Its The Economy, Stupid

09 Jun

Been a busy few weeks and I’ve not been blogging nearly enough. Couple the busy schedule and a bit of the nothing-thats-new-or-expected-soon doldrums and you have a recipe for non-bloggage.

A number of recent posts have touched on a few aspects of MMOs which I inevitably see linked to some of the challenges of better world design. The challenge for me is to actually not get sucked into an ever expanding analysis of every aspect of an MMO that these idea touch on, but its hard. I’m sure if someone were to take the time to scour the MMOGosphere, they could come up with a really good comprehensive list of Improvements That Would Make the Virtual World Better.

But until they do, we blog and we blog. Onward.

Auction Mechanics

Tobold had a recent post on Auction Houses that provoked me to revive a number of half started articles I’ve never gotten around to posting. My problem is that anytime I start something about improving game auction mechanics I get sucked into an internal discussion of The Economy. Being a former student of the dismal science, this should be understandable. The mere thought of these things generally evokes painful memories of intersecting blue lines and red lines and phrases like “pareto-optimality” *shudders*.

Most auction discussions focus, rightly so, on the challenges of creating the illusion of an efficient market. The idea of a auction mechanism whereby individual players can post items and “let the market” determined their true value through a competitive bidding process sounds good. I say “illusion” because the devil lies in the artificial constraints or rules placed on the market exchange mechanism. Constraints create distortions and distortions can create less than “efficient” outcomes.

Anyone who’s been sniped on eBay knows exactly what sort of distortions I’m talking about. Time eventually runs out and the highest bidder wins often with a high degree of gameplay and maneuvering in the last moments. Unfortunately, the notion of a limited time auction in an of itself creates the biggest constraint of all. Competitive bidding will result in an efficient market clearing price for the demand present for the item during the duration of the auction which may be significantly more or less that at other times when supply or demand may be wildly different.

Anyone who’s spent any time at all in a game like WoW with a sizable population understands how the world population balloons like a sea side resort town in the summer time on the weekends and evenings when more players are actually logged on and playing. Concentrated play around the weekends creates a surge in demand for consumables around those times with resulting effects. A surge in play time also means that more drops come into players hands and flood the market.

Concentrated play time often means that players will be unwilling to wait for an auction to resolve itself and instead opt for the immediate “buy now” price (if there is one) for the item. A buy now price of course has the effect of terminating an auction “early”. Unless you’re really disciplined and are obsessive about getting the best price on things, most players just simply need x quantity of y potions or scrolls and want to get on with raiding or questing. They don’t want to wait around for an auction to expire and see if they won a simply commodity item needed for ordinary play.

A couple of effects: the buy now option results in creating a pretty significant disparity in market information: sellers know who is selling and what their buy price is, but can’t really get any information on the demand side since there is no bidding activity to monitor. Is the lack of items below a 10G buy price because they all sold at that price (or maybe all sold at 1G and the 10G seller is crazy) or because no one is interested in these items at all and sellers haven’t plumbed the depths of the market far enough to find a price that moves buyers to action? Sellers end up “competing” with themselves in a vacuum.

Seems to me that saleable items (more on that can of worms in a minute) fall generally into three general categories: commodity items like crafting resources, useful but fairly abundant items (most green items in WoW) and truly scarce items (rare components, BoE blues and purples, etc.). Each of these faces a fundamentally different market.

Commodity items are not particularly hard to come by and are in relative abundance. Vast quantities of copper ore may take a while to harvest, but any miner with some time and inclination can obtain it. Of the three, commodity items seems most amenable to some structural fixes.

Purchase Orders

Remember that the “buy now” feature of auctions is for the convenience of the buyer (otherwise they’d call it “sell now”…;)). An auction posting is in effect an escrowed order to sell based upon specified terms (e.g., minimum bid, buy out). What the vast majority of MMO auction systems lack is the buy-side equivalent and the market information that goes along with it– purchase orders. A purchase order would act in effect as a buyer’s agent and buy off the market until your order is filled or maybe some reasonable expiration date like a few days or a week out.

Here’s how it would work: visit an NPC that acts as a buying agent (could be the current auction masters or another) and place your order such as 100 copper bars for a maximum amount of 100sp. The agent would take the maximum amount of money required to fulfill the order plus a fee and go to work. The agent would then purchase off the market until your order is fulfilled. Maybe its 10 listings or 1, maybe prices varied from 50cp per bar up to 2sp for some. All you care about is that you get 100 copper bars for no more than an average price of 1sp each. The agent could simply have each purchase forwarded by in-game mail.

At any point in time, players could see what ORDERS where in the market for commodities and actually go adventuring to fill those making resource collection a game in itself for all players, not just farmers or commodities players. Current “Bid” and “Ask” prices would be available to players providing the necessary economic feedback to make more rationale decisions.

Market Makers

A purchase order system is still one step short of what I consider a better overall system for more commodity type items that actually have enough supply and demand to create a meaningful market (as opposed to very rare epic BoEs that might show up only occasionally and fetch wild prices). The unattended auction system is still only a proxy for the creation of a real time market.

A better system IMHO for commodity items would be an NPC that acts as a market maker. The NPC is an independent market actor buying and selling commodity items in the market at a calculated average market clearing price which would move overtime as overall supply and demand fluctuated (i.e., fluctuating bid and ask prices). Sellers could sell to the resource broker now at the current market price for a small fee and take away cash in hand.

The resource broker would then resell the commodities into the market. The resource broker would be a source of liquidity rather than a source of the commodities themselves. Players would still be the only source of harvestable commodities and resource buy prices would be a function of the prices that the commodity was selling for. If it worked reasonably well, there would be little opportunity for arbitrage as the market that the broker creates would respond to fluctuations in supply and demand. Depending on the amount of liquidity the broker could provide to the market, quite a few of the hills and valleys of supply and demand could be bridged (i.e., Wednesday prices start to look more like Saturday prices for common items).

Seems that a player order system might be easier to implement but conceptually more difficult for more players to grasp whereas the resource broker would be more difficult to design (if it were to interact with a wider game economy as opposed to creating an exclusive resource only market) but probably conceptually easier for players to understand. I go out into the wild world, harvest commodities, and when I get to town, I sell them to someone who actually gives me a fair price (as opposed to rock bottom “vendor” prices which don’t move with the market).

Other Market Categories

As I mentioned, these sort of improvements probably works best for commodity items that are largely fungible and readily available. With the wide variety of itemization in most MMOs, a resource broker concept for items other than true resource commodities like ore, herbs, gems or even more commodity-like player manufactured goods like potions or other crafted items probably doesn’t work. There is probably too little market information to create a meaningful market for a level 25 Zugzug’s Chainmail Hauberk of Moderate Goodness when a level 24 Shining Gleaming Chestplate of Wonderous Leetness is a very close substitute. For that, the current auction system does a decent job of providing information on effectively substitute goods.

Likewise, for extremely rare items, an auction is still probably the best opportunity to redistribute these items. Sotheby’s exists for a reason, but notice that Sotheby’s doesn’t deal in commodities. A completely different global exchange market has evolved for those items. That kind of market just doesn’t exist for a one of a kind Picasso or Vermeer.

Take Out the Trash and Get a Job

A few final game economy thoughts while I’m at it. Lets get rid of all vendor trash. Not a new idea, but with each new game that continues this ridiculous tradition, I get more and more sick of the routine. Either an item has an economic use in the game or its complete trash, so why have it? If the Lord of Goodtown has an orc problem, then set a bounty on orc-heads and let us go a-hunting. Yes, in this case, I’m pro kill ten rats. If there’s a plot driven reason for it, then so be it. Newbs need jobs in the world to make coin. At least bounty hunting is rational. Let me gain reputation in service of the Lord of Goodtown (which has to have meaning) rather than selling Foozle gizzards and toe nails to any vendor in the universe. Vendor trash is just crap and a cheesy cop out by devs.  Kendricke has a good rant on this here and I’ve mentioned it before in other contexts too, here and here.

Vendor trash is a poor attempt to put some coin in the pocket of the average player. If we were to roll up a new toon and drop into a world as a complete fresh newb (or for you RPs, left your village and family which was killed horribly and burned by orcs to find your fortune and revenge in the big city), we would have to either beg or sell the only commodity we had in abundance: our labor. Vendor trash only serves to deflate the value of every other economically useful item in the game.

Let the newbs earn coin for service to the King defending the realm, or service to the armorsmith who needs commodities or whomever. Eve does a great job of this with their player driven economy and mission system. Don’t want to mine asteroids? Talk to a mission agent who will have something for you to do to earn your keep. As you gain their trust and demonstrate your worth, you are rewarded with more complex, dangerous and financially (and socially) rewarding missions.

Old dev habits die hard, but they’ve got to change some day right? Until then, I’ll keep banging the drum.


Posted by on June 9, 2007 in Uncategorized


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10 responses to “Its The Economy, Stupid

  1. daoshen

    June 10, 2007 at 11:27 pm

    Thanks for posting your perceptions, i definitely find well thought out opinions such as this useful when considering design issues.

    One small note on vendor trash in WoW, these items serve purposes other than simply contributing to the economy. They enhance immersion by providing contextual clues to the creatures they are gathered from. That they fill up your bags as both time and resource sinks is deliberate. An economy that has essentially limitless resources (limited only by the time of the players that is!) needs sinks such as this.

    Thanks again for your post!

    ~ Dao

  2. p@tsh@t

    June 11, 2007 at 12:18 am

    Thanks for the comment. I still have to disagree with respect to the role of vendor trash.

    There may be a small contribution to the immersive experience by having foozle claws drop from a kill, but that immersive experience completely evaporates when every vendor in the city is willing to purchase items of no utility to the game economy. That’s somewhat less the case when there is at least the plot device of “bring me 10 x to make a potion” as part of a quest arc, etc., but then again, that makes my point about being a gatherer for hire rather than a merchant of useless items. Eve-online has done wonders with a player driven economy.

    You’re right that an economic system with one limitless resource (player labor) does need some kind of consumption to avoid the various forms of inflation prone to MMO economies. But saleable vendor trash exacerbates this problem rather than solving it. And all economies real or virtual have this problem. That’s why prices rise and fall based on the supply of an input and its perceived utility. Abundant but useless things are valueless. In most games though, a foozle claw is worth 5cp to a vendor on launch day and its still worth 5cp on the day of peak subscription.

    The main problem is it provides a mechanism to monetize player time so it creates the problem. Player hours become player money which is fungible, transferable and allows a mechanism whereby players can effectively transfer their play time to others (and to defer that consumption as well). Twinking alts is a time honored profession for some. Level 70 vendor trash can certainly have inflationary effects on level 19 items in the twink market.

    Consider by contrast the award of experience earned as a form of non-transferrable value in a game. It can only be earned by a player while in game and cannot be transferred or spent. At some point in most games, higher level players cease receiving any experience from lower level mobs. They still will receive the same value for vendor trash dropped by these mobs.

    Consider also the rationale for bind on equip items. Binding on equip allows limited redistribution (arguably a good thing) while preventing mudflation from developing as hundreds or thousands of “rare” items enter into the economy.

    The more inflows, the more outflows required to avoid this problem. Every sink in a game is designed to fight this effect– cost for training, item durability, needed consumables, etc.

    NPC indexed pricing would go a long way to helping solve this as well. We’ve got to move beyond virtual economic systems which only consider mob spawn rates, loot tables, vendor buy prices and arbitrary money sinks. In my view, that would make for a much more immersive and rewarding experience.

  3. Yunk

    June 12, 2007 at 12:52 pm

    I really like the CoX auction system, you can see what it sold for recently (but only the last 5 transactions), but you can’t see the asks like most other systems. So you put an asking price in based on what you think it will sell for.

    And when you bid, the highest bid is matched up with the lowest ask, and the seller gets the entire bid minus a commission which is a percent of … I think a percent of the sell price. There is also no expiration. They also pay a fee which is a percent of the ask.

    So if you absolutely want something right now, you have to put in the maximum bid. So that and the fee on the ask gives an incentive to put low asking prices. And you can put in a very low ask hoping to get that impatient buyer and sell for a lot right away. But sometimes if you do that it doesn’t sell and instead the next day someone pays that very little amount. If you put a high ask that is close to the market value (based on the previous sales that are displayed) it might take awhile to sell. And you might only get the market value, not a fantasitically high value.

    It is very intersesting. The only thing that could improve it is to maybe have a fee for bidding to lower the daytrading (unless you think that just makes it more efficient and daytrading has value). Also more than the last 5 transactions should be displayed.

    Anyway I really like it. (It’s also across all servers for both heroes and villains)

  4. Yunk

    June 12, 2007 at 1:02 pm

    Oh and it also displays the number of bids and asks for a given item, though not the amounts. So this gives you an idea of the liquidity and helps you set prices.

    I agree with the ideas that vendor trash is lame, it’s no different than having monsters drop money. Bounties would be a good way of getting new players money. Though it’s basically the same thing, just a little more realistic. Maybe quests and tasks should be the main ways of getting cash, or fighting NPCs instead of monsters (for evil characters) but… would that be too realistic and less fun? I have money troubles now I don’t want to play a game where i have money troubles. But I guess as long as you have inter-player trading you’ll have money troubles because someone will have more money than you.

  5. kendricke

    June 12, 2007 at 3:19 pm

    I think the immersion would be better served by having merchants who are a tad more discerning in what it is they buy, and by having descriptions on items that make sense.

    Bear with me a bit here.

    I’m a new adventurer in a big, big world. I go out and kill a heebyjeeby that was about to attack me (it’s coming right for us!). When it’s dead, I start ripping the carcass apart in case I find it’s liver or what?

    Ideally, I have some idea that the liver of a heebyjeeby (in good shape) is a prized delicacy. I also remember hearing once that heebyjeeby teeth are pretty symmetrical, and are prized as arrow heads. I might even recall hearing once that heebyjeeby horns are made of a substance that, when ground to a powder and mixed with the appropriate agents, makes a pretty good detoxifier.

    In game terms, these items have a chance to “drop” from heebyjeeby’s and when looked at (i.e., examined, moused-over, right clicked, etc), give a descriptive text which either hints at the above uses or just flat out explains it.

    Now, when I get back to town, the local blacksmith isn’t interested in the heebyjeeby liver at all. He’s not interested in the horn, either. There’s even a pretty good chance he’s not interested in the teeth (unless he happens to make/sell arrows). No, he passes on it all.

    However, when you wander by the local butcher shop, that liver nets you a cool 50 silver, and the horn manages to bring in a nice 2 shiny gold pieces down at the apothecary’s shop. Try selling the teeth to bowyer or hunter and you might get different prices.

    The idea isn’t to just hand over X coin for Y product no matter which vendor you speak to. The idea is to build a metagame based on vendor selling, which could even result in players who know where the really good prices are (or who have worked faction up to get even better prices) going out in the world offering to buy up raw materials direct from other players at a lower price (to still make a profit at the appropriate vendors).

    In other words, smart players who learn the local econonmies are rewarded more than average players, you keep an immersive time/space sink in the game, and the game makes more sense.

  6. p@tsh@t

    June 12, 2007 at 5:07 pm

    @kendricke: “In other words, smart players who learn the local econonmies are rewarded more than average players, you keep an immersive time/space sink in the game, and the game makes more sense.”

    Said better than I could have.

    I guess I’d just close the loop and have those vendors act as a merchant for those items back to the player economy. Unless they are truly quest drops or bounties (=wages for time played), it would be great for those NPCs to act as dealers (buyers and sellers) of the items for which prices would fluctuate with supply and demand for them.

    If heebyjeeby horns are a critical component for apothecaries, then the players have an opportunity to earn coin harvesting them. If of course they have been overfarmed and the apothecary’s inventory is full of them, he’s not buying or paying very little for them.

    @yunk: CoX’s system certainly seems like it provides better feedback. I haven’t checked it out, but I need to. I keep putting it off but I need a new exploratory project. Thanks for the comment.

  7. kendricke

    June 12, 2007 at 5:43 pm


    Here’s a different angle to the idea: have the potions only exist on apothecaries as players provide the ingredients necessary. If no one’s turning in horns, or if players are buying up the potions quickly, then the potions increase in cost.

    To further add a layer of immersive complexity, restrict NPC merchants/crafters to certain levels of quality on products. These are retailers, not necessarily master level crafters (much as city guards aren’t master level adventurers).

    Have these lower quality items as supplies or fodder that can be used as a base for more refined, higher quality goods by PC crafters.

    In this example, heebyjeeby horns can be sold to NPC apothecaries. The apothecary sells “heebyjeeby horn poultices” which sell for a base of 1 gold each. Turning in more horns reduces the price of the poultices for you (think of it as a suppliers discount). Eventually, you work the price down to half a gold per poultice.

    These poultices are useful, but not nearly as useful as “Refined Detoxifying Agents”, which can be made from several different methods, including (you guessed it), heebyjeeby horn poultices.

    This idea touches on several ideas dear to my heart (dynamic vendor economies, intermediate supplies that are still useful, reasons for players-as-suppliers, multiple creation paths for different tradeskilled goods).

  8. medison

    June 22, 2007 at 4:09 pm

    Have these lower quality items as supplies or fodder that can be used as a base for more refined, higher quality goods by PC crafters.


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