. This can be as simple as asking, “what would I do if I were them?”, or as complicated as the kinds of elaborate statistical analyses that banks and credit bureaus perform. Modeling is based on the theory that people’s behavior tends to be purposeful rather than random, and that similar people tend to behave in similar ways in similar circumstances.

Incentives are about channeling a person’s behavior along lines that enhance predictability and improve the odds of a desirable outcome. Incentives rely on the theory that people adapt their behavior in response to what they perceive the consequences of that behavior are likely to be. By altering the consequences, the behavior can also be altered. This too presumes behavior generally to be purposeful rather than random, but seeks to gain predictability by shaping the behavior rather than by simulating it.

Scope reduction involves structuring the situation to constrain the possible variations in behavior that are of concern. The basic idea here is that the more things you can arrange to not care about, the less complicated your analysis needs to be and thus the easier prediction becomes. For example, a merchant who requires cash payment in advance avoids having to consider whether or not someone is a reasonable credit risk. The merchant still has to worry about other aspects of the person’s behavior (Are they shoplifters? Is their cash counterfeit? Will they return the merchandise later and demand a refund?), but the overall burden of prediction is reduced.

In pursuing these strategies, the human species has evolved a variety of tools. Key among these are reputation, accountability, and relationships.

Reputation enters into consideration because, mutual fund legal disclaimers notwithstanding, past behavior is frequently a fairly good predictor of future behavior. There is a large literature in economics and sociology demonstrating that iterated interactions are fundamentally different from one-time interactions, and that expectation of future interaction (or lack thereof) profoundly effects people’s behavior. Identity is the key that allows you connect the party you are interacting with now to their behavioral history. In particular, you may able to connect them to the history of their behavior towards parties other than you. Reputation is thus both a modeling tool (grist for the analytical mill, after all) and an incentive mechanism.

Accountability enters into consideration because the prospect that you may be able to initiate future, possibly out-of-band, possibility involuntary interactions with someone also influences their behavior. If you can sue somebody, or call the cops, or recommend them for a bonus payment, you change the incentive landscape they operate in. Identity is the key that enables you to target someone for action after the fact. In addition to the incentive effects, means of accountability introduce the possibility of actually altering the outcome later. This is a form of scope reduction, in that certain types of undesired behavior no longer need to considered because they can be mitigated or even undone. Note also that the incentives run in both directions: given possible recourse, someone may choose to interact with you when they might not otherwise have done so, even if you know that your own intentions were entirely honorable.

Note that reputation and accountability are connected. The difference between them relates to time: reputation is retrospective, whereas accountability is prospective. One mechanism of accountability is action or communication that effects someone’s reputation.

Relationships enter into consideration because they add structure to the interactions between the related parties. A relationship is basically a series of interactions over time, conducted according to some established set of mutual expectations. This is an aid to modeling (since the relationship provides a behavioral schema to work from), an incentive technique (since the relationship itself has value), and a scope limiting mechanism (since the relationship defines and thus constrains the domain of interaction). What makes a relationship possible is the ability to recognize someone and associate them with that relationship; identity is intimately bound up in this because it is the basis of such recognition.

All of this is fairly intuitive because this is how our brains are wired. Humans spent 100,000 or more years evolving social interaction in small tribal groups, where reputation, accountability and relationships are all intimately tied to knowing who someone is.

But the extended order of society in which we live is not a small tribal group, and the Internet is not the veldt.

End of Part 1

In Part 2 (up soon) I will talk about how our intuitions involving identity break down in the face of the scale of global civilization and the technological affordances of the Internet. I’ll also talk about what I think we should do about it.

May 10, 2005

KidTrade-inspired designs…

My original KidTrade posting caused quite a bit of controversy, as the design clearly demonstrated that a eBay-resistant trading economy was possible, but the biq question remained: Could such an ecomony be any fun when applied to current MMORG designs? This call to action was heard by several would-be virtual economy designers.

Several people produced counter proposals at the time, including Jenni Merrifield, who posted some design suggestions on strawberryJAMM’s Thoughtful Spot and [link missing – Ted, where’s yours?]

The initial designs presented some interesting thoughts, but weren’t as deep as the developer community was looking for.

Last month, that changed when the first full-fledged eBay resistent trade/market design proposal that would work with a ‘standard’ MMOG was published by Barry Kearns as Draft of “No-Cash”: a commodification-resistant MMO economy and the followup Detailed explanation of “commodities market” under No-Cash system.

The design is pretty elegant and interesting. Anonymous markets for objects, and person-to-person interaction for experience/skill points. Pretty clever.

I’m looking forward to more variations and trying out someone’s initial implementation! :-)

April 23, 2005


An addendum to Randy’s observation below. This triggered a memory of something our buddy Crock once wrote. He said:

There are three positions you can take on inevitability.

  1. Passive ignorance.
  2. Futile resistence.
  3. Exploitation.

Sony is moving from Position 1 to Position 2. eBay is in Position 3.

He was talking about Sony’s announcement that they were going to ban the sale of characters from their online games. This was in April, 2000.

But, as Randy said, just because they’ve decided to embrace reality doesn’t mean they’ll necessarily embrace it successfully.

April 20, 2005

Sony Slides to the Bottom of the Slippery Slope

Last October in my KidTrade paper, I asserted that eBay virtual goods markets are the direct result of design choices that have important (and potentially harmful) side-effects. Not all virtual economies need follow the same path. But some companies continue on boldly… In part, I wrote:

From Twinking to EBay:
The MMOG Virtual Economy Design “Slippery Slope”

  1. Gifting → Twinking
  2. Gifting + Multiple Chars/Server →  Muling
  3. Gifting + Messaging + Trust →  Trading
  4. Trading – Messaging – Trust + In World Machinery →  Robust Trading
  5. Robust Trading + Scarcity + Liquidity →  External Market (eBay)
  6. External Market – Trust + In World Machinery →  GOM

It seems that Sony has embraced this inevitability and has announced that Everquest II will take the final step on the slippery slope and create an online market for users to exchange real-world money ($$$) with virtual goods, within the game.

I guess that’s one way to handle an economic design that leads to farming – rather than fix it, ‘legitimize’ it. :-P Honestly, a system that has a market like this should be designed from the ground-up to mitigate abuse and manage production rates. This feels so much like:


I can’t wait to see the TOS for using that market – this is a very risky play.

[Discussion pointer: TerraNova]

October 12, 2004

KidTrade: A Design for an eBay-resistant Virtual Economy

A position paper for State of Play II Reloaded, for the
Virtual Property/Real World Markets: Making a Living in a Virtual World panel.

Updated October 20th, 2004



Though many of the ideas presented in this article have been kicking around in my head for more than 20 years, and some of the features were tested here-and-there in various virtual economies that I’ve been fortunate enough to help create, the bulk of the work presented in this paper is part of an undeveloped children’s MMOG, designed for a Tantrum, Inc., and appears in this paper with permission. As always, I wish to thank the entire MUD/MMOG development community for constantly challenging and refining many of the ideas contained herein, and especially Chip Morningstar, who co-designed and  implemented most of the virtual economies that inspired this design. The latest draft of this article clarifies some design issues and makes a few minor fixes, all as the direct result of discussions on Habitat Chronicles and TerraNova. Thanks gang.

There are many external markets for virtual objects, including Gaming Open Market (GOM), TheGoods , and eBay to name a few. Not all use real currency to facilitate trades. For the sake of brevity, I will refer to all external trading markets as eBay, acknowledging any significant differences, where warranted.

An eBay compatible virtual economy is now a design choice.

 “For every person you see selling an [Ultima Online] account on eBay … there are a bunch of people bidding, too. And they are bidding on intangibles. They are offering up their hard-won real money in exchange for invisible bits and bytes because they see the intangibles of UO as being something worth having. A tower for a sense of pride. … I find it odd that people think this cheapens the whole thing. I think it validates it.” – Koster

 “ …[an eBay-able virtual] economy primarily indicates that the leveling grind is a design flaw…” – Lastowka, Castronova, and others on TerraNova

“…You may not buy, sell or auction (or host or facilitate the ability to allow others to buy, sell or auction) any Game characters, items, coin or copyrighted material.” – EverQuest EULA, Section 9

“As a player, I still prefer a subscription model with no eBaying.” – Ed Castronova

Among MMOG customers and developers, online debate rages about the unfairness of the time-investment vs. money-investment trade-off. Those who have an excess of one resource and a shortage of the other face off against those with the opposite resource imbalance. I will not retread that ground here, but instead offer an alternative approach to the entire idea of the virtual market.

An eBay compatible virtual economy is (now) a design choice. We may not have known that this would happen a decade ago (though, arguably, we should have), but now there’s no excuse for ignoring this effect when developing a new game. We can design our products, service rollout, Terms of Service and End User License Agreements with our eyes wide open.

We don’t have to do it the same –old way, especially if it doesn’t make sense for our game. There are other virtual market designs that do not have these same properties, and may be suited better to your property, especially if externalizing virtual object markets will be harmful to the health and/or profitability of your product.

I will present one such model in detail: KidTrade.

First I will describe the de facto-model of many large MMOG virtual economies and deconstruct and name the primary design decisions that lead it, seemingly inescapably, to items for sale for cash on eBay.

Next I will present a specific model for an eBay-resistant economy, designed for children to trade scarce virtual objects without fear of being cheated by smarter, craftier (adult) traders who are generating a lifestyle-supporting income from eBay-ing the kids’ poor trades.

Finally, I will review the tradeoffs proposed and the anticipated effects they will have on the game experience.

From Twinking to EBay:
The MMOG Virtual Economy Design “Slippery Slope”

Twinking[1] is a design choice. Muling[2] is a design choice. These are built on gifting, another design choice. Gifting is person-to-person transfer of virtual goods. Just add private messaging (email or IM) and some trust, and gifting becomes trading[3]. Most designers figure this out (eventually) and implement a trading machine interface to remove the trust requirement. Introducing object scarcity increases the play value sufficiently that, when combined with a large enough target audience, you only need to reintroduce trust to create the incentive for an external marketplace to thrive, like eBay. GOM even removes the trust requirement again by implementing deposit/withdrawal ATMs in Second Life.

So, the steps on the virtual economy slippery slope are:

  1. Gifting → Twinking
  2. Gifting + Multiple Chars/Server →  Muling
  3. Gifting + Messaging + Trust →  Trading
  4. Trading – Messaging – Trust + In World Machinery →  Robust Trading
  5. Robust Trading + Scarcity + Liquidity →  External Market (eBay)
  6. External Market – Trust + In World Machinery →  GOM

The items in bold face are the ones that designers have primary control over. The rest is up to the users. They decide on the economics of twinking, muling, eBay-ing, etc.

Some may think that this chain of design decisions is inevitable, and some have argued that, for good or ill, it is now a de facto standard and is expected by the customers. I have personally designed and/or implemented many products that have followed this path, but, like many other service operators, found this design unsatisfactory. Many play online games to escape the fact that they aren’t as successful (aka: rich) in the real world as other folks. Correct or not, a portion of our audience sees virtual worlds as a new level playing-field, where everyone starts fresh, without any particular advantage. For at least one audience, this is particularly true: children

 I took it as a personal challenge to someday build a virtual economy that did not rely on the slippery slope of the typical MMOG. In 2003, I was given that opportunity when I was the lead designer for a tiny self-funded startup working on a children’s virtual world. KidTrade is the name that I’ve given for the economic model I’ve extracted from that design and am now presenting here. I offer it as an alternate economic model with man
y interesting properties,
including resistance to the sale of game items and currency on eBay.

KidTrade: An eBay resistant economy[4]

Background & Goals

The KidTrade economy is a part of a kids MMOG design described as

“NeoPets meets Toontown: But the objects work!

Children have humanoid cartoon kid avatars and collect, trade, and play with virtual objects including pets, fun vehicles, combat contraptions, clothing, toys, decorations, furniture, and houses, all in a safe, shared virtual world with various locations and activities, each targeted at a different set of kids’ interests.”

The product has no treadmills: Being online for more hours a day does not increase your wealth or power. Items are generated at a time-release rate. Family play is one of the design goals, bringing the game within reach of a younger audience and was optimized for sparse, short sessions.

KidTrade a proposed economic model underlying a service that is a collection of children’s multiplayer games and activities, many of which may/must be augmented with the virtual items provided by the system. The market is not intended as a primary play-feature of the service.

Trading is specifically meant for optimizing the service’s play model: collecting the components of a vehicle, building and furnishing your house, or gathering the resources needed for a team-play game. Focus is placed on subjective value over objective (quantifiable) value.

KidTrade: Design Elements

A Thing Based Economy

The service is built almost entirely out of ‘game-objects’ which I will call things, for simplicity. Things are what the players collect and trade. Instead of a CCG (collectable card game), it is a CTG (collectable things game.)

Things are all active: Each thing does something when it is in the world. The vast majority of user activity is expected to be the using and trading of things. There are pets, vehicles, combat contraptions, clothing, toys, decorations, furniture, and more. They all wear out with use, so the kids learn to not abuse their things. This discourages antisocial hoarding behavior.

Things come in three basic categories: collectibles, consumables, and customizers.


Collectable things are meant to be purchased by a player for personal use and sharing/displaying to others. These things are often quite utilitarian in nature, such as vehicles, clothing and toys. Just as often collectibles are aesthetic, such as decorations and furniture.

Sets (Crafting, Part 1)

Some collectibles are parts of sets. When all the things in a set are collected by a single player, the objects may be combined to produce a combination object, representing the whole set. For example, the individual things CAR TIRE x 4, LONG CAR BODY and HUGE CAR ENGINE could combine to create a LONG CAR WITH HUGE ENGINE vehicle. A collection of action-figures/dolls could be combined with a PLAYSET to produce a diorama scene for display in a kid’s house.

Uniques (non-tradable)

Some collectibles may be non-tradable unique things. These are usually given to kids for personal achievement, winning contests, or for participation. These objects are non-tradable as they represent personal achievement. When a set of things is combined into a new thing, it becomes a unique thing and may not be disassembled or traded. If the service supports Sharing (see below) things, unique things may be shared. Several games refer to this category of objects No-Drop.


Things that are intended for immediate use are called consumables. These include things like repair kits, combat contraptions, fuels, medicines, and the like. Unlike collectibles, it is common for consumables to allow for a fixed number of uses and then are used up or destroyed.

Customizers (Crafting, Part 2)

An interesting subclass of consumables is customizers. Things that mutate the nature of other things are in this category: Cans of spray paint, texturizers, shape/size-changers, sound-changers, voice-distorters, etc. These are always consumables (limited use) and only work on appropriate customizable objects. For example, a user could use one to change the door-opening sound on their house, or change the pattern of wall paper in a room, etc. uses Paint Brushes in this way to great effect.

No Currency

Hoarding of objects and currency is a standard practice in many online games. So is hyper-inflation of the internal currency. These behaviors are do not provide an appropriate model for younger children: Parents want their kids to learn good citizenship and sharing skills, not caveat emptor.

The service is presently designed without a currency to discourage hoarding and other antisocial trading schemes.[5] This should help emphasize subjective/relative value: “I need x and I can trade y for it” over numeric objective value: “I need to convert objects y & z to currency to get enough cash to buy the hyper-inflated x that I want.”

Production and Consumption

The product implements a Faucet and Drains economic model, where things are carefully introduced into the world by the service operator (the Faucet), and they leave the system as a result of being either combined (collectibles), exhausted (consumables) or by being discarded by users because they have decayed to the state of being broken. This provides two points of leverage for managing the value of things in the world.

Faucet: Paid Membership → Thing Income

Users are given things purely based on being a paid member of the community. Each X day(s) a thing is added to the user’s inventory. It is randomly selected from the players approved set of things.[6] This model equalizes the playing field for all players, with each having roughly the same chance to get any subjectively desirable item. Since the Trader’s Market (described below) only allows anonymous trades with the community, players who can afford multiple accounts can not use them to create a disproportionately rich/powerful player via muling or making lopsided trades with themselves.

Another method for the introduction of new items into the game is for system staff to make them available in the world as prizes for contests (treasure hunts!) or list them in the Trader’s Market.

No tradable scarcity

By design there is no scarcity of tradable collectibles or consumables. The number of things of each type remains roughly constant across the active user base which is kept in balance by the faucet As noted above, only Uniques are scarce and are not tradable on the market at all.

Special Drain: Decay (Wear, Tear & Repair)[7] suffers from irreparable runaway inflation of its currency: NeoPoints (NP). This is because currency and objects are introduced into the economy at a rate significantly higher than their consumption. As a result, needed items, such as medicines to cure pets of illnesses are priced in the range of 100,000NP, when the same item was at the system store (for about 2 seconds, before a bot bought it) at a price of 100NP.  New users are at such a disadvantage that if a pet gets sick it is better t

o abandon it rather than work to heal them.

We will avoid this problem and encourage responsible care of owned collectibles by having them decay.  Excessive use of items causes wear & tear, eventually leading to the object being broken.

There are consumable items that can repair damaged and broken items up to used status.

Consumables are not normally subject to wear & tear, as their use count is limited instead.

A thing does not decay if it is part of a standing offer that is currently unfulfilled in the market (see below.)


Of course, when a kid sees some thing that someone else has, they might want one of them. Since the only way for items to enter the world is via the daily award faucet, it is very unlikely that a user would get exactly the item they wanted just by waiting for it.

Instead of waiting, we encourage kids to trade their things for other people’s things, since this is the only way for them to get a specific item.

The Trader’s Market

Since there are so many kinds of things, with so many combinations of attributes, and not everyone is online at the same time, the service offers a special Trader’s Marketplace, available at all times on the user interface. All online trades happen here. Like the stock market, all trades are listed anonymously, best terms only. Since the identities of all traders are hidden, this market resists the establishment of an external money-for-things marketplace by preventing specific user to specific user trades: There is no way to make a guaranteed delivery. This also discourages adults buying multiple accounts just to raid them for their daily thing grants.

All trades may be completed asynchronously – while the offering party is offline. If a user’s offer is accepted while they are offline, they will be informed as soon as they connect.


The market is presented as a series of pages, each displaying the things available for trade. Buttons on the page limit the search criteria by types, sets, and specific attribute values. Each line shows thumbnails of what is being traded for what. Each oldest, best trade with a particular set of terms (x for y) is the only one displayed for those terms (trades with duplicate trade terms are not displayed). This massively simplifies the display, removing duplicates and lower-value trades from consideration. No information is provided about the number of offers available at these terms, nor the age of any particular offer.

The first trades listed are those that the kid can fulfill immediately for items he’s otherwise already made offers for,  next are items that he can fulfill, third are items that he can fulfill with currently banked things (see below), next are trades that he can’t fulfill but contain items that he’s made offers on, and lastly the remaining items for trade. All of the sort buttons respect this ordering except the Sort By Thing button, which sorts in alphabetical order.

Completing a Trade or Making and Offer: “I want a big engine”

The kid can either accept any fulfill-able trade as displayed, or compose a new offer. Offers are constructed graphically and always one for one.[8]

When a thing is offered in trade, it is put in escrow or banked until the offer expires or is accepted. Banked things can not be used in any way or offered in another trade. Banked thing are not subject to decay If an object is removed from the bank, the corresponding offer is removed from the market.

When browsing, trades that the player could conclude with objects that are banked for other offers are listed second. If a player accepts a trade that includes items he has banked, the user is informed that completing the transaction will cancel their other offer.

Banking teaches children about committing resources to achieve a long-term goal.

A Word About Liquidity

In order for the market to have the property of masking the identity of the traders, there is a minimum liquidity level required for each trade type. Offers of each formulation (x for y) will not be displayed until this threshold is met. The liquidity threshold should be some fixed minimum value plus a random bonus to discourage gaming.[9] See the Appendix for a detailed defense of how this market is resistant to eBay.

Sharing (No Gifting)

The Trader’s Market doesn’t allow you to give something to your friend. Given that I firmly believe that gift-giving is the foundation of community, the elimination of gifting in a children’s product seemed extreme. Fortunately, the answer came in the form of a feature from a competitor:’s lending feature.

A user may choose to share a non-unique collectable with a friend for a fixed amount of time (20 minutes?) after which the thing automatically returns to the owner. The borrower cannot, in any way, be considered as the owner of the thing, but may use any type-specific behavior: he may ride the bike, spin the top, etc. Note that the object will still decay normally.[10]

Tradeoffs & Conclusions

The KidTrade virtual economy design avoids the slippery slope from Gifting to eBay by integrating the market directly into the game as well as making the identity of the traders anonymous. It effectively prevents muling, twinking, and eBay trading while trading off the features of a currency  (an audience driven design choice), some scarcity, and gifting (this is mitigated through sharing/loaning.)

Though this model has yet to be implemented and thus has not revealed its own particular weaknesses, I contend that it is rich enough to provide an entertaining and vital economy, especially for its target audience: kids.

I submit that this design is specified at a sufficient level to demonstrate my position for this panel: “An eBay compatible virtual economy is now a design choice.”

Be sure and let me know if you try any of this stuff before I can. Discussion of the KidTrade is taking place on Habitat Chronicles.

[1]  Twinking is the practice of experienced players gifting powerful virtual objects and/or large sums of currency to beginning players or low-power characters.

[2]  Muling is the practice of users transferring objects between their multiple characters on a game server. This is typically done to get around per-character item storage limitations.

[3]  The most primitive form of MMOG item trading was in the original Lucasfilm’s Habitat, in which Avatars gave objects to each other by dropping them on the ground at their feet and walking to the other party’s objects and picking it them up.

[4] Note: This model does nothing to address the sale of characters on eBay. The service’s position on character transfer was TBD but would have, most likely, followed Sony’s lead: Transfer is against the Terms Of Service, and the company will not offer customer service support for such transfers.

[5] Other designs are worth considering to meet this goal: A currency could be implemented with a limited-maximum wallet/purse for kids. To teach cash management and good saving skills, any cash allowance would have to be pre-allocated to the purchase of a specific thing. Als

o, the market could set the token price of all objects to a fixed value. This alternative was not explored in any depth and is left as an exercise to the reader.

[6] The base set may vary by user, based on play behavior: For example, if a user is hoarding collectables, they may receive more consumables to encourage other game play.To meet the no-scarcity requirement, the random selection will favor any things that are in non-equal supply.

[7] Decay complicates the trader’s market by adding wear status as a dimension, but seems like an important feature for a kid’s educational game. Stuff that lasts forever, even when you use it heavily, doesn’t match their real-world experience.

[8] Another exercise for the audience: How does the market change if you allow many-for-one offers? How about many-for-many?

[9] The system could also detect odd trading patterns and inject its own offers into the market to correct any imbalances.

[10] If this feature were implemented, it is equivalent to short-term twinking, but the benefit is so limited that I believe that there would be no significant eBay market for this effect.


A walkthrough The Trader’s Market and eBay market resistance features.


Several questions have been raised about my claims about KidTrade’s features and how the market for Things is eBay resistant. In order to defend the claims, I will first lay out the requirements for a successful eBay trade, demonstrate how an established KidTrade Trader’s Market inhibits fulfillment of those requirements, and how liquidity limits effectively protect the market until it becomes established. Finally, I visit the sharing feature and demonstrate how to mitigate the risk of using eBay to ‘rent’ Things.

Requirements for an eBay transaction to succeed

There are several requirements for an external market transaction on a service like eBay to be possible for the transfer of virtual goods between characters on a service:

  • Requirement 1: The Seller must be able to guarantee delivery of the virtual goods to the correct buyer in a reasonable timeframe. Delivery to the wrong party is not acceptable.
  • Requirement 2: The Seller must also be able to confirm delivery of the virtual goods to the correct buyer, or be subject to potentially fraudulent buyer non-delivery claims.
  • Requirement 3: The universe of Buyers and Sellers must believe that Requirements 1 and 2 can be reliably met, or the market will not develop. This belief is only established through a history of successful transactions.
  • Requirement 4: The value of the Thing being sold is greater than transaction costs including: Transaction fees, market liquidity, delivery fees and delivery coordination. If the sale value drops to zero, this requirement can not be met.

KidTrade needs only prevent requirement 1 or 2 to make the market nonviable, but this design interferes fulfilling both requirements!

The properties of an established KidTrade Trader’s Market

To demonstrate the eBay resistant features of this market, we will first consider an established trader’s market. This is defined as the state where there are significant numbers of outstanding offers for each type of item on the market.

Since, from the point of view of an external observer, all offers are commutative (A for B is the same offer as B for A) the number of outstanding offer formulations will be the number of pair-wise combinations (C):

C = n * (n – 1) / 2

where n is the number of tradable thing types.

In an established market as defined, for any specific Thing type, there are(n – 1) offer formulations (one for each other Thing type), each with many offers for each.


  • A seller lists a Thing for sale on eBay, promising to transfer it to the buyer using the Trader’s Market

Design givens:

  • All orders are anonymous:
    • No one knows which offer will be fulfilled.
    • No one knows the number of offers of a formulation that are pending.
    • No one knows when an offer will be fulfilled.
    • No one know which offer is their own.
  • When your order is fulfilled, you have no idea who you traded with.
  • Any attempt to formulate an offer will be fulfilled first and immediately with standing orders.
  • An established market contains many standing orders for all offer formulations


  • The seller can not meet eBay Requirement 1, since it is not possible to guarantee delivery to a specific buyer due to anonymity and instant fulfillment.
  • The seller can not meet eBay Requirement 2, since there is no way to independently confirm that the delivery was made to the appropriate party.
  • Therefore, the eBay market is resisted.

[Auto]-Collusion attack against an unestablished Market

But, the definition of an established market is key. That won’t exist at all times, and most certainly won’t at the beginning of the service. If there isn’t sufficient liquidity (enough offers of a specific formulation available), it might be possible to find a way to almost-meet eBay Requirement 1. It has been suggested that the collusion of enough sellers (accounts) may be able to control a set of offer formulations for the transfer of goods.


  • A seller creates many KidTrade accounts (or colludes with others),  collects several of a specific Thing type (CoolThing) on a subset of those accounts. He lists a Thing for sale on eBay, promising to transfer it to the buyer using the Trader’s Market, intending to have the buyer use an often-traded (statistically determined) item as placeholder-currency to complete the transaction. The seller will use as many accounts as it takes to fulfill the trade.

Design givens:

  • All orders are anonymous
    • No one knows which offer will be fulfilled.
    • No one knows the number of offers of a formulation that are pending.
    • No one knows when an offer will be fulfilled.
    • No one knows which offer is their own.
    • When your order is fulfilled, you have no idea who you traded with.
  • Any attempt to formulate an offer will be fulfilled first and immediately with standing orders.
  • The liquidity for the PlaceholderCurrency-for-CoolThing is low enough to manipulate.


  • The seller may be able probabilistically meet eBay Requirement 1, with a large number of accounts, each with their own CoolThing. This reduces the US$-value to a crap shoot: The seller can’t know how many offers he will have to fulfill to deliver the goods to the correct buyer. Along the way, any mis-delivered items were given to unexpected (presumably very happy) recipients.
  • The seller can not meet eBay Requirement 2, since there is no way to independently confirm the delivery was made to the appropriate party. In the end, the seller has given away all of his CoolThings and doesn’t even know if the buyer has been ripped off or, worse, taken him for a ride by collecting all of them for the price of one, while demanding a refund.
  • Therefore, the eBay market is resisted. Though not
    quite as effectively as in a fully liquid market.

Bootstrapping an established market (liquidity control)

What little potential the collusion attack may have can further be weakened by increasing the liquidity in the market to approach the goal of an established market. What level of liquidity is required to resist the probabilistic market manipulation proposed in that attack?

An interesting baseline calculation is the expected number of offers-per-formulation (o) in the market based on the current number of tradable Things (t), percentage of things banked (b%) and the number of thing types:

o = t * b% * 2 / n * (n – 1)

So, with 1,000,000 tradable things, 10% listed for trade, and 100 tradable thing types you get an average of  o = 20 trades for each formulation. Any minimum liquidity threshold should be less than o, perhaps .5*o or 0.75*o. It may well be reasonable to have a different (or even changing) liquidity threshold for specific things/formulations based on trading patterns.

Use Case: The HotNewThing

This design explicitly does not claim that 1:1 trade means that the value of all things is equal. On the contrary. Some things will be more desirable than others, or more desired by many players.

Consider the case of the HotNewThing. These services are content-consumption dependent, and new items are desired most strongly by the core community. Many will want the newest thing and would this increases pressure to consider alternate delivery methods (such as eBay), if technically possible.

What would a HotNewThing most likely trade for? A CruddyOldThing? Probably not as fast as for AnotherPopularThing. There will almost certainly be many CruddyOldThing-for-HotNewThing offers pending in the market, as people would have no reason not to try that trade, given that it may eventually succeed. Given the proof in this appendix, it should be clear that the trade that is most likely to complete in the shortest time will be AnotherPopularThing-for-HotNewThing, confirming the perceived value of both objects.

This should be the final nail in the coffin of the thing-transfer-by-eBay argument: There won’t even be a junk thing for eBay-traders to use for placeholder currency as the largest number of outstanding offers for each widely most-valued object will be in exchange for CruddyOldThings, because they are less-valued and it is no burden to offer them in exchange for any desired item.

Sharing and eBay: The Question of Market Friction

The sharing feature of KidTrade is optional, but desirable for social-education reasons. Here we consider the so-called “Blockbuster” threat:


  • A seller rents the right to use a CoolThing for 20 minutes using eBay for the cash transaction and fulfilling it in the system using the Sharing feature.

Design givens:

  • Sharing allows a specific user to lend a thing to another user for 20 minutes.
  • Shared items have limited functionality.
  • Some number of CoolThings are available for trade on the market.
  • There are as many CoolThings in the economy as any other Thing.


  • The seller can meet eBay Requirement 1.
  • The seller can meet eBay Requirement 2.
  • The seller can meet eBay Requirement 3.
  • The seller may be able to meet eBay Requirement 4, if:
    • The selling price is greater than the listing costs (and other overhead.)
    • Many potential renters don’t already have a CoolThing and the limited-use value of the CoolThing is greater than the selling price.
    • Many potential renters can’t (or won’t) easily trade one of their Things for a CoolThing.
    • Many potential renters can’t simply borrow a CoolThing for free from anyone they know/see, which is it very reason for the Sharing feature.
  • The eBay/Thing rental market may or may/not be resisted depending on the temporary-use value of things and transaction costs. I contend that the frictions described above are considerable and sufficient to, at least, severely limit the effect any external market.
  • If an external rental market appears, the service provider may implement one or more of several mitigation options:
    • Enable users to borrow one of each Thing type from the system once, for evaluation. (This should kick the teeth out of Requirement 4)
    • Limit the number of times a thing may be shared per owner per unit time.
    • Reduce the lending time.
    • Disable sharing, disabling the threat.
    • Use standard hunt-the-TOS violator techniques (not recommended.)
    • If it represents a small amount of the total sharing transactions, just ignore the external market. The kids don’t have credit cards. It isn’t hurting anyone. :-)

This appendix reinforces the main point of this article: The eBaying virtual items is not a necessary-evil of MMOG design.