Don’t Panic! Leave That to the Experts

In many massively multiplayer online games (MMOGs), players who are heavily invested in the game (sometimes just in terms of time, but occasionally both time and money) often group together in organized collaborations, usually called guilds.

Guilds pool resources and tightly schedule and organize the activities of the members. This is typically a huge advantage in MMOGs, where many players either work together only temporarily with strangers, play completely by themselves, or belong to guilds that only offer weak or fitful organization. Many MMOGs tune the gameplay so that the most difficult challenges require this level of elite coordination. The rewards for overcoming these challenges typically have an accumulative effect, allowing the elites to overcome still more difficult challenges and to easily defeat other players in direct combat or competition. The virtual goods and powers obtained through elite coordination visually distinguish the members of these guilds when their characters are seen within the public spaces of the gameworld.

As in any status hierarchy, these advantages are only meaningful if the vast majority of participants do not and cannot obtain the same rewards. So the elite guilds in some sense have a very strong incentive to keep everyone else around. A gameworld abandoned by everyone but the elite stops being fun even for them. This is especially acute when the collaboration within a heavily invested group of elite players extends to keeping their advantage over others through pooling insider knowledge about the game systems, or even to protecting knowledge about a bug or flaw in the game systems which can be potentially exploited by everyone.

To give an example, one of the “virtual world” MMOGs that I spent considerable time studying a few years ago was called Star Wars Galaxies. It was a notable turning point in the history of game design in many ways, most of them not particularly happy, but it did give players a very significant amount of control over the gameworld and had a vigorous design infrastructure in particular for allowing players to compete with each other within a virtual economy. Players could produce a wide variety of items for other players, and the very best of these in terms of the power and utility were rare, difficult to make and worth a good deal of money, especially very early in the history of the game. In order to produce the best items, a player had to spend an immense amount of time making inferior items and incrementally increasing their skills.

But early in the game there was a bug. If you knew about it, you could gain a huge amount of incremental skill increase in a very compressed amount of time. So almost immediately after the game went live, there were a small number of players who could make the very best items that conferred enormous power on the owners of those items, literally weeks before it was even possible for anyone to have gained that level of skill. Naturally the wealth they accumulated was equally disproportionate, and that advantage remained permanent, because the developers chose not to strip away that benefit after fixing the bug. By the time everyone else caught up, the early exploiters–who had shared the secret with each other but not everyone else–were essentially a permanent class of plutocrats.

It keeps happening in such games. There’s almost no point to being a new player in games like DayZ or Ark, for example, unless you’re playing on a small server with a group of trusted friends. Even if there were no hacks or exploits, the established players have such enormous advantages that any new player will find again and again that whatever time they invest in gathering resources and making weapons and shelters will be stolen by elite groups of established players. But the established players have a problem too: they need a large group of victims to invest in the game. That’s where the easiest source of wealth is for them: much better to have a hundred newbies labor for two days and to steal what they’ve made in five minutes than it is to directly compete with an equally elite and invested group of rivals. So they need to talk up how fun the game is, to establish it as a phenomenon, maybe even sometimes to show selective mercy, to offer newbies a kind of protection-racket breathing space, to treat them like an exhaustible resource. (Not for nothing do players sometimes speak of “farming” another player as well as some aspect of the gameworld.)

Why is this on my mind today? Well, for one, I’ve been working off and on over the summer on trying to write about virtual worlds. But for another, I can’t help but think about the analogies I see between these experiences and the stock market.


In the middle of a sharp downturn like this one, there are expert investors who come on the radio, the television, the Internet. “Don’t panic,” they say. “Don’t sell. You’re in it for the long haul! That’s what the experts do.”

These appearances also offer many earnest attempts to explain the underlying reasons for the downturn. “It’s China!” “It’s the emerging markets!” “It’s the price of oil dropping!” “It’s the Fed raising rates!” Some of this frantic offering of explanation seems to me to have the same reassuring intent as “Don’t panic”. It is an attempt to rationalize the change, to relate it to something real in the world. In some cases, this offers the investor (small or large) an opportunity to calculate their own risk. “Ah, it’s China. Well, China’s government will find a way to fix it, I would guess.” “Oh, it’s the emerging markets! I always thought those were fishy, I think I’ll reduce my exposure.”

In some cases, I think these explanations are a form of pressure–even blackmail–directed against governments. “Don’t raise the rates, Fed, we like that easy money–so if you do, you’ll ‘shake investor confidence’ even more, and you wouldn’t want that, would you?” We saw that back in 2008, after all: it is the logic of “too big to fail”. Do this, don’t do that, or we’ll pundit the shit out of the investment economy and create a real panic.

Scattered amid the explanations are also some earnest attempts to argue that there is no explanation, to treat the market in a naturalistic object whose behavior is beyond human agency and not well understood by human science. “We’re still not sure about dark matter, and we’re still not sure why the stock market did that.” This too is a kind of reassurance, and often is followed by the reminder not to panic. “It’ll go up again, it just does that, don’t worry.” I think there’s something to that: the 21st Century market is a cybernetic mass brain that thinks in strange ways and reacts at speeds that we have never lived with before.

What I darkly fear is what I think might be said but never is. After all, the experts say, “Don’t panic!, don’t sell, you’re in it for the long haul”, but some of them panicked, or at least their high-frequency trading computers did. Sure, maybe someone else’s Skynet is buying it all, but this wouldn’t happen if it was just Mom and Pop investors getting nervous about China. And I think to myself, “This is like a guild that’s discovered a bug.” They need everyone to stay in so that they can farm them some more. They need to herd the cattle down the soothing Temple Grandin-style chutes. That some of the explanation is neither, “There is a rational thing that is causing this all” nor “This is something so complex that it just does things now and again that no one understands.” That instead some of it is, “We have trouble here in River City”.

The problem is that in 1987 or in 2001 the expert could also say, “If you’re afraid, then after the next rally, move your money into a safe harbor, stay out of the market.” There is no staying out any longer. That’s the other thing that’s changed because of income inequality, because of the way the elite guilds have changed the game. Nothing’s really safe as an investment. Nothing’s really safe as a life or a career. Our institutions (and even our government, especially when it pays pensions) are part of the asset class now. If you just earn a salary and work hard, your income and prospects have gotten steadily worse in the last three decades: the investment economy isn’t just a nice hedge against the worst now, it’s the only way to stay in the middle class.

This is what elite guilds in games would do if they could: require you to play the game.

Too bad if you don’t like spending two days training a velociraptor and building a shelter in Ark only to find that when you logged off for dinner, a couple of elite hackers took your dinosaur, destroyed your shelter and locked your naked body in a cage. (You think I’m kidding, but I’m not.)

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4 Responses to Don’t Panic! Leave That to the Experts

  1. Fred Bush says:

    Although I admit that much of my information comes from Michael Lewis, I think that historically, pension funds, small banks, and small municipalities, not individual investors, have been the natural prey of the investment banks.

    The high-frequency traders try to make money off of every transaction, so they want churn. Buy-and-hold (“don’t panic”) actually does seem to be a good strategy for investing in the market while avoiding getting fleeced by them. Historically, the more active an investor is, the worse that investor does.

  2. Timothy Burke says:

    Yes, though all of those are really just “individual investors” in slightly larger units, aren’t they?

  3. Nord says:

    “If you sit in on a poker game and don’t see a sucker, get up. You’re the sucker.”

  4. Contingent Cassandra says:

    And here I thought you were going to make an analogy to grad school in the humanities/the current academic job market. That one works, too, I think (alas).

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