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Mind Gamez: Avoiding Economic Collapse in your Video Games

Edited by: Stephon


Developers use real life systems as references to create a variety of experiences in their games. With the current issues in the world economy, I felt it was a good time to take a look into multiplayer games with player driven economies and see what designers can do to keep them a float. These tips may not work with all games and are meant as general guidelines. Please note this is not a critique on or proposal for the U.S. economy.

What is an Economy?

Economy is the “The wealth and resources of a country or region; In terms of the production and consumption of goods and services” (Google) and are largely governed by the rules of supply and demand. In action supply and demand is seen in Team fortress 2 (TF2), right after an update, where new items are usually expensive to trade. The Tomislav was extremely expensive to trade, due to its rarity at initial release (low supply) and high desire by players (high demand) because of its unique features. On the other hand, the Gunboats were far less expensive to trade because of is low desire (low demand) from its weak ability, despite it similarly rare initial supply. Economy is usually run by one of two different systems, barter and monetary system.

(This graph represents how prices are determined in Runescape’s Grand exchange)

Bartering is when one commodity is directly traded for another. The TF2 trading system is a great example of this. While this system has its advantages, the disadvantages of this system make implementation of it difficult in many games. In particular, the transports of the goods are extremely difficult and severely limiting factor when bartering. In many games, the player is limited by the number of slots or weight their character is allowed to carry at one time. Also, when bartering, a commodity is only valuable and tradable to those who want it. In TF2 the Ellis’s Cap and the Frying pan are fairly worthless, due to wide availability and low demand making them nearly impossible to trade.

(Steam trading system- the bartering system in tf2)
The monetary system is the usual method system of commerce in games, thus this system will be the one examined in this article. Money is a representation and, usually, metric used to denote the value of all commodities. Almost any item can be used to represent money, such as paper, gold, rupees, bottle caps or coins. Here, commodities are exchanged for their value in money instead of their value in another commodity, and this solves the major problems of the barter system, as it is far easier to transport, trade and everyone sees it as valuable.
Fiat money is popularly used in many games. The item being used as money is inherently worthless, except for the value assigned to it. For example, coins used in the Runescape (Rune) are useless as anything other than money. These coins cannot be directly used to advance levels, skills or crafting. Unlike the crafting metals used in TF2, that are used as pseudo-money and crafting. However, money backed by a commodity such as gold is no longer fiat as there is real value attached to it. The miss management of this system can lead to economic chaos and cause frustration in a game.

Central Control of Money Creation and Supply

Fiat Money can be created by two entities in a game, the game’s regulatory system and farming by players. Farming, in this context is when a player uses a repeatable method it amass a large amount of money, usually more than intended by normal play. These two competing entities hinder each other, as the game attempts to regulate the amount of money and the player wants to produce as much as possible. When an excessive amount of money is created, the value of it goes down, commonly called inflation. Limited change in the value of money can be expected as players change the supply and demand of commodities. However, during hyper inflation money becomes utterly worthless, making the player’s effort to create their wealth wasted. This may occur with exploiting or a sudden surge in mass farming. Obviously, anyone using exploits can be penalized and their assets erased. Probably, the best way to prevent mass farming is to create a system where players can progress without the need for excessive farming and monitoring for areas where it is happening. A tip from observation is watch your spawn points, as the continuous killing of certain enemies in quick succession due to predictable spawning is a favorite amongst farmers.
If inflation does occur, try incentivizing players to buy non-essential items as a way to counter it. For example, the developer can create an event where an NPC is selling a time limited item. Naturally, numerous players will buy the item, due to time sensitivity. Thus, reducing the amount of money in circulation and the player doesn’t lose any wealth, as the new item bought has a value. The item acts like an investment and may become more valuable due to scarcity over time. In the 2010 Scary Fortress Update event, in TF2, a number of time exclusive hats and Items were available to the player, at an expensive crafting cost, thus significantly reducing the amount of crafting metal in circulation. Note this event occurred about 5 to 6 months before the update that reduced all crafting costs.

(These 2 party hats are extremely valuable due to scarcity. Rune has a limit on the amount of coins a player can own and these items are usually traded by the rich as their own form of money.)

Avoid Loans, Debt and Credit systems

Loans create artificially high prices on certain commodities, due to easy access to large amounts of fast cash. Elder Scrolls Skyrim (ESS) allows you to buy various expensive homes and Proudspire Manor, for instance, is 25,000 septims, the most expensive home. Having played ESS myself, I can attest that it took quite a while to accumulate the money needed for this home. In the US, after the housing bubble crashed, homes fell drastically, with ranging estimates, but for the purposes of argument, let’s say it was 35 percent. Assume that ESS had a loan system built into it and followed housing bubble trends, the Manor would have cost 33,750, with an additional 5% interest rate driving the total cost up to around 35437.50 septims. The player has to pay the loan back over time and worry that he can lose the house if he misses a payment, killing the fun of owning a home entirely. Suppose ESS was a mmo, where is the incentive for the player to buy a house, if it can be lost by not having enough septims for loan payments? Also, as an added penalty, the player can watch the value of their investment plummet in the event that ESS had a housing crash.
The addition of a player driven loan system raises various fun killing problems for your player base. First, expect to see price hikes on many items, directly or indirectly related to loans. Secondly, it will be a nightmare to implement a debt enforcement system. If a player can’t pay their loans are you going to automatically liquidate all their assets and penalize the difference out of their skill points or, even worse, charge their account? Or, you can let players act as collection agencies leading to the harassment of players in debt. Remember, real life collection agencies are a nightmare for people in debt. This will destroy your player base rapidly, as indebted players will quit due to frustration and new players will be force into the debt out of pressure or lack of choice because of unreasonable prices.

Laissez Faire Attitude

Laissez Faire is an economic ideal of the hands off approach, with little regulation. Players hate excessive regulation and prefer freedom in any game. With freedom, players enjoy the game more and find innovative ways to play, which in turn, enhances the value of your game. I believe, regulation should only be implemented if it prevents cheating, scamming and helps facilitate fair game play.
Artificially controlling prices is a particular form of regulation to avoid. Developers should let free market decide the prices of items. An unwitting way, developers hinder free market is with npc run stores that buy and sell items at flat prices. The stores should, instead, adjust price and payment base on the quantity of the item. This is another good way to hinder farming. For instance, Lobster fishing and cooking farming in Rune used to be lucrative and at one time the npc stores paid a flat price for each item. Thus despite the fact a player sells 5 or 5000 they are still getting the same price for each. If payout inversely scaled as quantity increased, this would deter farming and prevent inflation, as mentioned before.

Facilitate Trade

A game’s trading system should allow players to potentially trade with as many players as possible. In TF2, trading is difficult, as dedicated trading servers can only hold a limited amount of players at one time. Also, players spam the chat, making it exceedingly difficult to communicate and worse spam voice chat giving people headaches. Prior to the grand exchange in Rune, it was difficult to find players to exchange goods with and the profit from selling to npc stores was lousy. After the grand exchange update it became much easier to sell, turn a profit and buy raw material as needed. In Luminary players can create their own business, store fronts and act as business partners. However, this game also has problems of its own, which has led to inflation (source: MMO Hunts).

(Grand Exchange in Rune)


In a following post I hope to examine a few games that have suffered economic problems and the reason why. As this is my first blog post, please provide constructive feedback and thanks for reading.
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About Falldogone of us since 10:26 PM on 06.18.2012

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