Gold Sinks don't work

There's also the stability of the government to consider. No one's ever asked me to make change for them in Pesos.

 

Agreed. I hope everyone interested in the economy discussion to go and listen to that podcast. It really is an interesting talk about virtual economies in games, despite the Bitcoin title.

 

This is why I said it's a kind of government-enforced barter good. Through government fiat, everyone living inside the country has to accept its currency as payment; accepting other goods as payment is typically allowed, but not mandated.

But it's still a barter good, with a value that fluctuates according to market rules. Just one that tends to be far more stable than any other barter good due to being traded in far larger volumes.

You can see this reasonably easily if you track the variations in value of foreign currencies, and spend some time looking into why they are happening. When you get to international commerce, where there are multiple countries involved and, thus, a single country can't mandate the currency to be used, money behaves closer to its barter good nature.

Unless you live somewhere Pesos is the official currency, they can't. Well, they can ask, but you are only legally bound to provide change in the legal currency of your country (and, depending on where in the world you live, trading in foreign currency without government authorization might be a misdemeanor or even a felony).

 

Something else to consider is time and convenience. I might know that Knight Commander so-and-so has a vendor out the front of their tower loaded with potions, bandages and spare jeweled swords - all for a reasonable price. So let's say I shop there often.

But if his/her tower is a good ten minutes travel away and I want do enter a dungeon now with the people I'm grouped with, I will probably happily pay whatever the first local supplier I find is asking.

I think shopfront location will be a significant factor in supply & demand.

 

Only if the devs think they can achieve a better economy without harming the rest of the game (and, preferably, have a fall-back plan if any hypothetical innovative system doesn't work).

Actually, no. There's a fair amount of variability in the sinks and faucets model, and even within a single variant there is a large range of possible results according to how well it's tuned. This doesn't mean it's the only, or even the best, system, but discounting a game's economy just because it uses faucets and sinks is, IMHO, silly.

Allowing players to have failure has to be done very carefully. If done in a way the player can feel that they failed due to their own fault, and that attempting to succeed the next time is fun and engaging, it's fine; if it makes the player feel like he failed due to no fault of his, or if the player feels like succeeding involves tasks that are not fun or engaging, then it's a way to drive players away from the game.

And when you deal with failure in anything that is not exactly a part of the core experience of the game it gets even trickier. If a player that is not interested in the game's economy suffers an economic failure, the chance of the player leaving the game might be higher than if he failed at a core aspect of the game; he is far more likely to be playing the game for its core aspects than mere "accessories" such as the economy, and likely will have a far higher tolerance for practicing and making a larger effort in systems tied directly to the core aspects of the game.

Incidentally, it's why I have seven rent-free character slots. I'm basically going to opt out of the economy by having a master in each crafting profession, so as to be self-sufficient; while I enjoy crafting, I don't really care for the economy, and find a strong focus on economy to be detrimental for most kinds of games.

 

Gold sinks work if there is a balance between new value creation and value destruction.

Sources: loot, quest rewards, resource spawns, production (crafting), gold or sellable items sold via add-on store
Sinks: wear/repair, destroyed items, items sold to NPC vendor, accounts getting cancelled, taxes on transactions and houses

If the gold value of everything created equals the gold value of everything destroyed during any given time frame there is no inflation.

Normally sources can (and need to) be a bit higher than sinks to account for players hording wealth and the player population growing. As long as monetary growth reflects true economy growth in a virtual world there is no inflation.

What Portalarium should watch very closely will be RMT exchange rates of gold vs the dollar. If gold value drops, they might want to consider reducing the sources (e.g. monsters dropping less loot, NPC vendors paying less for goods and charging higher rates when they sell). If gold value rises, they may consider doing the opposite.

Of course anything like dupes or exploits to create wealth have to be prevented or quickly fixed with extremely high priority when discovered or unauthorized sources can break the economy.

This definitely can be done and has been done in some virtual worlds. It is true, however, that most game developers did not have the dedication or strength to properly balance sources and sinks to fight inflation. Of course the game feels more difficult if loot of similar mobs gets less and less the more powerful the players become. Someone joining late might feel the game is hard. Players might want to get "rich" fast looting lots of gold pieces. However, in real money terms this is just an illusion if inflation reduces the value of that gold again. The honest approach is to be strict adjusting sources and sinks and keep exchange rates stable or allow only moderate inflation.

 

The economy for these games is too complex and there are too many factors to manually manage an economy.

The invisible hand is required to balance an economy of this size and complexity. You're fooling yourself if you think these economies are balanced by developers running scripts. They might get close on a macro level, but never on a micro level.

 

I don't think scripts alone would do the trick. Of course there needs to be an economic expert watching that economy and adjusting parameters as exchange rates rise or plummet too fast. And player traders will play a vital role creating liquidity and exchanges within the economy and linking it to the outside. But without active management by Portalarium the SotA economy will either faces MUDflation or (the much rarer phenomenon of) MUDdeflation.

 

Not to be pedantic, but that's simply not true. Currency is not a bartered good, it is a medium of exchange by which other goods and services can be traded.
The fluctuation of value does not fit into this question. Yes, currencies can fluctuate, but how a currency market (dollars, yen, euros) works, and reasons for fluctuation, is very different from how a commodities market (oil, grain, and of course FCOJ) works. In relationship to a virtual economy of a game, both markets can be manipulated by the developers in different ways.

 

Sure...or you could let the market work it out organically and safe yourself all that trouble of getting it almost right part of the time maybe.

 

I agree with you on a micro level, but on a macro level the total of sources and sinks will always set the stage for inflation rates. Even in the most extremely liberal RL economy you still have a central bank managing the monetary supply for example. In an MMORPG you usually have loot and NPC vendors as gold sources with other stuff like sellable loot and resources acting as an in between. The Central Bank of New Britannia would have to manage these or MUDflation is what will happen.

Of course one could argue that any kind of inflation could just be accepted and adapted to. I don't know if that is what you are suggesting? Personally, I consider hyperinflation in games quite annoying.

 

Yes, I also think hyperinflation is very annoying. What I'm suggesting is what Mugly Wumple and I talked about earlier. See below...

 

Well, treating gold as a resource with purity properties might make it very complicated to use that same gold as a currency. What you are suggesting is also still a play with resources and sinks. You suggest linking gold supply to resource supply and introduce a gold sink in the form of gold decay functioning somewhat analog to a financial property tax if I understand this correctly. So I think we are all talking about managing gold supplies and gold sinks.

 

When I think of gold facets and sinks, I think of an open economy model where the gold comes into the world and then leaves the world. What I'm suggesting is a world where gold is constant (closed), it's just in different owners hands or different locations. The value of the world doesn't change no matter what happens in the game. But to encourage people not to hoard actual gold, there's a decay system. So you will still have your gold bars, but they may be worth less and less (in fact it's likely this would happen) if you're not using it on something meaningful in the world.

Again, the gold in this world is finite.

 

In SotA, two things are certain. Death and taxes.

I think that plans are likely well advanced in terms of gold sinks, although usually, with gold sinks, you get something nice. Buying Lots with in-game gold won't come cheap. And on-going fees will be attached.

In SotA, a few cutting edge ways for money to 'disappear' have already been designed in.

What happens if you want to keep the property you've got in Episode 1, when Episode 2 comes along? Will you want to buy a new property, in Episode 2, with real dollars or game gold?

What I haven't seen much mentioned yet, in this thread, is the huge, upcoming tax burden. Fees and taxes are-a-comin', my friends, from all directions.

My guess is that we can't even imagine some of the diabolical taxes, fees, charges and depreciation costs we will soon be cuddling up with?

These Devs are clever people. Creating costs will present little or no challenge.

 

I understand. You already mentioned the issue with a strictly finite currency supply: as people's wealth increases the currency becomes more scarce and appreciates in value (deflation). This makes people to want to horde it to benefit from this effect. New players joining the game might increase this effect. Your solution is a sort of taxation of the gold people hold in the form of gold decay.

An alternative to gold decay or a gold tax would be to watch the RMT markets and add additional gold into the economy and actually increase the total amount of gold in circulation when deflation happens (or when the inflation rate drops below a target rate), similar to how Central Banks do it. When inflation gets too high one may decide to remove gold from the economy and reduce the total gold supply in circulation. In practical terms this should be a very rare case though, unless the player population really shrinks fast (maybe vs the end of the game's life cycle or after a hype cycle). An approach like this is working pretty well in Second Life since about 2008.

 

Good post, I hope you're wrong about taxes. I have tax free lots for a reason.

Also, these are the same devs that created UO (not meant as an insult) and they "learned" a lot from that economy. However, here they are again trying to manage it with facets and sinks. I'm sure they have great ideas and will do a solid job, but the point I'm trying to make is that there's a fundamental problem with facets and sinks (they don't work), in that you have to manage them using an imperfect science/art that we can't even do in the real world without crazy unintended problems.

 

Sir Guni, I totally understand what you're saying...I just believe that it's inefficient and foolish to believe that (as a dev) you're going to "balance" this. We need to just take the safety belts off, trust in the invisible hand to bring buyers and sellers together, and enjoy the ride.

In real life I would never suggest such a thing. I'm not even close to a free market guy. But in a game that needs to adjust quickly to new trends, this is the best way to achieve balance.

 

One simply needs to contact the Rothschild family for economic structure and stability.... cough.....cough

 

Being a medium of exchange does not prevent something from also behaving like a barter good. In essence, a medium of exchange is just a barter good that everyone within a geographic region accepts as payment, be it due to its intrinsic value, government fiat, whatever.

And of course (modern, fiat) currency fluctuation will often behave differently from other commodities. Currency has the production controlled by the government and is tied to the economy of that government's country, other commodities can (usually) be produced by any interested party and aren't tied to a single country. Those differences should guarantee that they fluctuate in different ways. The reasons for the fluctuations, though, are quite similar, even if they relate to different economic actors and, thus, result in different behaviors.

And, of course, when it comes to in-game gold, despite its use as a medium of exchange, it is typically more related to other in-game commodities when it comes to how it's created and destroyed. There is usually no "government" to speak of controlling it's creation, there is usually no geographical limits on where it's accepted, etc.