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I'm seriously thinking of building a space opera game which would share some of Machiavelli The Prince aspects regarding commerce: each player will be able to extract/build/buy/sell/donate a wide range of products (from ore to spaceships roughly).

However, I'm struggling with the economy aspect of it. Should the game define the prices once and for all? Should each player be able to determine his own buy/sell prices, and if so, how? How can I avoid over engineering this game economy mechanism, while still making it attractive for users?

Edit: thanks to your very nice input, some more information about the setup:

  • it's a "player only game," with no "computer managed player."
  • players start with a planet and some resources/units and then (try to) expand
  • players can be of multiple "species" with no proper relationship apart from the one they might make up => no possible notion of "central bank" or similar in the first place
  • consequently, I would prefer "not magic" on the economy, by that I mean a standard currency whose value would be determined by the system. However then I don't see how trading would be appealing, since bartering would be the only way, which feels a bit clumsy for the players. I was thinking of having some rare metal as the standard exchange medium, but then I wonder how would to include other basic economic attributes, such as the population's wealth...

Hopefully it doesn't look too daunting...

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You left out the most important part of your question, is it single or multiplayer? –  Kort Pleco Apr 27 '11 at 23:57
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@Kort, I'm assuming that when the phrase "each player" is thrown about that it's intended to be a multiplayer game. –  Tetrad Apr 28 '11 at 0:08
    
I provided more context, hope it helps! If not, do not hesitate to ask for more ;) –  space borg Apr 29 '11 at 13:00
    
You've just asked for hints on creating a working economy which you jointly just said was completely made up by the players themselves. If your worried about finding a standard, chances are if you have players, they will find an item that is being used the most; don't leave so little faith in the bartering system. It works. –  Daniel Apr 29 '11 at 13:44
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If you wanted (as a developer) to monitor transactions, you could just monitor trades between players. Filtering out trades that appear to be 'gifts' (1 way trade), you should have an accurate idea of what the market worth of items are respective to others. Even building a value tree from that. 1X = 2Y, 2Y = 1Z, therefore X == Z. Later you could build a currency based off these margins or some such. –  Daniel Apr 30 '11 at 1:06
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3 Answers

The main thing players want from an economy is control. A player wants to feel like advanced knowledge of the economy will yield economic rewards. This does place some responsibility on the dev but a lot comes from the players. I'm gonna refer to World of Warcraft here because I have quite a lot of experience with the in-game economy there.

Firstly, the developer's interaction with the economy should involve controlling supply and demand- that is, Item X is rare and only used in high-end play, so it's expensive. This basically entails understanding the value of each item, in general, so that you can implement point #2. Remember that specific players have specific playstyles, and may as a group trend towards favouring supplying some items over others, even if objectively they should have the same value. This means monitoring the in-game economy and trying to keep it balanced.

Secondly, you have to control the income and outcome of the economy, globally. Remember that money transferred between players remains in the system and is not infact lost. Buying items from computer-controlled vendors is an example of economic outcome- that money is permanently lost to the player economy. If there is too much income compared to outcome, money will devalue and you'll suffer large inflation. This can happen when unintended things occur, including bugs or exploits, that dramatically increase the player economy's income and often happens with new content. If there is too little income, then players will spend almost all their time farming money because they simply can't keep enjoying the content without a sufficient supply for, say, consumables/upgrades/whatever. This was especially true of the early days of World of Warcraft, where virtually all computer-controlled vendors charged very excessive prices for their wares, including essential skills. This means that even very low-level players had to spend a lot of time looking for money to keep up, instead of enjoying the content. This is easily seen by comparing the prices and rewards for quests and basic goods- in the expansions, the money earned by simple levelling was hugely increased, and the cost of basic essentials like mounts was dramatically decreased.

Income- quest rewards, drops, etc. Outcome- repair bills, buying from vendors, and soulbinding. If you spend 1000g buying an item, then it'll be soulbound to you and when you come to upgrade, that money is just gone, it's not transferred, even if you get it disenchanted then you won't get it all back by a long way. This means that you can inflict costs on your playerbase without necessarily making them pony up.

The final thing you want to offer player-based economies is organization. For example, in WoW then the most common organized economic activity is the Auction House. If you don't offer organized economy then it will be difficult for players to take meaningful control of their own economy and use it for their own ends. Of course, the degree to which you want to offer this depends on the degree to which you want to make an economic game, such as EvE.

In the end, you want to ensure that players can afford in most scenarios the basics that they need- consumables, item upgrades as befits some new status that you choose to give them, etc, and then if you want, you can make them work their socks off for the more elite status.

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thanks for your answer. However, it made me realize my initial post wasn't detailed enough. I've now updated it and, actually, I feel like it doesn't really match WoW, since I don't know if or how to handle a common currency and, on top of that, the economy is purely player managed. –  space borg Apr 29 '11 at 22:27
    
Unluckily even EVE struggles hardly with inflation.... due to infinite item "generation" –  daemonfire300 Apr 30 '11 at 22:31
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You've got a few different options. My preferred option is to (even if its not), make it look like a real world (or as it appears in your case, real galaxy) economy.

To do this, you want each region/store to have an initial price. Such an initial price should be broadly similar over every store, and then similar to the prices nearby. You could generate them using a very stretched, very blurred/low granular perlin noise generator. As well, a regions price should be determined by what is in the region. For instance, if there is a lot of iron available in a region, iron should be slightly cheaper owing to the standard principals of supply and demand. A nice touch is to change the landscape according to the economy - if iron is slowly getting more expensive, finding occasional iron sources being built.

These prices should then slowly change. You can make it look like supply and demand is working in the background by moving the prices slowly up and down generally, whilst adding some variation between regions. Regional pricing can then be influenced by some events as well. For instance, if the seller is selling massive, economy altering quantities of widgets, the price should be going down - a reasonable amount in the region, and a small amount globally. Which still doesn't preclude you from having a situation where there is a massive oversupply or lull in supply in one particular place - making the price far lower or higher respectively, creating the opportunity to 'exploit' the economy to provide or take away goods for massive profits. As such opportunities would be exploited by many people who can, you slowly push the price back to normal as the lull is fulfilled. A nice touch is to visibly return the economy to normal as the player does.

The selling/buying prices should be different, but similar - enough that you want to encourage your players to actually sell things (if that is what you want them to do in the game). In the real world, profit margins vary, but if your sellers are selling goods for more then about 30% more then what they're buying them, players (particularly in a game where you want to encourage money making via trade) will feel a bit ripped off. My selling would be to offer two spot prices - a buy, and sell price. You'd see them slowly moving up or down (like watch them move by a few cents as you're buying them), and even on occasion as somebody 'makes a big order', see the price suddenly jump up by 2 or 3% and then slowly go down.

Determining individual item prices can be done by rareity in the same way. The more rare and demanded an item, the more it should cost in general. The harder it is to get an item in a specific region, the more it should cost. The more that is available at a specific place, the less it should cost at that place. The more that is available everywhere, the less it should cost everywhere.

You don't have to fully simulate an economy to make a game feel like it has one that can be used, and is an actual influence on the world. If you remember basic supply demand (You can see a more full description Here), and make it look like that its workings (whether or not it actually is), your economy will feel real and generally be very playable.

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Very nice and exhaustive answer, thanks a lot. Since I've updated my initial post, and I put there how I add issue with the common currency point. Any hint on it? Furthermore, I really plan for trade to be a way of getting at the required resources for building others elements. As such, I feel like players should be able to aim at buying specific resources. I wonder if it would do any good that they could set the prices/goods they're willing to pay for it (which contradicts a bit your automatized view of trade)... Any more hint? –  space borg Apr 29 '11 at 22:37
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Designing a virtual economy is a complicated task. It is a balancing act between your game design and artistic design; it can also involve meta-game design factors (such as your company's financial model).

Let's remember that the point of an economy is to facilitate the players transferring value between each other. Money is generalized value. That is to say, it should an abstract thing that you can convert into many different types of value.

What counts as value? Among other things, power points and pretty points. Power points include that Longsword of Dragonslaying and the Potion of Swiftness- things that will make your character more powerful, enabling you to overcome more difficult challenges. The addition of power-point-items is restricted by your game design. Pretty points include the barber-shop giving you a new hairstyle and that cute puppy pet that follows you around. They're aesthetic and don't involve core game mechanics. The addition of pretty-point-items is restricted by your artistic design.

Design of a good economy is largely matching money flow to value flow.

If an item of value is sold by a merchant, it introduces more value (the value of the item) into the world and takes money (the purchase price) out of the world. When money flow matches value flow, prices remain stable. It also makes it easier to keep money flowing between players. Here are some other game events and how they’ll affect the balance of money and value:

  • Player buys an item from another player (no change)
  • Player sells an item to an NPC (value--, money++)
  • Player kills an NPC, who drops an item (value++)
  • Player kills an NPC, who drops money (money++)
  • Player spends money at an NPC blacksmith to repair armor (money--)
  • Player completes a quest with a reward of money (money++)

The ways that money and value enter and leave the economy will depend on your game; the above list might work for WoW and not for your game. But you'll need to understand what events in your game will affect the amount of money and value in your game's economy.

What are the benefits of a good economy?

In a good economy, buying an item costs an amount of gold that matches its value. Super items cost more than basic items.

In a good economy, the price of a good item can be driven up by the players buying those items; crafters can see that, make more of the item, and the price will fall again.

In a good economy, money is just as useful for top-level players as it is for new players. There are high-level things that require money just as there are entry-level things that require money.

In a good economy, crafters can find a buyer for their product if they set a fair price. Not only that, they can sell it for more than the cost of materials. That's because materials (value) + work (value) = item (value).

What are the problems of a bad economy?

If money supply outpaces value, money will become less meaningful and people will stop accepting it in trades. If there's another item that ends up being better currency than actual money, they may switch to that (see the Stone of Jordan in Diablo II). If they can't find another suitable currency, trade will dry up; this will make certain playstyles (such as the crafter) less broadly appealing.

If value outpaces money supply, you'll typically run into the problem of hoarding: a few players will have all the money. This will dry up trade for most players, and only the few rich, well-established players will have access to the “real” economy. This makes your game less appealing to newcomers.

If your crafting system isn't balanced well- if the created items don't have the right amount of power points or pretty points- the work of a crafter will actually add negative value, and they'll have to sell their product for less than the cost of materials. Very few people will want to craft in that circumstance.

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