Ethical AI in VR Games: Welfare Economics for In-Game Microtransactions

The presence of in-game microtransactions has always remained at the center of discussion for both virtual reality gaming practitioners and researchers. With the advent of AI and its usage in enhancing the development and distribution of in game advantages based on microtransactions, the issue of ethics has garnered more attention. The prevailing literature on the economics of in-game microtransactions mostly examines the ethics of fixed game rewards and random loot boxes. Although it looks at the morality of distribution of in-game advantages based on players' ability to buy items with real money, this approach leaves a gap because it only studies the outcomes of current economic structures in video games and does not provide ethical guidelines to ensure objective outcomes. Even the sparsely available literature that seeks to examine ethical framework focuses mainly on philosophical and cognitive approaches and often overlooks welfare economics. This paper aims to fill the gaps in both areas by proposing a new approach to ethics of in-game transactions. It uses welfare economics as a theoretical framework to guide the ethical considerations of AI-driven microtransactions in video games. The assimilation of new perspectives will expand the scope of interdisciplinarity of existing studies and help advance us towards a more holistic intelligent reality.