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[Edited by - Awoken on September 15, 2009 7:49:09 PM]

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Original post by Awoken It's application is useful for acedamia however I would doubt it's actual use in banks and the Fed, (they are the ones after all who look after money supply.)

You do know that banks and Fed are run by PhD Economists right? (if you are tempted to argue with "look at how bad everything turned out", ask yourself if we know how much worse it could be if non-PhDs are running the economy)

There is a grave misconception that academic work is disconnected from real life when in fact all of academia is derived from real life. Any article without a proof using real life data is not likely to be accepted in academia.

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Original post by AwokenWhat I would do instead is actually run sample runs of your game and build the price structures as your program it. I'd suspect you'd be dissappointed to include this theory only to realise it's application for your game is limited and won't provide you with the results you're looking for. However... What are others thoughts on this? This is just my opinion. You may want to get someone to give you a good reason to use it.

I agree that theory should not be included in the game but for a different reason :

Unless you are a PhD Economics, the probability of you understanding and applying an economic theory is zero. Including theory will most likely not produce the intended result.


On a side note...

Google for "eve online economist" : Eve Online actually hired a PhD Economics to run their in game economy.

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[Edited by - Awoken on September 15, 2009 7:40:27 PM]

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Original post by Ecomas Money is indeed a partial goal of the game. Players compete against money since more money gives them more possibilities. I think that's normal in a MUD/MMOG. But the second point (even distribution is the goal) is not completely correct: Such a distribution is not the goal. But the opposite (an disparate distribution of money) should be prevented, of course.

"players compete against money"? I'm not quite following this statement. If there is a money prize, players can compete against each other so that one gets the prize and the other does not. But that is the disparate distribution of money that "should be prevented".

[Edited by - AngleWyrm on August 20, 2009 9:11:48 PM]

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Original post by AngleWyrm "players compete against money"? I'm not quite following this statement. If there is a money prize, players can compete against each other so that one gets the prize and the other does not. But that is the disparate distribution of money that "should be prevented".

Maybe you've misunderstood the concept "player". "player" doesn't mean the users who play the game. "players" are the items/goods in the game which a football/soccer team consists of. ;)
Since you buy the players with your money:
number/value of players = quantity of goods
total account balances = amount of money in circulation
Is this wrong?

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Original post by Girsanov Unless you are a PhD Economics, the probability of you understanding and applying an economic theory is zero. Including theory will most likely not produce the intended result.

So my equation is wrong? I did exactly what the text "quantity theory of money" on Wikipedia says!?

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[Edited by - Awoken on September 15, 2009 7:34:44 PM]

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Original post by Ecomas Maybe you've misunderstood the concept "player". "player" doesn't mean the users who play the game. "players" are the items/goods in the game which a football/soccer team consists of. ;) Since you buy the players with your money: number/value of players = quantity of goods total account balances = amount of money in circulation Is this wrong?

Thank you for clearing that up a bit. What I'm seeing in this reply is a vision of money as a raw resource that is then converted into the player-components that a user competes against other users with. An analogy would be the raw materials from resource nodes in some RPGs that are converted into the tools and equipment to outfit a player's avatar.

A gold 'coin' used to be just an ornamented hunk of gold, exchangeable for exactly one hunk of gold. Because that is all it was. The official stamp/seal was to declare that it's really gold, and not some counterfeiter's blend of cheap metals. Anyone wanting some gold could trade their labors to gather, hunt and assemble something desirable in exchange for that hunk of gold.

We've lost the meaning of a coin, when we switched first to paper that was redeemable for a hunk of gold, and then to paper that was just paper, declared to be worth a hunk. Um...Of what? Oh, you know, just a hunk. A dollars worth, to be determined later. Just go see what you can get for it; meanwhile we'll be keeping the gold. If you're laughing right now, congratulations, you get it.

The Quantity Theory of money attempts to describe the relationship between quantity of money in circulation, and what that money buys, because money isn't actually stuff anymore. It's lost it's meaning as a valid basis of comparison, and so we measure the the measuring stick.

If you're interested in a viable economy, starting with some raw resource seems a sound principle. Perhaps it would be good to use a tangible thing other than money to start with. In real life that tangible thing is sunlight, where all energy comes from, and we convert it to our labors.

For instance, in a game where the player can mine copper, have them mine copper pieces. Then those copper pieces could be turned into something by a blacksmith.

[Edited by - AngleWyrm on August 30, 2009 4:36:12 AM]

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Original post by AngleWyrm The Quantity Theory of money attempts to describe the relationship between quantity of money in circulation, and what that money buys, because money isn't actually stuff anymore. It's lost it's meaning as a valid basis of comparison, and so we measure the the measuring stick. If you're interested in a viable economy, starting with some raw resource seems a sound principle. Perhaps it would be good to use a tangible thing other than money to start with. In real life that tangible thing is sunlight, where all energy comes from, and we convert it to our labors.

1) Yes, I want to watch the real value of money in my game. In order to see "what that money buys", I want to calculate the price level according to the quantity theory of money every day. This is adequate, isn't it?

2) My users start with raw material (players) and money ($). Is this ok?

Yes of course it's ok -- anything you want to do is ok!

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Original post by Ecomas You can calculate the current price level in an economy with the following equation according to the Quantity theory of money: P = MV/Q P = price level M = total amount of money in circulation V = velocity of money (frequency) Q = value/count of goods The problem is (you can see it above): I don't know whether to take the total value of goods in the economy or the count of goods. For example: Should I divide by 160,000,000$ (value of all players) or by 53,000 (number of players)?

You have ten bucks and I have ten bucks; between us there's a total currency in this mini-economy is of twenty bucks. M = 20.

Let's say you make stuff out of supplies, and I make supplies. I buy some of your stuff for ten bucks, then you buy ten bucks worth of my supplies to make more stuff, and lastly I buy the new stuff that you make for ten bucks. Three transactions have happened, each one for ten dollars. So even though there is only twenty dollars between us, thirty dollars of activity has taken place. Let's call it A for activity.

If we take that thirty dollars of activity and divide by the twenty dollars that is getting passed back and forth, we get A / M = 30/20 = 1.5 average purchasing activity/dollar. This is the velocity, V = 1.5.

So if we multiply V * M, (1.5 * 20) then we are re-acquiring the thirty dollars worth of transaction activity. Depending on the application, one or the other figure may be more accessible, either the total amount of all transactions, or the activity/dollar. If A/M=V then A=VM.

To the original formula, we can multiply both sides by Q:
P=MV/Q ;The equation as given.
PQ=MV ;Multiplying both sides by Q.

Therefore PQ also gives the same value as MV, namely the total activity A, thirty dollars in our example.

The question of quantity is: Does changing our available twenty dollars that we had to spend also increase/decrease the thirty dollars worth of economic activity? Does the change in economic activity represent a change in behavior patterns due to the new money situation, or is it same behavior pattern as measured in the new rescaled dollars? Tricky business, changing the size of a unit of measure.

M is a quantity that can be altered; A and V are usually measurements. For a game setting, it's probably easier than real world to tally the total transactions.

[Edited by - AngleWyrm on September 1, 2009 9:54:46 PM]

Thank you for this very detailed reply!

Until now, I've been trying to calculate the price niveau by only using M (sum of account balances) and Q (sum of market values of playes):

http://i26.tinypic.com/ckf9t.jpg

M = sum of account balances of all teams
Q = sum of the market values of all players
P = price niveau = M/Q

But that doesn't seem to be correct according to your last post.

It would be great if you could help me to add the last few factors to the calculation. I think I have to do the following, right?

1) Sum up the prices of all player transfers (Player1 changed team for 3 Mio, Player2 changed team for 5 Mio => Activity = 8 Mio)
2) Divide the Activity by the sum of account balances (M) in order to get the Velocity (V)
3) Simply multiply my price niveau values above (picture) by V and get the real/correct price niveau values

Are these steps correct? What can you say about my picture of calculations above?

Why do you change P=MV/Q to PQ=MV?

Should I take P=M/Q as I did in my picture or should I rather take P=MV/Q?