How to have a free market economy that doesnt inflate out of control.

I think it would be interesting if the game didn't have a built in money system. It would be interesting to see what would arise as currency especially if different areas had different resources and it took time to travel between.

I also agree on macro economics. Personally I think whatever is good for the individual can be extrapolated to being good for society at a macro level. Many economists tell us that having lots of money in the bank personally is good but then say as a collective society its good to go into debt. I think if we had a society where everyone had $50,000 to $100,000 in the bank instead of in debt we would have a lot less problems in real life.

 

I played UO for at least 5 years and started out earlier on in its life cycle. Over time inflation became a real problem, especially after they introduced the trammel and felucca facets (which introduced risk free reward into the system). A high end sword went from 100gp to 2000gp in only a few months with all that extra money coming into the economy. The only shard that was able to maintain stable prices was Siege Perilous which was an advanced player shard where trammel was never introduced.

Since we don't know how the PvP will work or whether we will be able to gather resources in online friends only mode and bring those into online mode we could be at risk of cultivating an inflation prone environment where everyone farms in friends only mode and only come into full online mode when they are looking for a fight.

 

Oh how I love it so when a grand thread brings us all together like this ..."it's like Economics Instancing!"...

Of course I'd have to hire a lawyer to be able to talk about anything SotA Technoleon with Bowen Bloodgood because he's such a wealth of information and I now know who I'll need to talk to whenever I set up my in-game IRA with the very sound reasoning's in higher education, "our very wi$e and good friend Mipoleon"
PrimeRib is still struggling with being a very savvy Game Technoeon himself because his true inner fun loving nature just wants a game that can take his mind off all the others. My good compatriot in life's Voyeurisms, Jivalax Azon and I always end up watching it all from the peanut gallery with our 1300s to French Revolution reasoning minds within it all and Morkul has now found out why we still love to engage in it all; "It's all so wonderfully fascinating and diabolically corrupted!"

As for me, any economy that keeps encouraging a multitude of trade caravans for our PK community to keep traveling from place to place and aides the PvP world with such classic of all taunts, such as "Look, look, I Got Your Sward, Look everybody, I Got His Sward" is well worth deeper thoughts into the subject of economics' endeavors.

Our game SotA game is scheduled to ascend for 5 years and then drop into decay unless we continue to find new innovative ways in keeping it all fresh and new. Yet even if we begin to decay after that time, it took UO 5 years to begin it's decay and it's still out there decaying away today, so we can look forward to many years of enjoyment watching our game's economy heading south with a hopes of good solution or revolution. But I think that effect is linked in even more economic reasons for it, as game world populations rise, then stagnate and then slowly dwindle back down to the die hard nostalgic gamers core.

Of course a Time Lord like me have other indicators of the whys that anything is effected within any economy such as stars and planetary formations, yet even here in SotA we've managed to keep dead the true art of astrology, in favor of the new fangled astronomers who think their so smart as to scoff at such. "For instance".. did you know that there is now a astrology computer program called Sirius that has accurately predicted and can accurately predict the price of gold? Most people throw up their intellectual noses at me for even mentioning such, yet this is just one of many things that are as yet to be revealed at Time goes on But I can tell you that in the month that our SotA is set to launch, there will be a very interesting real world Lunar Eclipse conjunct the planet Uranus. Thus bringing together a mix of the "mental, emotional, innovative as well as the truly very revolutionary"...so there is hope for allot of interesting fun...

I grew up in a very large and productive country with a very large economy, yet now I've been living in a country as small as Texas and see such a vast difference within both economies that I am truly fascinated by. yet still both of these economies do not rank as highly as Demark does (world's #1) in the happiness of it's people.
Can anyone tell me what the economic difference is between places like the USA vs Thailand vs Denmark?
I think there's a possible happy solution to our gaming economic problems in such

~Time Lord~

 

This is something that are confusing a lot of people, SotA are not a 5 year thing, it's a one year thing that will episode 2 be released. Episode 2 will be completely stand alone so the economics can be reseted and problems that appeared in episode 1 can be fixed. One year after that will episode 3 be released that again are stand alone and so will it continue to episode 5.

 

No. This isn't true at all. The new content is just that, new content. It's optional. No doubt the economy will evolve, but everything from before will still be relevant. The game is online so the economy (or anything else) can be messed with daily if the developers so decide.

 

"That is a very interesting outlook!" Morkul

I truly never looked at it in that way. All episodes will be sort of stand alone solo play (5 game versions) and then there is the online game, which I "suppose" will still be able to be played with everyone (E1-5) in it? Yet not be able to complete or enter into all quests?.... "those are all questions as I don't know how that future will be"...

Just as before, with Ultima Online, RG seems to be taking online gaming into uncharted waters...."But I'm sure he has that chart somewhere"...

"Great Point Morkul"
~Time Lord~

 

The new episodes is NOT new content it's a completely stand alone game that will be using the same system. The ones that buys in to episode 2 will not be able to play episode 1.

Quote from kickstarter:

 

It's possible, but I'm 99% certain you're misunderstanding. It's the same online world. New content is just being unlocked. You can choose to play the content or not.

 

stand alone games probably means you don't need episode 1 to play episode 2


but i'm quite certain it's all part of the same game world. episode 2 would for example include a new continent with new housing space and new skills. and monsters and story etc

 

As others have stated. Yes you can play them standalone BUT.. if you have all 5 installed.. one big game. That's always been my understanding. They've always talked about new content as if it functioned like an expansion pack. Listen to the terminology. When they talk about new housing opening up on new continents with each episode for example. That's not possible if each episode's online play is completely separate from each other. Since you can't play the story online as well as offline.. well there you go.

Can be played individually OR as an expansion.

 

First off so have devs been speaking about how you need to migrate your characters between episodes. Then they have promised that if you opt-in at episode 2 you will be able to play online with episode 2 players.

Those two together makes it pretty clear that there need to be some kind of online separation between episodes.

 

Firstly that means no new character creation.. retaining all your stuff etc. so if I have my house in EP1 land and I go over to EP2's continent.. i have to be able to go back to EP1 land. 2ndly.. playing with EP2 characters does not mean being unable to see or play with EP1 characters. I also wouldn't read too much into the use of the word "migrate".. it is one of those words in the tech lingo dictionary. I see nothing "clear" in those statements about online separation.

 

This whole side discussion is pretty off-topic and something the devs need to elaborate more on IMO.

I had always assumed later episodes were essentially expansions... but if each of them can be purchased and played as a standalone game then there must be some kind of in-game barrier planned to keep the lands separate. How would that work for people who potentially buy 2 separated episodes (like if they only bought episodes 3 and 5)?

 

In a video a long time ago (trying to find is right now) Richard Garriott got the question about if a player with episode 1 only would be able to meet with a player with episode 2 only and the answer to that was no. I guess that could be fixed with having different continents or something but then: " Just as Richard Garriott conceived the original Ultimas as a Trilogy of Trilogies (Ultimas 1 thru 9), he has conceived Shroud of the Avatar as encompassing five, full-length games."

Just remember that SotA are not announced to be a MMO game! Devs have been extremely careful and over and over again said that SotA are a "ultima game with multiplayer support". I might be wrong but from all what I have read so far so are this game a one year shot with a new game after that, including the multiplayer part.

 

I've been careful to watch ever Portalariu video. I can recall no such statements. Even so that doesn't mean both characters are unable to exist in the same world. Such as sharing vendor data. The problem would be in EP2 having content like equipment EP1 doesn't have. It would be easy to filter vendor data though.. in that respect both episodes can still share the same world economy. The players don't necessarily have to be able to see each other in person for there to be a shared economy. They just wouldn't be able to trade episode specific goods because of missing object meshes & textures or perhaps story specific items.

(and that brings it back to economy. )

 

I'm trying to follow this and find that I'm making a few assumptions which may not be true of what you are saying. If I understand correctly you are saying that the server should run a script every day to determine a price. Which in principle sounds fine, there are many real life examples of price fixing in a "free market" (i.e. gold fixing, libor etc); however, your proposed mechanism sounds like it would try to fix the prices within some price range which sounds anti-free market. I'm sure you understand the free market which is making me wonder if I've misunderstood.

In short you should be saying: let the market control the prices. Which then takes us back to the Milton quote.

The devs have an extra "problem" where they are not only the central bank but also supreme deities. They decide the number of resources and the rate of respawn. Some free marketeers have missed that point (not saying you have). I'm far closer to the free market camp than otherwise but I'm aware of this additional problem that devs have (being god). I'm trying to connect this fact with your post and wondering if that's what you are getting at (in the third paragraph above that I quoted).

I'm also wondering if I'm getting pedantic with the language in the third paragraph and trying not to make assumptions about certain words. When you say "encourage" I'm hoping you may "entice" rather than "force". In Austrian language: players shouldn't be forced to trade and consumption should be its own reward.

Not to sound too egoistic but I think I covered this in another thread in the dev+ area. We do see inflation just not in every item. As Kal and mipoleon have pointed out inflation should really be defined as the increase of monetary supply, rather than an increase of prices. Given that we do see an increase in monetary supply then where does it go? How is it possible that you don't see broad price increases yet inflation still exists?

Well one counter to a broad increase in prices is hoarding and the other part (which I pointed out in dev+) is the exponential increase in the price of rares. The aggregate value of rares is probably a far better proxy for the total money supply in an MMO than the aggregate value of all common items. Whether that should ever be the case is another debate; but it is certainly my observation. On the one hand, excessive rare prices helps to keep broad based "inflation" down but it also places rares far outside of the hands of the common player. As prices go exponential there are very few who can compete to keep up with such prices, hence you have a wealthy "elite". Whether we like that / think it should happen is yet another debate. But this shouldn't be a surprise, not just from the point of view of monetary supply but also that all natural systems have a tendency to follow a power law (in log space): in simpler language: the income, and wealth distribution, of any population follows a Pareto distribution. SOTA will be absolutely no different. I'd stake money it.

Arguably rare items should be in a "bubble" but they are like real-life "art" that continue to fetch for ever ridiculous prices. While I think it is daft to pay millions for piece of art (especially modern art ) it is the folly of human nature and I won't bet against that.

 

That's really not true. It's certainly a component of the problem, but it's sitting on a pile of other assumptions. If you have a huge money faucet, the supply of goods is fixed, and there's some incentive to horde goods, then yes, the price will go up. But the economy is much more dynamic and complex than that.

1) Goods aren't necessarily finite. I may be able to increase the amount of iron ore in the universe just by virtue of looking for it, due to the magical nature of instancing and node spawns. If some good is zero sum, then yes, it's much more likely to inflate.
2) As I said, oligopolies break down. I've certainly been in the position in games to have some kind of cartel of rare mats, items, or recs. But that usually doesn't hold forever. Competition will drive the prices down to opportunity cost.
3) Old goods become inferior to new goods.
4) People diversify. Given more gold, they don't need more and more of the same sword.

Macroeconomics is complicated. It's very good at explaining why we were wrong yesterday, but not so good at predicting the future.

 

I didn't assume that the supply of goods is fixed at all. I stated my observations but never actually said anything about the supply of goods. I've seen an inflating money supply in many games, that is fact. I've seen exponential price growth in rares, also fact. I've also seen, partly to my surprise, that common items didn't increase as quickly; also fact. My conjecture, where I make assumptions, is to link these facts to causations rather than leave them as correlations. The supply of goods was not a fixed amount nor a fixed rate of supply; and to cover myself from the obvious caveat: yes I dare say there might have been a piece of code that had a fixed respawn rate but clearly a resource has to be mined by humans in order to increase supply which is not going to happen at a constant rate.

Ultimately the determinant of price is what the people are willing to pay for it. Technically the people could be wading "infinite" money but decide not to raise prices. I'm not saying that prices move in exact proportion to the supply of money.

1) Never said they were. Already dealt with in the above paragraph.
2) Yes, true, but it doesn't refute what I said. My conjecture will have many caveats, for sure, there is no natural system which is perfectly described with zero caveats or zero outliers. I've seen too many games that have rares with exponential price patterns, there is limited competition. I'm perfectly aware of the theory that competition should help to prevent price increases (hashtag economics 101). When prices have stalled it is (I conjecture) something to do with either: the fundamentals of the game that the devs have altered. It will change from game to game no doubt but I suspect the overall trend is the same.
3) doesn't refute anything I've said.
4) doesn't refute anything I've said.

I know macroeconomics is complicated tyvm. Predicting the exact future price, or cash flow, is essentially impossible. However, finding trends and "rhythms" (rather than repetitions) is not impossible. An increase in monetary supply tends to lead to an increase in prices. That's the trend. I've observed in many games that such a trend is not a perfect / linear correlation between the two and conjectured that rares play a huge aspect of keeping prices of common items down. If they didn't, perhaps if they didn't exist, yet the supply of money was just as great then we should expect prices to rise. Yes, there is the caveat that I mention in the beginning where players have to be accepting of the higher prices. We can believe that they might if they are nominally richer and hence far more easily able to accept the higher prices. That doesn't contradict the appearance of new items. People might also buy 50 swords the same, just depends on the game. It certainly happened in Runescape in the early days but I would not guarantee that particular feature to be true of all games for all time.

 

I do mean "entice" and not "force".

I'm going to provide some background info for the benefit of those not familiar with monetary theory.

Austrian Theory - Austrians believe that money should be or be backed in full by a commodity of a relatively stable value. The value of money is therefore a function of the value of the commodity behind it. According to this theory as productivity increases the prices of consumer goods goes down.

Chicago Theory - Chicago economists tend to believe that the supply of money should rise at a fixed rate or rise and fall with our productive capacity. The net result in theory is stable prices.

Now back to my mechanism. Since the virtual world has dynamics that transcend real world limitation (like the ability to issue consumer goods) I have tried to alter Austrian theory to suit the in game economy. The mechanism is a reactionary function of market based activity with the intention of stabilizing the prices of the most basic components, which I tend to think are the closest thing to real money in a virtual game. I don't see it as price fixing as much as pegging the price of gold (withing a certain flex range) to base components. I would have to concede that the net result is something closer to what the Chicago school would produce but only because we can issue consumer goods.

 

I think I'm getting a clearer picture of what you intend. My fear is that prices are fixed while the supply of gold is not. If we are assuming a boundless supply of gold then it seems likely that prices will rise, and that the price fixing mechanism would either (1) force low prices, or (2) accompany price rises at a steady rate. I'm still at a slight loss to see how this mechanism can kill inflation without being option (1) which is a non-player driven economy. I read your caveats but can't say that I currently agree.

I'm not worried about price stability, and even less so given that this is a game. Prices were likely cycle with fashions / trends in the activities of the populace (and perhaps throw in a little madness). A 10% change in the price of iron is nothing for an MMO: no one's livelihood depends upon it and they can just as easily click trees or fish as they can on rocks. Here I take stability to mean anti-volatility, given that the Fed Reserve claim they have a price stability mandate (to ensure non-volatile prices) but they are, of course, proponents of inflation.

RG and Chris have said that they have plans to limit the flow of gold into the game; however, I'd wager that it will ultimately be a endless supply of gold but at a fairly slow rate. That would roughly be in accordance with their desire not to intervene and not to have wild inflation (prices increasing). Furthermore, there could be periods where player inactivity is great such that the increase in monetary supply is negligible compared to the money that's become inactive: ergo, we might see prices drop in this period.