[lurk2]

I saw this happen on a Minecraft server. It was an economy simulator based out of Sweden or Denmark. The administrator was committed to Keynesian economics. One day he wants to clear a desert to build a new town. To compensate people for working there, he used a plug-in called Shop Chests, allowing users who deposited 64 sand into the chest to receive 100 units of the server’s currency. This was substantially more than the sand was worth on the open market. Since this guy was a Keynesian, he had also built a government marketplace that bought and sold all the major blocks. Rather than spending the afternoon digging, I warped to the market, bought out the entire supply of sand, warped back to the job site, and sold the sand at the higher price.

This kind of thing happened a lot with absentee owners who would set prices for their shops lower or higher than the market price. If the owner had set up hoppers underneath the shop chest, you could effectively bankrupt him overnight. It happened a lot with minecarts, diamonds, colored wool, and things like that.

[kristjansson]

Which is why the likes of Eve Online employ real-life economists - is easy to get wrong.

Cobras aren’t really an arbitrage problem, except in the sense that the reward was (presumably) more than the cost of breeding them.

[soulofmischief]

History often rhymes because we clearly aren't teaching it effectively enough. Every six-year-old schoolkid should understand the Cobra Effect (perverse incentive) and how to recognize it around them and in their own thinking.