Should video games be priced based on their overall ratings instead of industry standard prices? If they could be priced this way, how would that change the economic dynamics around in the video game microeconomy?

I would dare say that in most cases, it's already happening. I think you'll find the cheaper games in stores are the ones no one really cares about or with low ratings. Publishers know that the price is the only thing they can move in order to compensate bad reviews. Now take a look at the great games and you'll see how high their price tag stays at. And beside this point, major publishers would never agree to that rule anyway. They know very well how much money they can make with bad sequels to great games!

This will be a bad idea as it'll help only big publishers and Indies... those who are caught in the middle will end up spending a lot of money, while making less in return. Mid-sized developers put in more share of their profits into the development of their next game and their games generally get lower ratings than AAA ones. This means they will suffer and will shut down and that's not a good thing. The other issue is that there will be a lot of corruption in the industry if this become the standard. Publishers will start paying reviewers to get good reviews as their profits depend on it. Also, what review score will you consider when making the decision? A review by a site like IGN or the game's metacritic score? Checking score of one site will be giving it too much power and Metacritic is flawed on multiple levels. Sites like Kotaku for example, don't give traditional percentage ratings. Reviewing a game using a percentge system is very flawed as every site gives different weightage to different things and pricing the game based on that would be pretty silly. Once more people start downloading games instead of buying a hard copy, developers and publishers will know the exact number of people buying and playing their game. They can use this measure to reduce the price of the game.