[Mud-Dev] Money supply in game economies (formerly Brokeneconomies)

Matt Mihaly the_logos at www.achaea.com
Thu Apr 5 16:59:48 New Zealand Standard Time 2001

On Thu, 5 Apr 2001 geoffrey at yorku.ca wrote:

> Matt wrote:

>>  a) If anyone has any ideas on how to make loans in a virtual world
>>  feasible? It has to be extremely difficult to defraud the banks
>>  (or interest rates will skyrocket to the point where there's no
>>  incentive to borrow).

> It may be a naive standpoint, but doesn't the old rule of 'provide
> the tools, they'll do the rest' apply here?  I.e., the players have
> the money, and they will, and do, extend loans - although I'm sure
> they operate more as loan sharks than actual banks.

I've never seen anyone in a MUD begin to reasonably simulate the way a
bank gives loans. I see friends or acquantinces giving other friends
or acquantinces loans, but I don't see 'banks' springing up where
total strangers can go and get loans. The problem just boils down to
the seemingly impossible task (at least in current game designs or
forseen ones) of assessing player credit risk.

Loan sharks don't fill the same purpose as a bank because a) they
don't have enough money to loan and b) their interest rates are
generally too high to be useful to an entrepreneur. Loan sharks appeal
to either a) fools, or b) really desperate people.

> If you mean running a central bank that governs interest rates
> et. al., wouldn't the most effective means of accounting for all of
> the difficulties involved be to guide its evolution over a
> significant period of time, as opposed to implementing it in a
> single patch?  I.e., enact policy as difficulties arise, and as
> consensual goals emerge.

Well, the fundamental difficulty that I see is largely that of
establishing credit risk for a given player, in terms of loans. You
don't have to have loans to manage the money supply, but without a
method like that, you end up regulating it through how much gold
quests give out, how much gold monsters give out, etc, and you lose
the ability for entrepreneurs to fund themselves via loans.

>>  b) Has anyone implemented systems in their worlds that allow
>>  players to act truly entrepreneurially?

> What do you mean by 'truly'?

> The guilds who sell protection are entrepreneurs.

> The woman who does interior design in UO is an entrepreneur.

> Even the players who used the bow command in UO to roleplay
> prostitutes are entrepreneurs.

> But, since I know you know all this already, I think I'm missing the
> point of your question...

As you'll see below, I talk about entrepreneurialism in terms of being
able to multiply your efforts. There is no scope in current games to
work your way up from employing 1 person to employing 1000 people,
which is how most entrepreneurs get rich (generally they either invent
something they can sell, or they multiply their efforts through taking
a piece of the labour of others). Yes, a prostitute is an
entrepreneur. She's not doing much entrepreneuring if she's not
looking to expand though (and the only way she can do that is by
becoming a pimp and taking a piece of other whores' action).

>>  I'm sure someone else can come up with a better list of
>>  requirements for this, but I'd think that it would at least need:

>>    1. Multiply your efforts by employing (almost certainly) NPC
>>    workers.

> Is there a reason it has to be NPCs?  Wouldn't the shop keepers that
> people could position in front of their tents in UO count towards
> this?

No, doesn't have to be NPCs, except that I would prefer to not make
players be, say, labourers in a field or a factory. I don't think
they'd enjoy it.

>>    2. A wide range (hopefully open-ended, but I know in my case at
>>    least, that's beyond what I'm going to aim for) of
>>    interdependent businesses that can be formed and grown, or
>>    rather, a wide range of activities that a business may engage
>>    in.

> A key part of entrepreneurialism is the spark of creativity and
> inventiveness.  I think a predetermined selection of possible
> entrepreneurial ventures would play directly against the very nature
> of the stated goal.

Unfortunately, I don't see any way to make this an open ended system
on a sufficiently large scale. I'm sure someone cleverer than me will
figure it out, but I don't think I, for one, am capable of doing
it. It seems to me that what this requires, almost by definition, is
the ability to invent new products (and not just the same product with
a new look) and to develop increasingly efficient methods of
production. That's a mighty tall order for any game designer. If
someone manages it well enough, I certainly will be signing up to

> Again, I think a laissez faire approach (with the proper amount of
> pushing in the right directions) would work best - let imagination
> run its course...

If the game systems don't recognize the imagination then you're
playing a MUSH, and I don't think a competitive economy would work
very well in an environment where you can essentially claim to be
doing whatever you want.

>>    3. A competitive environment, in which the incentive to do well
>>    is that you will make more money.

> I think MUDs have this already - although I'd substitute 'wealth'
> for 'money'.

Sort of. For instance, as I understand the system now in UO, any
incompetent can make money by following a very simple formula of
gathering X commodities of Y and Z type, creating item A and selling
it to mobile B. This doesn't require you to do anything well. In a
competitive economy, that doesn't work, because there is a) limited
demand and b) the ability to significantly differentiate your products
in the eyes of the consumer, (generally by advertising, for instance).

In Achaea, NPCs don't buy any player products, but by the same token,
there is essentially no way to differentiate your product from the
other guy's. You might produce a better sword this hour than the other
guy, but the next hour he might produce a better sword. You could go
out and pick 20 irid moss, but so could somebody else. If you're a
Serpentlord, you could milk one of your 25-30 venoms into vials for
weaponusers to apply to their weapons, but one dose of kalmia (or
whatever venom) from you is exactly the same as one dose of kalmia
from anyone else. You can't really run your shop(s) better than
someone else, as the only way to cut costs is not to pay the property
tax imposed by city governments, in which case your shop will get
repossessed anyway.

>>    4. Game systems supporting the formation and funding of
>>    independent entities (ie a corporate format).

> This functionality would definitely need to be in place - although I
> know of several MMORPGs in development who are adding this kind of
> 'strategic' capability into their guild admin interfaces.

They are adding the ability to create independent entities I assume,
which is nothing new. If they're adding the ability to get a
corporation funded (which then entails having a reasonably competent
accounting and reporting system in place), I'm impressed.

>>    5. Strong in-game legal systems with codified property,
>>    business, and contract law.

> IMHO, points #4 and #5 are the only critera that would have to be
> hard coded and 'designed'.  #5 especially - as, arguably, only this
> kind of legal framework can provide would be entrepreneurs with the
> capacity to trust that their actions, and the fruits of their
> actions, will be honoured and protected.  Thus providing the
> incentive to out new ideas...

> Actually, I would argue that only points 4 and 5 are necessary to
> foster entrepreneurialism from the POV of the designers.  The rest
> the players will handle on their own...

I strongly disagree. If there's no game system supporting, say, the
manufacturing of lemon-tree-warmers, then there is no way for a player
to start a business making them. The same goes for any business in
which anything but an intangible player attribute is sold (such as
prostitution, in which case you just need the ability to describe
interesting sex with the customer).

Further, if you want to encourage entrepreneurialism, why would you
not put the tools necessary to support it in the game? Why would you
make players keep track of investments and take care of accounting
outside of the game? That doesn't make sense to me.

>> And then I think that the following would be nice, though not
>> strictly necessary:

>>  1. The ability to manage risk. This might be a little too
>>  sophisticated, but I just think it'd be neat if I could own a
>>  series of, say, lemon tree farms, and reduce my exposure to
>>  weather-related risk by buying options on tree-warming-equipment
>>  manufacturers, or sell futures to lock in a price now.

>>  2. Financial markets supporting, at the least, bonds and common
>>  stocks, so that companies can raise money from the general public,
>>  and because it'd be neat to try and make a living as a trader.

> Again, rather than trying to implement the model currently in
> existence in the rw, I think a more successful approach would be to
> plant the seeds that lead, over time, to this kind of system
> emerging from the myriad of individual actions taken by your
> players.

Well, for the same reason that you don't require your playerbase to
invent steel, for example, or fire. If your game is only going to be
around for 5-10 years, then you can't start from scratch and
reasonably expect your player base to develop all these things in that
time period.

By way of example, about 2 and a half years ago, a player in Achaea
tried starting our first corporation. Unfortunately, we had minimal
code to support it. The game was small enough at that point that
everybody knew who he was, so he gathered money in a "friends and
family" sort of way. He then quit the game and everybody lost their
money. There was no alternative to this, because there was no
corporate format available that would ensure that the entity outlasts
its creator.

> I realize you're a critic of modeling too heavily upon the real
> world, but I think tracing the history of existing financial
> structures, and setting the process in motion from the beginning
> would be the most effective way of ensuring that whatever financial
> emerged met the needs of your world.  This method would also help
> significantly with the inevitable bugs that would occur, as you'd be
> able to discover them slowly over time - working towards their
> resolution could even become part of the gaming experience.

The economies in current games do not even come close to resembling
the sort of economy we're discussing here. Current ones are extremely
primitive, and I just don't think it's realistic to think that in the
5-10 years of a game's lifespan, the playerbase will evolve to such an
incredibly high degree in such an incredibly short amount of time.


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