Skip to main content

Video Games

When I was a kid, the first computer game console which I ever saw was Grandstand.  The game consisted of two white vertical bars and a 'square' ball! The object of the game was to get the square ball past your opponent.  Needless to say, computer games have come a long way since then. Today, computer games can involve countless players from around the world. For example, Eve Online has some 400,000 players.  In this game, players engage in trading, form coalitions, create banks, and make spaceships. Eve Online mirrors the real economy as banks fail, economies enter recessions, and the price level can fluctuate wildly.  

Economists have taken to testing their theories using data from Eve Online - click here to read more (hat tip Chris Colvin). Famously, the Second Life game suffered bank collapses at the end of 2007 - an early warning of what was to come in the real economy!


Popular posts from this blog

Bitcoin Bubble?

According to Robert Shiller , speaking at Davos, Bitcoin is a perfect example of a bubble - story here . Shiller sees Bitcoin as a backwards step in the evolution of money.   George Selgin , a free banker, takes an opposing view - click here .  Although he doesn't believe that Bitcoin is money, he sees its development as a fascinating turn in the evolution of money. In particular, he lauds the fact that Bitcoin production is constrained and cannot be infinite. There is a short video below where Bitcoin explain how it works.

How Valuable Are Connections?

Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne

Boom and Bust: A Global History of Financial Bubbles

Boom and Bust: A Global History of Financial Bubbles, co-authored with my colleague Will Quinn , is forthcoming in August. It is published by Cambridge University Press and is available for pre-order at Amazon , Barnes and Noble , Waterstones and Cambridge University Press .