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Dec 16, 2004



Note that if the money supply is in fact fixed, due to the degree of hoarding by players (e.g. ones 'saving up' for something big), the effective amount in circulation should gradually decrease. Real-world governments deal with this effect by printing more money (if you stick money in your mattress, you're making an interest-free loan to the government). Thus "controlled," rather than "fixed," is the key word -- I could certainly see tying the amount of money monsters drop to the amount of money one sees changing hands (both the aggregate amount and actually tracing individual "coins" through the world to see how many were simply non-circulating.


There's also a more general point lurking in the shadows here -- this 'inflation' happens with respect to anything that the game is willing to produce in unbounded quantity, not just money. I'm not even sure that 'inflation' is the right term: in some sense, the issue is that the supply curve in any given good is fairly close to flat. (Especially so in an instanced game like WoW, where there's not even a spawn clock putting a time-based brake on production.) This is making me think that your theory of the avatar might have some interesting things to say if embedded in one of the basic macroeconomic models.


James> This is making me think that your theory of the avatar might have some interesting things to say if embedded in one of the basic macroeconomic models.

[Warning! Shameless plug ahead.]

See my forthcoming book...


Very intersting article. It sheds some good light on the facts of hyper-inflation as seen in (I believe) every MMOG deployed to date.

One of his conclusions is relevant to another recent discussion here, having to do with external sales of in-game resources:

People may complain that EBay is the chief cause of a MMO's economic collapse, but any hard look at the matter shows that not to be the case. These are very controlled economies that live or die by the decisions of the developers, and no one else. Pursuing red herrings like shutting down EBay auctions, while good for publicity and player morale in the short term, do not address fundamental imbalances in the economy.

I'm glad to see those two issues so clearly separated. The ranting against out-of-game sales really comes down to just an unhappiness with the time-vs-money market equation that players are making. As I said earlier, as the market changes to include more people with more money than time (that is, non-core-gamers), these sales will continue and increase, despite the blustering of companies like Blizzard. Companies that realize this and include it in their game, support, and service plans have a lucrative new revenue stream open to them.

Edward said, Why do devs let players generate money? Players should generate resources; money supply should be tightly controlled. It's this old trope from D&D that every monster carries loot. Fine. Why is it currency, though? Recipe for inflation.

Even if monsters merely carried items or other loot, that's equivalent to them being economic faucets if that loot can transitively be converted into currency. And even if monsters dropped only loot that could be used but not sold or traded, that still acts as an economic faucet, since the characters would then be able to devote their cash to other items (that is, it's a cash net-gain for them).

But I do agree that if monsters are going to be a collection of faucets into the in-game economy, sufficient drains -- non-painful, un-fun drains -- must be found. Otherwise the currency supply necessarily increases relative to the supply of goods, and we're back on the hyper-inflation carousel.


I linked it because it supported my argument that hyperinflation is going to manifest in WoW given time. Anyone who was around when EQ first launched might remember that once upon a time, acquiring a single plat was considered a major feat, and everyone was thrilled because they thought it meant that the game was balanced. I was a doomsaying stormcrow that time too. :)

The fixed money supply experiment that James cites has been done, in UO. The result was a bigtime crash. :) Put in broad analytical terms, what happens is a gradual (or sudden, if you get enough players!) diminution of the positive feedback to players. The fun comes from the positive feedback. So this is a recipe for less fun.


I couldn't get past the first paragraph (explaining about his experiences in day-trading stocks) without falling out of my chair laughing. Apparently, he claims to know exactly what the "logical" forces are behind market moves, but he was confounded by the persistent stupidity of investors. God help him in the MMOG marketplace.


Mike Sellers> sufficient drains -- non-painful, un-fun drains -- must be found.

I think the problem is deeper than this as you don't control how many characters a single player has either. I.e. you don't really need a drain, you need to cap accumulation. This you can do on the character level, but to do this on the player level you need to go for either no-drop or rotting resources.

Or rather, you can have faucet-drain balance, but only if the gameplay creates a even playfield for stupid and clever players. I.e. kill the game.


Raph> So this is a recipe for less fun.

My experience with MMORPGs has led me to wonder what would happen if the criterion for evaluating real-world economies were not efficiency but fun. Maybe inflation is fun. Wouldn't that tip the econ texts on their heads!


Ola> Or rather, you can have faucet-drain balance, but only if the gameplay creates a even playfield for stupid and clever players. I.e. kill the game.<

It seems to me obvious that you can have a faucet-drain balance, because essentially, the Server Knows All. So if your transaction sampling is good enough, you know all the sink rates in the world. And since faucets are basically controlled by luck on drops i.e. the Server, you can set the faucet rate to any level you care to. Most economic analysis of MMOGs seem to me to founder on this point. They make the real world assumption there is no God, and no all seeing eye that sees every transaction. That is not true in a VW. Mudflation is a design decision by the developers, not a unstoppable accident. A design decision perhaps driven in the past by lack of CPU cycles to monitor the flow, but I doubt if that is a serious problem now.

As Raph points out, it may however still be a wise decision. A MMOG without Mudflation might not be fun. I suspect it might come down to how you control the luck function, i.e. the drop faucet. I’d agree with Mike Sellers that the future is likely in rebalancing the scales between time starved and time rich players. But I would do that more directly using the drop rates, rather than the disruptive effects of an external paid labor force. I don’t think you need to go to the extreme of a level playing field between the time starved and the time rich, or the stupid and the clever. But perhaps the positive feedback for being both clever and time rich is set a bit too high in today’s MMOGs.



Inflation -mudflation- of currency due to a larger faucet than drain *is* really fun, but only because some points remain fixed or take a really long time to catch up. Those points being the prices at which resources can be obtained/bough in the game - so you get more digital jollies for less real-time and only while this pace outstrips the davaluation your resource stash took during inflation. The opposite is not fun, and having everything catch up so an equilibrium is maintained doesn't deliver the inflationary jollies of "more for less."


CherryBomb> Apparently, he claims to know exactly what the "logical" forces are behind market moves, but he was confounded by the persistent stupidity of investors. God help him in the MMOG marketplace.

Actually, I think he has a very good point there. The MMORPG market *is* very rational. The real market is so caught up with triple guessing the price of values 5 years in the future that its behaviour becomes entirely random.

Playing the MMORPG market involves a lot less gambling than it does plain old fashioned arbitrage.

My experience in SWG made this very clear. I watched ore prices on the open market for a few days to get a feel of what priced auctions would sell out in two days. I would then purchase anything priced lower than that, and sell at the two day price threshold. Opportunities like this are rampant in MMORPG economies because they are still very inefficient. Furthermore, you tend to trade with absolute values, not derivative values.

The price of a stock tends to reflect how people think its value has changed more than its actual useful value. The price of ore in SWG tends to reflect the actual value for the ore.

- Brask Mumei


Edward said: Maybe inflation is fun.

Nicely succicnt. This suggests that we allow for inflation in the real world because it allows us to persist in the illusion that our local minimum is a more global one; that raising my prices or demanding a raise in pay now helps me now but doesn't hurt "us" (i.e. by contributing to overall inflation) in the long-term. A classic attribution error. When inflation gets too high it's no longer fun -- the illusion of local gain collapses -- and when it's too low we under-appreciate the constancy of prices.

The un-fun-ness of either a tightly controlled game economy (where faucets exactly match drains) or an unregulated one where hyper-inflation is rampant may throw into bold relief lessons from either end of this spectrum that can be taken to real-world policy.

That said, I think we've hit something of a plateau in our economic understading in MMOGs. For us to learn more (and provide more finely honed fun), someone's going to have to try something new -- say, variable currency availability (e.g., the orcs capture the gold mines so gold for them is more plentiful than for the humans); or import/export markets that provide local upper and lower price bounds; or meaningful taxation that varies by locale; or something else.


Mike Sellers wrote:
meaningful taxation that varies by locale

FYI, at least one of our games does that already in limited ways. Player governments set property tax rates for shops players run, usually based on location. Not sure if that kind of thing is what you mean or not though.



Isn't "mudflation" more a form of deflation than of inflation? I didn't follow the EQ platinum EBay value at all, so maybe there was inflation of the EQ PP in dollar terms. But *in game* the most visible effect was that any item for sale got cheaper every week.

Money flows into the virtual economy every day, and maybe more than flows out. But what about the items flowing into the economy? Even the games that have item decay usually have some sort of repair for money function, creating another money sink, but making items eternal.

It's this old trope from D&D that every monster carries loot. Fine. Why is it currency, though? Recipe for inflation.
Make the monster carry only items as loot, and you have deflation instead. Not really much more fun either. Whatever other money-making activity there is, at some point it gets easier to farm money and buy the Sword of Uberness than to quest for the sword yourself. It wasn't only "twinks" in Everquest that ran around with gear they couldn't probably have looted themselves, it was a lot of other players too, who bought that loot on the bazaar.


Tobold> Isn't "mudflation" more a form of deflation than of inflation? I didn't follow the EQ platinum EBay value at all, so maybe there was inflation of the EQ PP in dollar terms. But *in game* the most visible effect was that any item for sale got cheaper every week.

Mudflation is a funny thing, a combination of 1) increases the thing people use as currency and 2) increases in the stock of durable goods. That's why Raph has referred to it as 'database inflation' - everything is going up.

Inflation, technically, is when the price of (2) in terms of (1) rises. And that's a general statement - overall the price of 'things' in terms of 'money' is rising. But that doesn't mean that the prices of all individual things is rising. So long as some prices are rising faster than others, the overall basket of purchased goods gets more expensive. When you see prices plummet in a MMORPG, it's usually on yesterday's uber items, which are no longer uber but still haven't decayed either. Given that everyone in the economy can mint coin, the most elite players sell their formerly uber gear to less elite players, who then sell it down to still less elite players, and so on. As durable goods flow down the power ladder, money flows up. The effects of inflation are seen in the rise in prices for currently-uber items, because all the cash sits in the vaults of the elite players. The effects of the general increase in the stock of durable goods are seen in the collapse in prices of formerly decent items.

And they're both gameplay problems, I think, aren't they? When you're level 20 and you see that the price of the best level 60 gear is 100,000 times what you will ever make, it must be frustrating. And at the same time, getting those leggings on the market for next to nothing is less satisfying than undertaking a risky combat to get them on your own.


Just thought I'd note, we started this discussion on inflation and fun a while ago. See the comments, also.


Ola> Or rather, you can have faucet-drain balance, but only if the gameplay creates a even playfield for stupid and clever players. I.e. kill the game.

Hellinar> It seems to me obvious that you can have a faucet-drain balance, because essentially, the Server Knows All.

Let me change that to: you can't have long-term balance under stable conditions. If the clueless users quit because they run out of money that implies lack of stability. If the hardcore quits because of perceived unfairness/a nerf (e.g. "natural disaster", taxation, changes in how you make money) then that implies a lack of stability. If you cannot have this stability then the game economy has failed it's most basic purpose. Even an adaptive system can be destabilized if enough rich people suddenly start to dump their currency... Is that fun? Yes, problably. LOL

The problem is exaggerated because many hardcore players make accumulation of currency a goal! Bragging rights: "Yay, I've got so much money that I have to spread it over 3 accounts because of the currency caps!!". They accumulate more money than they ever can use/invest. Is this fun? Sure, it is pointless, but to be rich is fun if you aren't rich in the physical world.

Btw, the server does not know if a single player controls 100 different accounts...


Noone will ever try the other solution: Stop to make games pivot around money.

Really. If the game doesn't value the money who cares if there's an inflation? These are problems of the real world that we could easily avoid in a game. Raph says that loosing this part is about loosing a whole lot of potential but it's still something that can be done.

WoW doesn't risk much for a simple reason: it's near to the model I suggest. The toon I play couldn't be that much different if it had 100000 gold available. It wouldn't own the world.

The inflation hasn't a power if the trade isn't the heart of what you create. Our real world is going in the toilet because the money is up there at the decision-making level. In WoW the money has still a relative power. I don't do quests faster if I have more gold. Even if we wipe all the players I can still manage to play and advance thanks to the NPC vendors, quests and loot.

If at some point the players decide that a piece of bread costs 1 million of gold coins, I can still go to the bread vendor and buy a stack for 1 silver. And I really don't need much more than that, nor it's possible to being overpowered thanks to money. The richest, in this game, isn't the most powerful.

Really, who cares if there's money inflation? Who cares if the game doesn't offer a real economy to please spread-sheet players? Let SWG have that stuff and let WoW focus on the gameplay, not on the money.

What matters in WoW is content inflation. This is a valid point. For now WoW is gifted from NOT having the money inflation problems you describe here. This is the point. Nothing you write really applies to the game in a concrete way.


Really, who cares if there's money inflation? Who cares if the game doesn't offer a real economy to please spread-sheet players? Let SWG have that stuff and let WoW focus on the gameplay, not on the money.

This seems a very narrow definition of "gameplay," does it not? You seem to be saying that the hack n slashing is all there is. But games involving money are interesting to a lot of people--arguably more than are interested in slaying dragons.

For now WoW is gifted from NOT having the money inflation problems you describe here. This is the point. Nothing you write really applies to the game in a concrete way.

WoW will have money issues within six months. *shrug* Just my prediction.


It is possible to create an MMO economy that does not hyper-inflate on either durable goods or currency. At least while I was in charge of it, the DAoC economy was very stable and yet still managed to be fun. Items entered the system, and after 3-5 owners wore out and went away, money entered the system and got spent on creating high-quality items or on relic assaults and defense. People exceeded the average earning rates by a factor of a hundred, even exceeded my "worst case" earning rates by a factor of 2, and it still held together for over two years (it's gone a little flaky now, but it's not because of anything wrong with the system, just how it's been extended since my departure).

It's not even particularly *hard*, you just have to remember that what goes in, must come out, somewhere, and try to ensure that no matter how much money a player manages to make, he'll always be able to find a way to spend it "productively".



Raph, I'm not saying that WoW's economy is perfect or it won't have issues. I'm saying that it simply won't matter much. It is not game-breaking because only a small part of the game is focused on it. It's a minor problem.

"My" solution is basically the opposite of the one of Dave. *Prevent* the money to have a value. When the money doesn't directly rule the game (as in WoW) it also looses the possibility to ruin your game.

It's really simple. Instead of trying to convincing money to "behave", I simply stop to give it a responsibility. With no power it cannot mess things up.

Since I do not trust money as a reliable source of fun, I prevent it to have a major role in my game. Then I can address its problems in a more relaxed way.


Dave rickey wrote - It's not even particularly *hard*, you just have to remember that what goes in, must come out, somewhere, and try to ensure that no matter how much money a player manages to make, he'll always be able to find a way to spend it "productively".

Actually, the imporant bit is monitoring what's actively floating around. Characters that haven't been played for months don't count in the money/goods supply. (I suspect you meant this.)

I think economists call this the "M2" money supply in RL. Instead of controlling interest rates, VW designers have control over a) drops, b) item decay, c) how many objects a PC can carry/own, d) the rate that natural-resources appear, e) item prices at market (if NPC merchants sell/buy it), and f) the spread between what the NPC merchant sells it for and what the selling-player received for the item.

The fed would feel lucky if it only had this much control...


MMORPGs are not designed by economists nor MBAs so flaws with economic design is not surprising.

So my point is that if in-world economy is going to be a major aspect of "fun" in the game, don't make half measures. Mike Rozak already indicated the tools operators can use to manage the economic gameplay. Might as well consider th effect of eBay in the design.

Wonder what entreprenurial CEOs of major coporations would do to dominate the in-game marketplace? We got lawyer-types to look at VWs, so maybe its time to get MBA professors to look at VWs from a business perspective.


Ola>Let me change that to: you can't have long-term balance under stable conditions. If the clueless users quit because they run out of money that implies lack of stability. If the hardcore quits because of perceived unfairness/a nerf (e.g. "natural disaster", taxation, changes in how you make money) then that implies a lack of stability.<

I’m arguing that you could build a game based on the real underlying economy. That is, an economy where all the inputs are controlled by the designer, and all the transactions are known. On top of that economy, most current world build a fictional market economy, for gameplay and familiarity purposes. But to start believing that is the real economy seems to me like believing that the NPC sergeant you meet on the road really cares about his lost comrade in the hills. He doesn’t. The underlying reality is a simple script.

As I understand it, the point of market based mechanisms such as pricing is to extract information from a complex system in which none of the inputs is controlled and few of the transactions recorded. In contrast, in a VW economy, all the inputs are controlled by the designer, and all transactions are known. In that reality, a market economy is ultimately a gameplay fiction.

Since inputs in the VW mainly come from random drops, you can control the economy and wealth distribution by controlling the Luck of players. Make that explicit, the Gods of this world honor the valiant and industrious by reducing their Luck. You could then publish league tables of those with the toughest luck, to encourage the Achievers. I’d think once you detach bragging rights from the money supply, a stable economy would be much easier to achieve.

Such an economic model would at least be closer to the underlying reality, and so I suspect more stable. Dave Rickey claims that, if you acknowledge that you are running a controlled economy, you can do quite well. And I believe that. The designers closing their eyes and pretending they have no control doesn’t turn it into a free market economy.


Hellinar> Such an economic model would at least be closer to the underlying reality, and so I suspect more stable. Dave Rickey claims that, if you acknowledge that you are running a controlled economy, you can do quite well.

Yes, you can. Everything is of course possible, but you "can't" in the general sense of the word.

If you let resources decay (rotting items) or make them non-tradable, then the situation is obviously different. If it is entirely based on luck then you have basically killed the game.


"Preventing money from having value" and mudflation seem like isomorphic concepts. Mudflation happens because money lacks utility to players. There are two main ways this happens. The first is that the game itself offers nothing of utility in exchange for money, and players migrate to a currency other than what the developers intended. I know of this happening in two games: Meridian 59 and the AOL Neverwinter. In both cases the new currencies were items that were consumed in PvP, providing inherent utility and built-in sinks. The other reason money loses utility is if players have nothing of value to each other. I suppose choosing not to have any sort of player economy is an admissable design decision (Planetfall and Uru have followed this route) but then the question must be raised of why such a game should be aimed to serve more than 64 or so simultaneous players. Uru failed to answer that question, and Planetfall is struggling with it.

The idea of faucet-drain equality is a red herring, for the reasons Raph and others pointed out. Attractive drains should exceed available faucets by a wide margin. The proximal cause of a healthy game economy is not in having a fixed quantity of money circulating, but in ensuring two things:
1. There are always more things a player would like to buy than he/she can afford.
2. Things that are bought don't last forever and must be repurchased.

Players won't notice that items wearing out is un-fun if they are too busy getting the positive feedback of finding new items and selling them to each other.


Expecting an economy to work based on offering more things the player would like to buy than he can afford is shortsighted. The same can be said for expecting durability of items to solve the issue.

For the first one, players only buy things that have value to them. Most often, this involves value in terms of power in the game. There is a limit to how powerful players can be allowed to become, meaning that either more powerful mobs must be added to compensate or the players will simply get to a point where they can do whatever they want. Expecting more content to solve the economic woes is not a realistic solution.

Lacking real value to the player, the sink won't work. It's nifty to own a nice medalion or kewl looking clothes, but it isn't necessary to the game, so it won't really do much for the economy. It will help a bit, but not enough.

Having items lose value (durability, etc.) has a negative effect on play. If implemented right, it can work as a limited sink, but it can not tacke the full amount of drain necessary to solve the economy blues. During patching in Diablo II -- pre Lord of Destruction -- some patches made item repair very expensive (due to the excessive need to repair often). It was fairly easy to end up witout any cash to repair items, and have to go to a lower level area (little or no exp) and grind out some money to "get back into the game." In contrast, "item decay" does not regulate the real world economy as a significant sink. So then, why do we think it would work in a game?

The only real solution to economic bloat is to reset it from time to time in one or more ways. This is because 1) an economy has to allow players to increase economically. If it doesn't the player can never gain anything beyond what he starts with, and 2) due to the diversity of playstyle, it is not possible to construct drains that meet the appropriate drain-need for each player (resulting in excess value being introduced into the game).

In the real world, economies always grow. They shrink only in very adverse situations such as natural disasters and war where things of value are destroyed (both tend to "reset" a local or global economy). As an economy grows, new things of value are always generated to absorb the increased amount of value added to the system. This is the "balance" factor of the real world economies (short of any "reset"); any cash gained by a person ALWAYS has a sink for it to be put into. However, in an MMO, this kind of sink does not work in practice.

The main difference between real world and MMO economies is that in the real world, items do not increase the purchaser's power near as much as they do in a MMO. Thus, in an MMO, the power-curve grows much faster, making it much harder to maintain balance in the MMO economy. Any attempt to let the game create its own sinks will result in unbridled power for those players able to attain it.

Interestingly, this points out the main flaw of MMOs today: PCs never lose their PCs current power or economic position. If someone made a MMO where PCs and their riches could be swallowed up whole, the economic system could be maintained and bloat could be avoided. You know what I'm talking about: permadeath.

Short of having PCs die and the player have to start over from scratch, there really is no solution to economic bloat in a MMO.



The two principles - sinks exceed sources, and nothing lasts forever - have to go hand in hand. You're right that you can't keep adding more powerful things to incentivize sinks, but if players are always losing what they have, items that are equal or even less in power are attractive purchases.

Your objections to decay have led me to a third principle required for this to work: being poor must not be un-fun. It's clearly the case that being poor was not fun in Diablo, so decay worked poorly there. Contrast with UO circa 1998-2000 where people got dry looted all the time, but items were fairly optional anyway.

Incedentally, I don't think the typical damage/repair mechanic is a good solution to decay. As was said above, in practice it removes money but from the system but makes items eternal. It's better to remove items than money, so players can keep selling items to each other. The health of the system shouldn't be measured in the quantity of money existing, but in the quantity of items changing hands.


I actually wrote a paper on creating a stable MMOG economy for an economics course I took last semester. I haven't played many MMOGs lately, and it takes an economics perspective (since it was for the course), but it may be interesting to add to this discussion: < MMOGEconomics.doc >



Your paper doesn't deal with hoarding, account/item abandonment or scarcity of resources. UO originally had a closed economy, which tripped on these problems, and has been written about pretty extensively.

Perhaps I'm missing something?



This is something I've thought about quite a bit, and something I'm not sure we'll ever be able to deal with in a fully satisfying way.

I do think that there's a major unbalancing feature of pretty much *all* current MMORPGs (except perhaps ATITD, and I think this applies even there to some extent) that is going to lead to some form of mudflation no matter what the people managing the game can manipulate:

Power inflation

The enormous difference in "power" between new characters (or new players, when items are powerful and players can transfer items between their characters) and old characters is really at the heart of this problem. By power here, I'm speaking in a sort of vague general sense of "power to impact the world".

I'm going to use the term "character age" here instead of "level", in order to make it clear that I'm talking about whatever system a game provides to advance in power--whether it is "levelling up", "learning skills", or just plain gaining access to more and better equipment.

I'd say that power generally increases at least quadratically with the character age. Not every character "ages" at the same rate, since not all players are equal, but as the age of a character increases, the power of the character increases more quickly. Games typically try to slow this progression by making it take more time for a player to move forward as time goes on, and then finally by capping the character's progression at a certain level. (And that maximum bound will doubtless be adjusted more than once in the life of a game, in order to provide "more high level content".)

Regardless of the mechanism used, though, you pretty much always see a rapid increase in power in the first stages of the game, followed by a gradual slowdown in power acquisition, followed by a steep increase in the difficulty of power acquisition, and a final sudden halt to progress.

That progression isn't a horribly horribly bad thing--but the dangerous part of it is exactly how much the power of a character varies from one point on the curve to another. Let's imagine a progression where age 0.0 is the beginning of the curve, and age 1.0 is where the curve ends. Between 0.0 and 0.2, progress is extremely fast. Between 0.2 and 0.8 it gradually slows down. Between 0.8 and 1.0 it is extremely slow.

The problem is that the difference in "power" between 0.0 and 0.2 is such that no number of age 0.0 characters can do what an age 0.2 character can do, and an age 0.2 character can do pretty much anything a 0.0 character can do trivially. In fact, this probably holds between age 0.0 and 0.1 and again between 0.1 and 0.2.

So over the course of a character's career, that character is increasing so much in power that ten times he's passed a point where tasks that were previously impossible have become of average difficulty, and asks previously of average difficulty have become trivial.

Is it any wonder, then, that inflation occurs? We've set up from the very beginning a world in which the difference in power between the newest and the oldest players is so termendous it's barely worth measuring: they're on entirely different scales. And money, then, just becomes one facet of this.

So why do we do this? Because, god help us, it's fun to be able to look at a challenge that used to be impossible and say "wow! I can do that now!" Because there are many players who will advance through the system so quickly that they'll feel cheated if they don't see significant advancement--and at the same time there are many players who will advance so slowly that they'll feel like underachievers if they don't see at least *some* progress. And of course, loot and cash are considered by most players to be at least part of that progress.

So, in the broader picture, there's something odd going on here that doesn't really happen in the real world. There is, in addition to the huge divide between fiscal haves and have-nots, an additional division between cans and can-nots.

So what I wonder is: is it possible to design a world that does not have this property, but is *fun* at the same time. In the real world, we have some pretty great gulfs of power, too. The untrained man can't perform even nearly as well as a trained athlete. Likewise, the novice can't write software even nearly as well as an expert computer programmer. And in each of these cases, and all of the others, a person can spend their whole life working to improve themselves, and never reach the "limit" of their ability. And yet, those abilities are never so much more than the average athlete or the average computer programmer that they're completely out of reach.

So, how does it change things when a world is designed such that the "most powerful" character will never be able to do more than, say, about the same as ten characters of average power? How do things work when no matter what the goal is, enough characters working together can accomplish it, no matter how low their power is? Can we make a game like this in which while there are diminishing returns to continually honing your skills and improve your equipment, those increasingly infinitessimal advances still feel worthwhile?

If we can, I suggest that designing an economy with a lower level of inflation might be possible.

But would it still be fun? (And for whom would it be fun and for whom would it not?) Hard to say.


A bit of a parallel question.

Where is the source for the $800m figure (annual trade in virtual items)? Anyone knows? I saw it mentioned before but do not know (and cannot trace) its origin.



The level of the debate is quite impressive! But I'm wondering whether it's really the right question, "will the economy get out of hands, will it inflate? or anything else we could think of". In the end wouldn't the question rather be "how does it affect gameplay". If everyone eventually becomes very rich to the point being able to buy anything he wants, is it really that bad? Playing the role of something you aren't in real life (rich) is one way for a role playing game (albeit MMO) to succeed.

The great thing about MMORPGs is I don't believe the economy has to be realistic or at least reflect real schemes, I don't believe it has to be logical, balanced and follow rules. It has, just like the rest of the game, to be fun.

The economy of a MMORPG has to be built in a way it adds to the play experience and be corrected when it actually becomes a game breaking issue. For instance when "looted items" render crafted items useless/obsolete primarily because of their availability thus making a big aspect of the game (crafting, resource gathering, selling) less desirable.
Or when it's too much of a preocuppation and people start spending most of their time just gathering money to acquire "the next thing".

The economy of a MMORPG has to make the game more fun, and if that means being unbalanced, inflated, or whatever, I don't really see the problem. If level 10 players are worried about whether they'll have enough to buy all the new skills when they next level up while a character who reached the cap has so much he starts giving it away to guildmates thus feeling "powerful and generous" and subsequently having a fun experience, well that's great in my opinion.

Of course it's better to predict a problem before it happens and try fixing it before it's too late, and the original article does a great job pointing out and warning, but in the case of Blizzard (and any other mmorpg developer in general), with that info in mind, they have to determine whether that "upcoming economic threat" will actually affect gameplay in a bad manner and only address if it will, unfortunately predicting anything that's about gameplay is probably the hardest thing to do in MMORPGs, as shown by how hard it already is for them to do as "simple" and "basic" things as "class-balancing".

Sorry for the following childish/idiot dreamer comment (hoping the rest of my comment wasn't) : MMORPGs are a great place to experience things you can't do in real life (I for one play them for that, for the "escape" feature, my law courses especially those related to criminal cases are a hard enough hit to my morale). It could be a great place to test economic models no one would dare attempting in real life, it's a place where everyone could be rich, wouldn't that be great, of course if everyone's rich no one's rich but who cares, and if a character is extremely poor I won't drop a tear for him and if he starts begging I'll make fun of him, and it doesn't matter, it's virtual.
On a side note : wouldn't it be interesting to see how a communism based mmorpg would fail because most players care so much about ever acquiring more and better... or would earning more favors from the central administration (who would in turn reward the player with money and items) be a good enough alternative to the "traditional wealth accumulation of current mmorpgs" incentive?

Anyways, a successful mmorpg economy is one that makes the game more fun. While I'm convinced by the insight given by the original article about the future of WoW's economy I don't know how it will affect the "fun factor" and therefore don't really know what should be done, if anything should be done at all.


the source of the oft-quoted $800M line was from mark salyer (president of IGE) at http://www.nyls.edu/pages/2901.asp>State of Play II in the http://web.stream57.com/nylaw/102904_virtualproperty0004.htm>Virtual Property/Real World Markets track. mark's stated that almost 1M players participate in the $880M secondary market. his states that the source for this figure was "sitting on airplanes and signing NDAs and meeting with the people who drive the industry, the creators of the games that they bring to market for commerce"

he also states that he expects that the secondary market will account for as many dollars as the primary market (primary being the purchase/subscription fees for the game).

obviously, you'll have to decide for yourself whether or not you trust the veracity of this man's statements (and do the math along the way - does the average player on the secondary market spend $880/yr?).


Wow, there's so much to repsond to.

Looking at the original link, I believe Greg Kato gives us an interesting perspective on the "doomed" economy of the virtual world of "World of Warcraft". I also, however, detect a certain justification of his buying/selling habits. Not that I am entirely opposed to the practice, but when I read his analysis I detect an excuse:

Kato also breaks down the economy into "sources" and "sinks", a rather simple but effective way of looking at the flow of wealth in this model. He conjects that because the sources are limitless but the sinks are not, the economy is destined to become unbalanced and give rise to inflation. This seems a fair assumption.

Early in this thread it was suggested that the source of the imbalance was the supply of coin in the game via mob drops. I believe this is inaccurate. The problem is not money, but wealth. Money is simply a standard unit of wealth, but any obtainable, desirable item, - even one which cannot be directly valued in cash - is wealth.

Solutions via item durabilty forget another issue: in the absence of the players who have exceeded the cap of the existing sinks there is no need for additional sinks. That is, forcing low-level players to pay the same costs (even as a percentage of their current wealth) as the high level players would break the economy where it does work to fix it somewhere else. If you choose to express item upkeep as an increasing value as the player advances, you discourage advancement (much like the rl fear of moving up a tax bracket - sometimes you lose more money by getting a raise).

Fixing the amount of wealth in the model is both unrealistic and destructive, as was described in the reference to the experiment in UO. It is unrealistic because in the real world, resources are practically infinite; the only restrictions in acquiring them are time and effort. Limited resources such as ore are restricted not by the quantity that exists but by the practicality of acquiring it. Renewable resources like lumber can be regrown as fast as you can harvest it (with enough land). This is very similar to the infinite supply (in World of Warcraft ) of monsters and their loot which fuels the economy. The supply never really ends, but there are practical limitations to how much can be harvested in a time frame. It is destructive to introduce limits on the existing wealth in the virtual world because those who acquire wealth first are given nearly all the power, and control the economy exclusively. A new player is powerless to acquire wealth because those who possess it have no incentive to give it up.

Instituting a system of player "Luck" that decreases as the player acquires power and success is both doomed to be opposed by the majority of players (one often hears large nubers of complaints whenever the community detects hte devloper "punishing players for being successful". And rightly so) and easily circumvented. Remeber that in most games, and WoW is no exception, a player may create multiple characters. So attributing a poor Luck rate to one character will encourage players to harvest wealth with an alternate character.

Actually, for all the talk of controlling the model to make it "real", I believe we are looking at a VERY realistic economic model already. In the real world we see that the wealthiest few people control the majority of the worlds wealth for the same reasons that they do in the MMOG: beyond a certain threshold, the sources of wealth outway the sinks. There are NOT a limitless supply of sinks irl as was suggested earlier in the thread. [Hellinar]

Real world markets are not the product of carefully controlled supply and demand, but rather the market is defined by the conditions that naturally exist. And, because players are free to trade and sell amongst themselves and set their own prices and values (indeed, this is the entire reason for the discussion), all inputs are NOT controlled, and the market is NOT a fiction. Real people choose the value of the available wealth to them, and you will see that value is different to different consumers at different times [Talon-Thorn]

Talk of items as a function of the owners "power" is irrelevant. "Power" is simply an attribute - one of many - which makes wealth desirable, in game and irl. There are many other attributes, such as asthetics, which may contribute to an item's wealth. [John Prevost]

Immortal toons are not a major factor because even in real life wealth passes dynastically.

Inflation seems to be the destiny of any growing economic model. I dont believe there is any way to "fix" it. That SWG and certain other VWs have resisted inflation points to rather stagnant markets. Any SWG vetereans out there will tell you, even low level characters possess far more weath than they need - the only factor is time. SWG, for all it's claims to the contrary, represents the least realistic model I know of in a VW. Games that eschew NPC vendors such as AC2 and SWG just reveal to us the value such devices bring to the virtual market.

Its really late, sorry for the typos.


Oh, and as for the involvement of economists and MBAs in the production of a virtual economy...

There is nothing magic about a degree. Degrees are fantastic, and I am proud of mine, but many people put way too much emphasis on them. I suspect that many of the worlds greatest economists have better things to do than study economies (like making money).

Besides, who is to say they didnt call in an economist or two?


It think MMORPGs have potential to higlight the flaws in our own society if they mimick it as closely as they can.

Most users of MMORPGS are from the developed west and have enough money to live on (sorry for the generalization).

I'd like to see an MMORPG where (as in real life) the rich become richer and the poor, as a result, become poorer.

That way the vast majority of players would barely have enough to live on and lots wouldn't be able to scrape enough "gold" together to eat and would consequently die!

Perhaps the economies of present games are fundamentalyy flawed because they are inherently capitalist but don't have a "working class" to exploit!

Obviously as a game it wouldn't work (who wants to spend their time in cyberspace eating rats and living in poverty) But as a social experiment it could be of immense value?


What if you had a money eating spell/item/ability, such as a powerful sword that if you use a certain ammount of gold on, will temporarily gain a great ability increase. Or a spell that costs gold or silver to use. These powers will have to be very useful, such as a spell which would allow you to revive wherever your ghost is, but if they work, they would be a useful money sink.


It would seem to me that Brodie has never played SWG as evidenced by the fact that he claims low level characters have far more money than they need. This is a broad generalization, if you log on to SWG and head to the starting point of the game which is now Mos Eisely on Tatooine you will find a host of new players spamming and begging for credits. The fact is that for a new player in SWG, it is extremely difficult to acquire any kind of meaningful wealth, unless of course you happen to meet a few generous players as tends to happen. He also claims that SWG's economic system has very few if any similarities to the RL economy. I disagree since there are a myriad of players who simply make credits by becoming middlemen, and there are a lot of those in the RL economy. I realize that this is only one example but the fact is demand in SWG is much higher than supply, for example i can do a vendor search and find grievous starfighters for 75,000 credits, buy them and sell them for 1,000,000 credits. That is a huge profit versus a relatively small investment. The fact is that most players in the game are completely ignorant of the vendor search aspect and consequently have no way of finding goods that they wish to purchase. I simply bring the goods straight to where most players congregate instead of leaving them in player cities on vendors where, lets be honest, nobody goes anymore in SWG. Its the old buy for a nickel sell for a quarter addage and it works extremely well. Now im not refuting your entire argument im just pointing out a small hole in an extremely well written piece. I should also add that i have no degree in economics or any other subject whatsoever and that i work in a warehouse.

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