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ingame resources, the economy and stuff

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I'm currently trying to get a feeling for ingame resource management: gathering, refining, producing, consumption etc.
I know that when designing a concept for a game (actually any game), it is very important to keep this in mind. Therefor I decided to do some reading on this topic and possible pitfalls when designing an ingame economy.

Resources apply to all sorts of stuff (hit points, exp, materials, money, equipment, time etc). What I'm looking for are articles on experience with the ingame economy of games from different genres (RTS, building sims, roleplay games [single and online]). I remember reading an article about the effect of reducing or increasing the availability of one resource (like wood) in an mmo but I can't seem to find it on the net right now.

I am currently learning / working with and wanted to build a simulation where
[list][*]increasing the need for a product shows the increased need for the materials (quantity of the demand and effect on the value of the materials).[*]reducing the availability of a resource shows the possible effect on the price of the resource and all products build from it[*]and other interrelations[/list]

What I've found so far:

[url=""]an article/paper on feedback structures in game design[/url]
[url=""]a paper on mapping resources to functions in games (with cost)[/url]

I'm grateful for everything on this topic (articles, calculation frameworks etc), especially things that were not yet posted on this board as I'll do a search here after writing this post.
I'll try to build the simulation (database design, functionality etc) on my own but if you have any input for me as to how to solve certain calculations, implement inheritance (1 armor = 4 plates + leather binding + hinges = 8 metal + 2 leather) I won't keep you from helping me. ^^

Thanks in advance,

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Read first how real economy works, this will clear up many things :) (don't worry if you don't understand half of this, they wrote it overly complicarted, it's easier in reality :D) (it's important to understand the difference between perfect matket model and real market model since all theories are given for the perfect market while you making a game will try to simulate inperfect market)

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I would steer clear of the real world economics articles; they have stagnated in a pool of their own self-deception. They have a set of highly unrealistic prerequisites that are not generally desirable or likely for a game universe.

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[quote name='AngleWyrm' timestamp='1306389083' post='4815914']
I would steer clear of the real world economics articles; they have stagnated in a pool of their own self-deception. They have a set of highly unrealistic prerequisites that are not generally desirable or likely for a game universe.
[/quote]:D Another economists hater, well no surprise considering recent banks bankrupcies. You are partially right, world economic articles (macroeconomy and free trade vs protectionism) is seriously flaved and controversial. But the microeconomy part is perfect and apply to all games anyone makes (no matter if they are aware of it or not).

Maybe this below will make it more clear.

[b]Supply and demand[/b]
Once upon a time there was a village next to the enrance of a bottomless dungeon. The village was inhabited by 2 brave heroes (demand: 2) who were exploring the dungeon fighting monsters and taking back treasures. The village was also inhabited by 2 dwarven blacksmiths (supply: 2) who were producing axes. Heroes loved the axes because it was a better weapon than their fists, even though the axes were not durable and they had to buy these over and over again.

[b]Market price is the crossing point of supply and demand[/b]
The price of the axe was 100gp (supply to demand ratio 2:2) and everyone was happy. But then one day 2 new heroes arrived (demand: +2), which make the poor blacksmith dwarves be unable to provide axes to everyone and they decided to rise the price to 150gp per axe. What's worse the grandmother of one dwarf got sick and he had to leave (supply: -1), the price of the axes of the overworked dwarf was rised to 200gp. Fortunatelly 2 of the heroes were eaten by a monster in the dungeon (demand: -2) and the dwarf set back the price to 150gp.

[b]Complementary goods[/b]
One day an elf arrived and started selling bows. It was a weapon similar to axe (complementary good) althrough not every hero was dexterious enough to use bow as well as axe (not ideal complementary good). The price of axe has fallen.

[b]Supplementary goods[/b]
Then one day an arrow maker arrived (suplementary good to bow). It made bows more desirable because now heroes did not have to rely on looting arrows from dungeon. Some heroes decided to switch from axes to bows (demand for axes decreased, for bow increased - supply of supplementary goods can affect the demand for complementary goods). The price of bows increased. The price of axes decreased.

[b]Griffin's paradox (or why lack or iron makes axes cheaper)[/b]
Our village is now inhabited by 3 dwarven blacksmiths. 2 of them make regular axes, 1 make higher quality expensive axes. Heroes buy both regular and quality axes. Then one day there was a huge shortage of iron because ogres demolished nearby iron mine. Dwarves that made regular axes rised the price of their axes considerably to offset the cost of iron. Now heroes got into trouble, axes become very expensive, so they decide to apend all money only on the regular axes (which were cheaper than quality axes) so they always have any weapon. No one was buying quality axes anymore. The quality axes maker decided to reduce the price of his quality axes, even though his profit become reduced already because of the cost of iron, so at least someone would buy his quality axes.

[b]Transaction cost (non perfect market model)[/b]
Because of some random event our village was reduced back to 2 dwarven blacksmiths and 4 heroes. Both dwarves set the same price for thir wares. One dwarf set his shop next to entrance of the dungeon, the other at the distant part of the village. Most heroes started buying from the first dwarf because it was so conveniently next to dungeon entrance. The second dwarf became desperate and decided to reduce the price of his goods by a whole 1gp! But strangely this have not changed anything, heroes were still buying at the first dwarf (transaction cost of going to a distant shop was higher than 1gp). Only after the second dwarf reduced the price by 10gp he made some heroes to go to his shop.

[b]Imperfect knowledge (non perfect market model)[/b]
The first dwarf was unhappy. Sure, he could reduce the price to get back his consumers, but this was not a nice option for his gold greedy mind. Instead he went to a local wizard and brainwashed him to leave the village. Now heroes had no access to clairvoyance spell to check all the prices in the village. And since they were brainless heroes they could not remember who had what prices, so they started going to the first dwarf who was near. The second dwarf got very upset and hired a bard who was standing next to dungeon entrance telling the heroes that in the second shop prices are cheaper. Unfortunatelly, the bard was a lazy bum and leecher who was spending half his time on drinking beer in a tavern and picking up nymphs so not each hero was educated about the real prices and some havn't knew about it.

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[quote name='Acharis' timestamp='1306311842' post='4815488']
Read first how real economy works, this will clear up many things :)

Thank you for the reply and the links. (And thank you for the both educational and entertaining explanation!)
I was thinking "Hmm, how do those rules, mindsets and models transfer to games?" as well as "Hmmm, in games, people don't think rational because loss is only virtual!" which is a common problem when applying stock trading games and sims to the real world. You don't wager 2.300.000€ on a high risk knockout if it's your own real money and you have kids to feed and a rent to pay.

As I mentioned before I read an article a while ago about a developer of a smaller mmo who told his story of correlated effects, dependencies and stuff. One example was the need for certain valuable and rare resources and the resulting "traffic" in otherwise less popular zones. I wish I'd know where I read that story. He shares some very interesting insights.

What I have in mind is a model database with resources, refined materials and finished products, a table for current needs and suply and the resulting prices and values of all resources etc. Once the database is designs and filled with sample data, I planned to write simple controls to induce events with effects (very similar to your examples) and see if it is possible to monitor the inherent effects on the price/value of resources and products.

i.e. there is a big earthquake in middle earth and people need to repair their houses (and the city). Food supply drops while tools as well as stone and wood needs arise. This would affect both agrar products as well as industrial products and have an influence on many other aspects (like prices for houses because stone and wood became more expansive)

It sounds like a fun (and complex) idea to play with. I am aware that the dependencies between those are huge as well as the overall scope of this project but I plan to start small and see where it leads me. It's a fun project for me (I'm a numbers person) and not a "game in development". I guess looking at my experience with the ff11 auction house and similar things in other games I'd imagine such a text/database based experience could even appeal to some people as a "game" concept. I know many people like stock market games and I'd think trading with magical gems and broad swords might be more interesting and fun for younger people than trading Brent Oil on the Xetra or monitoring DowJones but as mentioned, that is not what I plan for.

I'm interested to hear further insights as well as possible (and game related) literature on this topic, even if it ends in number crunching or theoretical real world models applied to game mechanics.


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While reading [url=""]this wiki article about virtual economy[/url] I came across the following extract

[i][size="1"]Main article: [url=""]Mudflation[/url][/size][/i][/font]

[font="sans-serif"][size="2"]For a persistent world to maintain a stable economy, a balance must be struck between currency sources and sinks. Generally, games possess numerous sources of new currency for players to earn. However, some possess no effective "sinks", or methods of removing currency from circulation. If other factors remain constant, greater currency supply weakens the buying power of a given amount; a process known as [url=""]inflation[/url]. In practice, this results in constantly rising prices for traded commodities. With the proper balance of growth in player base, currency sources, and sinks, a virtual economy could remain stable indefinitely.

As in the real world, actions by players can destabilize the economy. [url=""]Gold farming[/url] creates currency within the game more rapidly than usual, exacerbating inflation. In extreme cases, a cracker may be able to exploit the system and create a large amount of money. This could result in [url=""]hyperinflation[/url].

[font="sans-serif"][size="2"]In real world entire institutions are devoted to maintaining desired level of inflation. This difficult task is a serious issue for serious MMORPG's, that often have to cope with [url=""]mudflation[/url].[/size][/font][/quote]

I'd love to read more about this topic (following the mudflation links) especially with real game examples, stories and other experiences as well as rants or thoughts about possible solutions.

[b]One way to implement a "sink"[/b] is something I would have included in my sim anyway... virtual people...
To represent demand and supply I planned to develop a system that represents people buying and offering items and therefor influencing the market. With special situations created as events I'd like to simulate situations that cause i.e. a shortage and actually affects the supply of the virtual traders.

I thought that implementing a daily, hourly or whatever interval at which new items appear based on source quality and availability as well as virtual traders that invest time to offer those items based on a given need. Let's say that there are no active events. The virtual people see no special needs and spread their supply over the available items based on profit, given supply at the time of the decision, need and ease of "gathering" or production. Many will "decide" to produce simple stuff and few will "decide" to produce complex/expansive stuff (based on a probability factor).
At the same time the virtual society has a base need that defines how many items are bought from the market.

With an active event, the need for certain items might increase. This affects the price and need on the market and therefore (with a certain lag) affects the decision making process of the virtual people what to produce next. With a given shortage of food or stone, they will decide to plant rice or harvest stone and offer it on the market. The lag is there to represent the decision making process as well as the time needed to get "results".

As you see, I have a quite complex sim in mind but as I see it, it should be possible to start small (create the market and items as well as base values etc) and then add to that by getting more and more things implemented. I want to establish the base of items first to be able to display the price, volume, change in % etc for given items and get something visual. As soon as I do anything that affects the market, I can see a change (or should be able to) and work with that.

[i][size="1"]As a side note... do you remember those little ant farms that used to be cool like 20 years ago? Ignoring the fact that I think it's cruel to put living beings behind glass such a farm would have been something I would have loved watching as a child.[/size][/i]

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Hi Elovoid,

Maybe I can be of some help! I'm an MBA student, avid MMO player, and I've spent a few years working in the game industry (and hope to return when I graduate this fall). I'm currently working on my thesis, which is about how economics work (and don't) within virtual worlds, and how to design a better virtual economy. The thesis itself should be done within the next few weeks, and I'd be happy to send it your way if you'd like to read it.

In the meantime, I can recommend a couple of sources that I've come across while doing some research: (very old article, still interesting)

Also, read anything by Edward Castronova. He's a professor at Indiana University who has done a lot of pioneering research on virtual world economics, and has done the only work (to my knowledge) with any actual data access from a game company. One interesting piece of his work is at

I hope that helps. :) If you'd like to get in touch, email me at To be honest, I don't check the forums here all that often, so that's the best way to get in touch.

Good luck!

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Thanks to f13 I found two articles that resemble the topic I was looking for (even though they are heavily based on mmos and not online games in general)

The Author is Raph Koster
- [url=""]'Flation[/url]
- [url=""]more on 'Flation and the future[/url]

I haven't finished reading those but as others might find this thread interesting, I thought I might as well share them.

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