Despite this publication highlighting the severe consequences of violence and conflict for economic performance, until today, economic research on these issues is of rather conciliatory nature, when looking at the individual and questioning his motivations to enter conflict. There are economic theories on why rational actors are opting to fight for goods in anarchy – but these are intended to highlight why formal institutions should be put in place to overcome conflict (Buchanan, 1975/2000), or why the state of nature will be overcome eventually (Hirshleifer, 1995); thus, not focusing on individual actions. There are also economic theories on why it might be rational to harm others out of strategic reasons – namely to avoid being exploited by others in the long run (for example, Schelling, 1960, 1978). And finally, there are economic theories of human beings possessing other-regarding preferences that claim – backed up by tremendous amounts of empirical evidence from bargaining games played in experimental economics – that people are sometimes willing to impair the income of others out of fairness considerations or because of conditional reciprocity (for example, Fehr & Schmidt, 1999; Rabin, 1993). To summarize these viewpoints: people might harm others (and in economics this mostly means that they either steal their goods or impair their income) because they profit from doing so either in the short run or in the long run, and sometimes because they want to punish them for ‘unfair’ behavior.

Given these economic explanations of violence, conflict, and the reasons behind harming other people, how can one say that they are ‘of rather conciliatory nature’? One way to defend this claim is to look at what psychology says when considering antisocial behavior, for example its description of sadism. ‘Sadism is the technical term for deriving enjoyment from inflicting harm or pain on others’ (Baumeister & Vohs, 2005, p. 96; emphasis by author). Sadists do not commit violence or harm others out of some interest for profit, let alone fairness considerations – they harm others to harm them. Violence is an end in itself for sadists. Another approach is to look at philosophy and the concept of evil. Kant for example claims that everybody possesses the propensity to act in an evil way and reasons about human actions out of pure evil will (Kant, 1793/2009, pp. 27–34). According to him, the goal of such vicious actions is not to become rich but to act evilly for the sake of evil. Given the concepts of sadism and evil, only covering violence under the header of stealing or strategic behavior in economics may very well seem ‘conciliatory’. Maybe economics has not yet considered all aspects of human conflict behavior and it is not just profit/interests of fairness considerations that cause people to harm others. Given the importance of violence for economic performance, the purpose of this book is to find out whether the existing economic theories and the empirical evidence on harm done are enough to explain why humans sometimes harm each other. More precisely, it will be argued that economics should integrate the concepts of economically evil actions and evil social institutions when trying to explain why people are willing to spend money only to impair other people’s property. In fact, given the long intellectual history of the concepts of sadism and especially of evil, it is surprising not to see any significant impact of these concepts in economics. This is even more surprising as only recently the normatively opposed concepts of altruism, fairness, and reciprocity have been acclaimed in economics thanks to the efforts of experimental and behavioral economists (for example, Camerer, 2003; Fehr & Schmidt, 1999; Kagel & Roth, 1995).

This book, however, will not focus solely on the actors committing economically evil actions but will also have a look at the circumstances and external factors of these actions. Following up on the findings of psychological situationism (for example, Doris, 2002) and New Institutional Economics (for example, Mantzavinos, 2001), it will be argued that instigating circumstances that typically lie beyond human responsibility are an important cause of economically evil actions. More specifically, this book’s concept of evil social institutions is intended to highlight this cause of evil actions. Whereas institutions are normally said to be normative social rules that shape human interaction in order to overcome the Hobbesian problem of social order (Mantzavinos, 2001, p. 83), evil social institutions are defined as institutions that actively foster social conflict and that emerged spontaneously in an invisible hand process or as the result of conscious deliberation. The second minimal goal of this book is thus to provide further evidence that turning the attention towards social institutions is important for giving an encompassing picture of what drives human behavior – in short, that evil formal and informal institutions exist and matter.

Beyond the two minimal goals of showing that evil actions and evil rules exist and matter, there are two more ambitious goals to be pursued in this book. Regarding evil actions, while there are economic theories able to explain harming, these established theories are not able to capture all aspects of the behavior to be presented in the empirical part of the book. Evil actions as defined in this book are a phenomenon in its own right not yet fully treated theoretically and empirically in economics. The rather conciliatory theories of harming in economics have to be adapted in order to integrate the new empirical evidence to be presented – some people committing evil actions are motivated by what seems to be a ‘taste for harming’. Regarding evil rules, it will be claimed that this kind of social institution does not only exist and matter but that it is here to stay. Although publicly known for fostering social conflict, some evil social institutions are able to persist in a society that generally possesses an adaptive institutional framework. The theory that – in an evolutionary process – those rules not contributing to mitigation of the effects of social conflict will be replaced by more effective rules eventually (for example, North, 2005) might have to be adapted.

The biggest advantage of MMORPGs compared to the real world is that, although they are complex, they are less complex than the real world. They are more controllable (because they are digital: everything you do is recorded), smaller (only thousands of inhabitants compared to around 100 million people for a medium-sized country), more restricted (they still feature less possible actions for the users than real life offers), and younger (typically less than ten years old) compared to real societies. MMORPGs allow for observing 100 percent of the players’ actions and for huge, more representative samples with comparably low effort. They are more complex, ‘noisier’ than laboratory experiments and yet stay manageable. They allow for doing fieldwork and for easier integration of social institutions into the examination – both aspects being paramount when conducting research on human morality.

The virtual world of choice for this book will be the massively multiplayer online role-play game EVE Online (EVE), which was published by CCP Games in May 2003. The data basis of the empirical part is the server data of this science-fiction game. Around 66GB of data in the form of huge spreadsheets encompasses practically everything the 390,000 active players did in the month of January 2011. To my knowledge, this is the first time that microeconomic research in virtual worlds has been conducted by analyzing the unmediated server data instead of relying solely on personal playing experience, in-depth interviews with players and developers, or other qualitative data. The purpose of this book is therefore not only to provide new insights into human behavior but also to present a new method of doing research in the social sciences. What is found is as important as how it was found.

Chapter 3 will then establish the genuinely economic foundations to talk about economically evil actions and evil social institutions. It starts by outlining how economically evil actions are defined in this book and why they are defined that way. This section is followed by reviews of the existing economic literature on phenomena related to evil as well as of some empirical evidence touching on the issue. Three different approaches able to explain why human beings sometimes are willing to harm other people – and to even spend money to achieve this – will be described. It will be argued that economists tend to underestimate the importance of evil actions, since they do not treat them as a phenomenon in its own right. The second half of Chapter 3 is devoted to the concept of evil social institutions. Their characteristics and how they could possibly have emerged will be set out.

In the following chapter, the focus shifts from examining the theoretical economic foundations of evil and will turn to the theoretical foundations of the research object: massively multiplayer online role-play games. To begin with, Chapter 4 extensively defines what an MMORPG is, as many readers may not be familiar with the research object. The second part of the chapter will highlight the advantages and limitations of doing research in virtual worlds and the third part will touch on the proper methodological approach to do so. Notably it will be asked whether human playing behavior is at all relevant for explaining behavior in economic contexts and whether the online behavior of players closely mirrors their offline behavior. Furthermore, the exact structure of the underlying data of this book is presented, followed by a discussion on whether the concepts of formal and informal institutions are applicable to virtual worlds at all. The line of argument in Chapter 4 is the first part of the effort to establish MMORPGs as a valid field of research in the social sciences; the second part being the practical example of such research given in the empirical part.

Chapter 5 is the first chapter of the empirical part. It features a short introduction to EV...