I think there needs to be careful balance between thwarting gold farmers and rewarding genuine work within the game. If someone is prepared to put in the effort and transport goods around or craft a lot of items that they can then sell, then they should be rewarded for their time and effort.

Quote:I agree. What gives the game to the gold farmer is having high level goods that are of value to low level players.

I think that's a very good point, and it's not something I've solved yet. I had a few ideas about items needing much more repair if a player is lower than the optimum level for it. So that a player could use a higher level item but they'll need to pay a much higher upkeep for it. It doesn't stop twinking and it is something I need to look at soon.

I still can't resolve the problem of player owned shops though - it's been rolling around my head all week. Is it worth the effort? I assumed some players would get a lot out of owning and building a shop (similar to UO) but I still can't see how they'd fit into this sort of economy - why would you trek around several shops when you could just got the Auction House and probably get the item cheaper?

And the other thing I couldn't work out, is why Sell Orders exist in EVE - what's the benefit of using a Sell Order over putting the item for sale on the Market/Auction?

Sell orders basically let the producer set the price to whatever they want(at the cost of having to wait for someone to buy)

Buy orders basically let the buyer set the price to whatever they want(at the cost of having to wait for someone to sell).

As such in a reasonable economony you'll end up seeing something like this:

Buy X bids: (waiting for someone to sell)
buy 5,000 @ 12.5
buy 10,000 @ 13
buy 5,000 @ 13.5

Sell X bids: (waiting for someone to buy)
Sell 3,000 @ 14
sell 4,000 @ 15
sell 1,000 @ 16

__________

So for the cost of waiting for someone to agree with your price, is just waiting long enough.

The market will tend to work best when you see bids both ways. Otherwise the market will tend to be blind to seeing the needs of either the buyer or the seller. Which in worse case scenarios could mean that it could take weeks for the market to correct itself, and also means that 'playing' with the market becomes quite a bit harder.

brilliant - thanks for the replies.

It is natural for designers to design an economy to be similar to how they encounter their real world economy. However, this is not necesarily a good model of how the economy works.

Most people's ecperience with an economy is:
1) They go do work
2) They get paied some money
3) They spend that money

This is the Source/Sink model that crops up so often in MMOs and other games, and, while it is a good model of how an individual intyeracts with an economy, it is not a good model of how an economy actually works.

The biggest problem is that it treats Money as the same as Value and also treats Value as if it is a constant between all individuals and times.

To put it simply, none of those are true.

Money is not the same as value. It is true that money has value, but that the value of money is not a constant. Money is a "potential" in the economy. It represents a potential good or service.

eg: If you had a Cow you wanted to trade for corn, and I had corn that I wanted to trade for some meat. Then we have a potential trade. But if I didn't want meat because I already had some, then I would not want to trade my corn for womething that I didn't want (more meat), so no trade could take place.

However, if we use a "potential good/service" as a trade medium, then you could trade me theis potential for my corn and then I could exchange that potential for something I did need (say a new millstone to grind up the corn - or the service of a miller to grind it for me).

Thinking of money like this means that the value of that money is only the value of its potential. If nobody is using that potential, then the value of money drops.

So, money is not value, but it is potential goods and services.

As for value, it is not a constant, but is dependent on the situation (the circumstances of the individuals involved.

A simple way to demonstrate this is by this situation:

Of what value is a glass of water to a drowning man. But of what value is that same glass of water to a man dying of thirst.

Inthis, there are two individuals, on, the man drowing has too much water, and so does not put much value on having more water. But the man dying of thirst has no water and so places a large value on any water.

This is encapsulated by the law of "Supply and Demand". That is: The greater the [isupply the lower the value, the greater the demand the greater the value.

But supply or demand are not evenly spread around the economy or in time (sometime someone will have a lot of something and other times they might not have much of it).

So the value an individual places on something (including money) is not a constant, but fluctuates as their situation changes.

Inflation (and deflation) occurs because of these two effects. Because the value of money is not constant and fluctuates becasue the value of the goods and services it acts as potential for fluctuate and that the supply of money (and the goods and services it represents) goes up and down.

So, if you keep increaseing the supply of goods/services/money into an economy, then the value of them will go down due to supply and demand. This measn you have to pay more for them and you get inflation. If you decrease the amount of good/services/money in the economy, then their value will go up.

This is sort of what the Source/Sink model tries to reproduce. They use sources (monster drops, etc) as the source of the goods/money and then use item wear and vendors to act as sinks for these sources. However, the ballance must be just right or you will get inflation or deflation.

Why these sink/source model can never get this balance right is that the balance depends on the number of individuals in the economy and their activity. If a player hoards goods and money, then this acts like a psudo-sink, but only for as long as that player does not release it back into the economy.

This causes an effect on the economy like a deflation and unless the game/developers do something about it, then it can wreck the economy of the game. However, if the player were to release their hoarded goods and money back into the economy, then this will act as a source and unless something is done about it, it will cause inflation.

Also, the more players in a game the more activity is needed to support them. If the game uses a sink/source model, then the more players in the game the more players will be putting resources into the sinks. However, if done right the amount of players going out and getting the resources (eg: questing, gold farming, etc) the more of it there will be.

And this is where the gold farmers are a problem because what they do is to focus their efforts on getting resources and minimising their expendature of resources. In effect, they will try to circumvent the source/sink model, so any imbalance in the model (which is inevitable) they will exploit and your economy will be ruined (or at least need constant adjustments).

Now it gets complicated.

In a trade, there are actually 4 values that exist in the trade.
1) The value the seller puts on what they own (the good or service they are selling)
2) The value the seller puts on what the buyer owns (usually money)
3) The value the buyer puts on what the seller owns (the good or service they are buying)
4) The value the buyer puts on what they own (usually money)

Now, if the seller values what the buyer owns more then they own, then they are willing to trade. If the buyer values what the seller owns more than what they own, then they are willing to trade. And, only if they both are willing to tradde can any trade take place.

the important thing to note is that the values each person puts on the deal does not have to mathc up with the other. In otherwords, the total value, when one side is suptracted from the other does not have to equal 0. Trade is not a 0 sum game.

Because trade is not 0 sum, this means that total value of the economy can be increased from trades (why do you think businesses and governments but so much focus on trade deals).

In the way individuals interact with the economy, we never really have to deal with these kinds of effects, so the models we create for economies don't reproduce them or take their effects into accout if they do occur (and when they do it is not usually by design, but by accident).

This is what borrowing money from banks is all about. The idea is that the borrower uses that money to create more value through some mechanism. This increased value can then be used to aquire more money to pay back the loan. Governments effectivly purchace this "value" by printing more money.

So, how could you apply this to a game.

First of all, because a game is not like real life, it is possible to know precicely the state of the economy at any moment. This is good because we don't have to guess any of this (or spend a long time collecting the data).

When an autority create money, they increase the supply of it and thus cause all money in the economy to reduce it value. IF you remove money from the economy, then you cause the remaining money in the economy to increase in value.

But, this does not change how the individuals value the various goods and services that ecist in your economy because money is not the same thing as value. Money has value, but they are not the same thing.

In the source/sink model, the developers try to regulate value by removing money. This doesn't work as they are only effecting the value of money, not the value of the goods and services it represents. All chainging the value of moeny does is make it harder for those without a lot of it to trade for the goods and services and allow the ones with it to dominate.

If the value of the money devalues too far, then players will jsut end up using some other object as their medium of exchange (and potential good/service). If the NPCs in the game then don't recognise this new "currency" then things can get really complicated and out of control of the developers.

So, just creating or destroying goods is not the solution as it doesn't really target the problem.

What I am going to do is to turn the idea of controlling an economy on its head. Instead of a central aurthority (the developers) being the ones in charge of creating or destroying resource, what if you put that control into the hands of players?

Of course, you would have to put into place mechancis to control it, but it can be done.

If a player could create resources, but not directly benifit from them, then when they create them, they reduce the value of the resource in play. But this means that when they create resource, they end up devaluing their own.

However, if a player could only destroy resources that they own, then this means that they reduce their net worth by destroying resources.

Under this system, why would anyone choose to create or destroy resources?

Well think back to the trade concept and how there are 4 values in any trade.

If a player wanted resources, but didn't have them, then they could create new resources and thus lower the value of them and thus get more of them in a trade. But, if they ahve resources they can easy get and can trade for them, then they might destroy their stock piles to increase the value of them for future trades.

As players both want to increase and decrease the values of the resources, then this creates a self balancing system controlled by the players.

Now "destruction" of a resource could be just not making it (not mining for it, crafting it, etc) thus increaseing it scarcity, so it does not need to be a direct deleation of their own stocks. And so "creation" of a resource does not need to be a direct spawning of the resource.

eg: A smithy might want cheaper ore so they make lots of mineing picks and sell them cheaply and thus making mining more attractive because the costs to do so are reduced and thus more ore is produced and supply/demand means that the price of ore will drop.

As you can see, by moving the responsability of managing the economy into the player's hands you can create a self regulating system that avoids uncontroled inflation or deflation and also avoids gold farmers (as their act of increasing a resource causes that resource to become devalued and they end up harming their own value).

It creates a self enforcing limit, but does not actually prevent players from temporarily exploiting the natural fluctuations that this kind of economy would do. It means that an astute player (or just lucky player) can manipulate or exploit these fluctuations for their own advancment. Just like in real life.

Quote:by moving the responsability of managing the economy into the player's hands you can create a self regulating system

Can you completely hand over economy management to players? How do you handle quest rewards and loot drops?
I had started thinking about having an indicator of the amount of inflation and scaling any gold drops that occured - or would you avoid any kind of currency being dropped or offered as a quest reward?
(thanks for taking the time to type all of that out - it's very much appreciated)

Quote:Can you completely hand over economy management to players?

Yes, you can completely put the economy into the hands of the players. Some players will establish themselves as an authority and other players will defer to their economy rather than use their own (it takes time, effort and the ability to back up their currency - the value I was talking aobut), but you can give players the ability to do so.

Quote: How do you handle quest rewards and loot drops?

This is actually what I am arguing against. Loot drops and NPC vendors are part of the Sink/Source Model which does not work without constant maintainance (and even then can still go completely out of control).

The real value of an economy is based on the effort that the members of that economy can put into it. The more efficient they are the more value can be created by them (this is what Adam Smith was talking about in his book "Wealth of Nations" - a good read if you are interested in economics, even for game economics).

If you make things like money and resources drop through the normal activities the player would ahve to do, then the value of the effort put into these resources is 0. And, because the value is 0, the value of the economy is 0.

Designers try to comensate for this lack of value by trying creating scarcity and haivng rare items that only occasionally drop. However, this is only a false scarcity and not real scarcitry, as this scarcity is only a matter of time, and any player willing to put the time into it can get it, then the actual value of that item is effectivly 0 because the actions of the players removes the scarcity.

In a player run economy, the players have the ability to create curency. When they create currency, they devalue that currency. If the player then ahs the means to remove some of that curency from the game, then they can increase the value of that curency.

The two restrictions you need to place on this are:
1) The currency created by a player does not directly benifit them. This way a player can't just create more curency to satisfy an imediate need before the knock on effects caused by the creation of that curency

2) The curency the player removes must come from them directly. This way a player can't jsut remove currency from the game to boost the value of thei curency that they hold.

The decision to create or destroy curency should be based on the need to facilitate transations using that curency. This is what these two rules do.

Any item can concevably be used as a curency, so these two rules must apply to every item in the game.

One of the rules that also needs to be implimented if you are hainv crafting is that a player, with effort, can convert one curency into another. This is what crafting is all about.

The problem, ultimately, is the tendency for value to beget value. The more value a player controls, the greater their sway in the market: If I purchase all the iron ore, its price (and the price of derivative goods) will rocket to the value of the highest priced action you can take with ore, and this value will tend to increase with time as well (as everyone's weapons break down they'll grow increasingly desperate for iron). The price of ore will attract more and more miners, eventually overwhelming my ability to corner the market. But until that time I can slowly sell off my iron for massive profit. I end up ahead, and all the other players suffer an unpredictable economy where at any given time there are basic goods they can't obtain. The system of players creating/destroying wealth won't work as long as a player can't be forced to sell something at the market rate, and do you really want players to arbitrarily have their goods taken away?

How to avoid this? You could declare a winner when value is too concentrated and reset. You can use sinks/sources to deflate successful player's values (e.g. ensuring a cheap source of iron ore when liquidity is low). You can figure out a system where value doesn't create value: where rich players have no more economic influence then anyone else. With a large enough world you could potentially always have a balance to powerful players (collusion is tricky, though...).

Lack of scarcity adds a ceiling price (How do I value an hour of my time? Then that's the most I'm willing to pay for an hour's production of that good). But now you're back to the original issue of inflation: the product's value will fall towards the minimum someone values their time. And without sinks, the quantity of a resource increases and increases. Maybe the iron has a sink, as players craft swords, but eventually that market will saturate. Unless there's wear, and swords are gradually destroyed: but now the game has sources (the resource you can always mine more of) and sinks (wear), and you're back to figuring out how long a sword should exist to keep its value balanced.

In an open system, playtime is the basic source of value, and that's something that's always increasing (creating inflation) and you move towards everybody having everything they want (or an eternal influx of better and better stuff). In a closed system, resources will concentrate in a few hands, making things unplayable for the have-nots.