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[Edited by - Awoken on September 15, 2009 7:14:05 PM]

Economies are not about currency. Currency is not just another good to be exchanged (although it acts more like a service). Currency is a "potential" good or service.

If we lived in a pure barter economy without currency and I had a goat. If yuo wanted that goat, you would have to exchange something for it. But, if you didn't have any item I wanted, then I would not usually exchange anything you had for it.

But, if we have currency, then you could give me some of that for my goat, then because that currency is a "potential" good or service, I can then take that currency and give it to someone else for what I want. And so on.

Game economies tend to think of currency as an actual thing, but instead they should be treating it as a potential.

When a player enters or leaves, they usually have some amount of currency with them. But the real worth of a player is their ability to do work. They have a "potential", and this is what you should ahve the currency reflect.

Instead of giving new players currency, they come in with the ability to do work and create some of their own "potential" (earn currency to exchange for good and services).

As a player collects currency, they are collecting the power to make others do work (eg: do this for me and I'll give you some of this money). They are in effect storing the work that has already been done by players like a battery.

When a player leaves they take not only there own ability to work, but take any potential they have already collected. This reduces the overall "power" of the economy.

Before banks and loans existed, any currency stored could not be used for anything, the potential could not be tapped. When banks and loans were invented, currency stored in these institutions could be used to cause more work (a service) to be done, and so generate more goods.

In MMOs currency that is stored can not be used in this way, although banks tend to exist in MMOs, they don't loan that stored currency out.

Loans are like a contract: If you allow me to use the potential you have, I will do what I need to do and this will allow me to make enough potential to end up with more than what I started with, and you can have a bit of that in return for your generosity (well a bit like that).

You can actually think of an economy a bit like an electric circuit. The people (players and NPCs) are like generators, they generate resources in the form of a service (work), they can also act like batteries in that they can store this as a potential for work (charge of a battery or capacitor). As this "potential" moves around the "circuit" it can cause more work to be done (a bit like a motor). People leaving (and taking currency and goods with them) are a bit like resistors in that they drain the potential form the circuit. Loans (and banks) are a bit like transistors in that they can be used to amplify the potential and so cause more work to be done (but be careful of the resistor/drop outs/defaulting on the loans).

Using this you can create a more stable economy in a game. When a player leaves the game, instead of that currency just disappearing, have it be transferred to a loan institution (bank, king, etc) and then have it as guarantee of the loans made by that institution and as the reserve of currency for such loans (this in effect, removes the "resistor" effect of the drop out and turns them into a capacitor).

To separate drop outs from vacation, it might be a good idea if you have the ability for players to mark that they are going on vacation (or away for long period - a bit like the AFK that is currently used but for much longer time periods). This way, they have the ability to stop the removal of their character for being away for a long time.

Compared to a player who just stops playing and forgets to remove their account, this allow a player to keep their status, and prevent the system from returning them to the start.

This avatar life & death cycle is not clearly solved, and I'm not sure that mankind has come up with a good solution in real life.

New players joining the game, and players starting a new character generate additional life. This new character is going to stress the system with it's actions. Killing mobs, hoarding loot, and generally elbowing against other players for the good stuff.

If we accept that first paragraph, then this second paragraph seems to follow quite naturally: Old players leaving the game, and players who stop playing an old character is the reverse of that stress. It should put back the hoarded loot, restore the depleted mobs, and generally give more elbow room to the living characters.

If on the other hand we do not accept the first paragraph, then it may be the new players bring with them the ability to create new and valuable stuff, define mini-quests for other players, and generally make the place worthwhile. Perhaps both paragraphs can be true at the same time.

The part that seems a bit fuzzy is in defining when a character transitions from living to dead/retired. It should probably be left to the player to decide when their toons are officially dead, with some death from neglect clause of perhaps three months. The Sims-3 handles toon death nicely, allowing the player to keep a ghost in play if they just can't/won't let go.