I've seen and read many thread about mmorpg economy, dealing with many aspects: - having hard/easy to get resources, all the same or with different qualities - players that can obtain items only through drops, or everything can be made and traded by players - crafting as a minor part of the game, or as the biggest activity - npc prices fixed or not, resources fixed or not - loot tables - different currencies in different areas - etc.... Something that I don't recall having seen taken in account is this: assuming that you have a player controlled economy (any item can be made by players, no fixed prices), how do you deal with periods of recession? (or any other negative economic trend - sorry for my lack of knowledge of the right terminology here). The question can probably be applied to a growing economy too, but the difference is that when an economy is growing, players tend to be happy, so as long things don't go out of control, you can leave it be - if the game economy is in recession, players won't be happy, and unhappy players just go to a different game. I'm not even sure that I used the word recession properly here; what I mean is: like real life has positive/negative economic periods, so a mmorpg economy can have good/bad periods - but in a mmorpg players can just decide to leave, so what action can you take to keep the game fun while still leaving the economy as free as possible?

This is more about real world economics than game economics, but the concepts are readily applicable to games as well.

The best solution to a recession is nothing. I am a socialist at heart, but the free market economists do have a point when it comes to dealing with recessions: Don't touch the economy, let it correct. Recessions are not bad things. Think of a recession like a rest for the economy. What happens to an athlete that never sleeps? Likewise, which is better over the long run, letting the athlete sleep when he needs it, or trying to reduce the hours he sleeps to a minimum? Eventually, all that lost sleep is going to catch up with him and he will always be tired because he's never had a full rest.

If your economic model includes recessions, and these recessions are anything like real world recessions, then they need to happen. Recessions are corrections to the economy, and typically cause "dead wood" to be discarded and better/more efficient practices to emerge as a result. Any attempt to lessen the effect of a recession makes it last that much longer, or encourages the retention of "dead wood." A week of troubled economic times is much preferable to six months, even if that week is hell and the months are only troubling.

In a game setting, a short period of rough economic times wont matter all that much, even if it's a really rough period. Some players may not even notice, or may only catch a small part of the already minimized period unless they're on every day in which case they would only experience a short time of dissatisfaction. If you extend that period by trying to tamper with the economy, you can get any number of problems including a worstening of the economy overall, or some drastically stupid measure like Starwars Galaxy's NGE.

The only time you should act is during a prolonged depression, where the economy cannot correct itself. Then you should do everything in your power to end the depression (but do not over correct!) without drastically rewriting the system, or upsetting the balance of the economy overmuch. Find out what is causing the depression and address that, don't try blanket methods.

So, to prevent players from leaving, try to shorten recessions without softening them. A single, sharp dip in the economy followed by a rapid recovery is most desireable, and few players will leave in response. A prolonged fall fraught with drastic or ineffectual measures will almost certainly cause the players to leave.

Recessions in the real world partly have to do with people being afraid to spend money, postponing major purchases because they fear they won't be able to earn the money back, and preferring to have money conservatively placed in the bank gathering interest than moving around in speculative, risky, or non-essential purchases.

Recession in a game? Most games do not have an interest-earning bank system. Most games have more or less scheduled purchases per character per level, such as spells, a new set of gear, mounts of increasing usefulness. The only times I've seen anything I'd describe as an in-game recession have been:

1. New content is due to be released in a few days and everyone is saving their money for it - I don't see why this would need corrected since it's temporary.

2. There is a perpetual shortage of a commonly needed drop or harvestable, which jacks up the prices on that drop, devalues all the other drops used with that one, and encourages people to skip the activity the drop is needed for.

3. A character needs something at a level where they are too low to get it, this can apply to quests to kill overly-difficult monsters as well as

4. A particular purchase requires a really large investment that can't be spread out over time - this mainly applies to buying mounts and registration/entry fees to advanced in-game content, but can also apply to quests which require the player to turn in multiple types of objects at once (the investment is partly in inventory space, which many games have a shortage of).

5. Obtaining something optional requires taking a large risk - this applies to paying to get a random reward which might be worth less than you paid, and also to locations/quests which are likely to cause loss or xp/money/time by killing you.

6. In a game with a cash shop, a cash item is necessary for something basic like crafting.

7. A game has a horrible market system - no global marketplace, inconvenient access to global marketplace, too high of listing fees/sales tax, too few selling slots per person.



Solutions? Well if you identify a specific problem with a drop rate, an npc purchase price, difficulty of a quest relative to the level it is assigned, etc, then obviously you would want to fix that particular problem. Personally if I was admining an MMO server or multiple servers I'd want a monitoring program which kept track of the average price of every item - that would point out which are too scarce so drop rates and purchase prices could be lowered accordingly. I'd also suggest that no drop rate on anything in the game be lower than about 10%. You could also have a monitoring program that told you the level of each player completing each quest, and what % of players never completed it. Other than that, having a holiday where you give people free stuff, especially if you don't give everyone the same thing, is an easy way to induce a frenzy or trading.

[Edited by - sunandshadow on September 3, 2009 6:54:42 PM]

Quote:

Original post by Zouflain The best solution to a recession is nothing. I am a socialist at heart, but the free market economists do have a point when it comes to dealing with recessions: Don't touch the economy, let it correct. Recessions are not bad things. Think of a recession like a rest for the economy. What happens to an athlete that never sleeps? Likewise, which is better over the long run, letting the athlete sleep when he needs it, or trying to reduce the hours he sleeps to a minimum? Eventually, all that lost sleep is going to catch up with him and he will always be tired because he's never had a full rest.

Your suggestions do not sound like the suggestions that someone who claims to be a socialist at heart would make. Do nothing is not a socialist response to recession. A recession is not at all like a good nights rest.

Quote:

Original post by Zouflain If your economic model includes recessions, and these recessions are anything like real world recessions, then they need to happen. Recessions are corrections to the economy, and typically cause "dead wood" to be discarded and better/more efficient practices to emerge as a result. Any attempt to lessen the effect of a recession makes it last that much longer, or encourages the retention of "dead wood." A week of troubled economic times is much preferable to six months, even if that week is hell and the months are only troubling.

Attempts to lessen the effects of recession do not make it last that much longer. It really depends on the factors that resulted in recession and the responses taken to lessen it.

Do nothing is fine for a game, but in the real world "dead wood" feeds live babies. At any rate, I don't think this is the right forum for continuing this argument.

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ShadowBit, you should start by clarifying your definition of recession. In the real world an official recession is defined as two or more consecutive quarters of negative growth in the size of an economy. In other words, half a year where the size of the economy shrinks. So if you want to enable the possibility of recession in your game, you probably need to define how you intend to measure the size of your game economy. If any item can be made by a player, the lack of items, the supply of items, won't likely be the problem that leads to recession. On the contrary, it would seem that there would be too much supply and not enough demand and thus prices so low the incentive to make more items fades away. Why buy something from someone else if you can make it for yourself? If raw materials are needed to make those items and the quantity of raw materials is finite, the scarcity that ensues could lead to recession. Another source of recession could be an insufficient money supply. When money is scarce people tend to horde it rather than spend it. And when people aren't spending money, recession follows. Too much money can be a problem as well. At any rate, if you want to pattern your game economy on a "real world" model it would probably do you some good to visit a library and check out some economics textbooks. Otherwise, sunandshadow offers some good tips, imo.

the best way to deal with any recession is quite simply reinforce the foundation.
all systems are based on the most basic premise and that is base level consumer spending. without this basic spending at the bottom level, all systems built upon it, investment, finance, construction, etc will collapse.
the money starts at the bottom and rises.
to increase teh amount of money starting at the bottom and rising up, you increase teh availability of money to hte people at the bottom.
in a game this is simple as pie.
just add more monsters that drop better rates of cash.

if people see a plentiful supply of money coming to them at the base level, they will spend more on armours and other stuff from players who are higher up the ladder.


this is quite an easy concept actually it makes you wonder why the governments in real life gave the money to the people at the top instead of making more public sector jobs available.

Putting more money in the system results in inflation which doesn't really fix the problem. Back when I was playing Atlantica Online, they decided to triple the cash rewards from arena fights. A few days later, every price on the market tripled. While the effect was positive on the economy with more goods flowing for a few days, in the end, it was still the same except with bigger number.

If you give money to everyone in real life, the effect will be the same. This is because production does not go up to compensate. With twice the money, we're not going to be able to buy twice as much. The prices will go up because demand went up but offer stayed the same. Everything will be the same except for 2 things. Those who had cash are poorer and those who had debt are richer.

There's a major difference between a game's economy and real life's economy. In a game, wealth must be acquired before it is spent. Money generally has a value. In real life, wealth is borrowed before it is spent. Money has a value because someone has a debt. The 2008 recession was caused because it was much harder to get a loan so the cycle of getting a loan, producing something and selling it to someone who just took a bigger loan was broken. People went broke because of this, jobs were lost, demand was lowered, less goods were produced, etc.

Now, this cannot really happen in a game because nobody has a debt. Everyone can live their peaceful lives without ever receiving or spending a gold coin. A recession could only happen if resources got scarcer, which are manpower and raw materials. The effect will be that prices will go up because offer is lower, so throwing money at the problem will only accelerate inflation because demand goes up while offer stays the same. To have the players create more goods and get out of the recession, you either need to create more goods per work-hour or create more raw materials.

Recession occur because economist believe that controlled inflation is better than deflation of any kind. The recession occurs because of excessive inflation. When there are excessive inflation, a deflation [in the form of a recession] occurs to balance the excess inflation. If there is no recession, then hyperinflation will be set-off, and the economy cannot fix itself for a longer period of time. The best growth is growth in real value, but inflation usually hides the real result (you have to factor inflation to find if there is real growth). Deflationary growth is also a good thing, but these usually become depression [recession beyond 3 consecutive years] if they cannot be contain.

The stock market is the trust people have in the market. When people lose trust in the market, it goes down hill. And that's the cause of economic downfall. It's all about whether people trust the economy or not. If people don't trust the economy, then it will fall. When one player leave because of recession, their action emphasis and increase the recession. When recession or hyperinflation occur, it's because one player begins by believing it's occurrence and that is the cause. The best way is to somehow control the player's mind so they will not notice the changes in the economy because they might exaggerate, and a little bit of exaggeration will cause panic and that spread of panic is the cause of economic downfall.

the reason why recession occur because of people's level of confidence is becuse they think they are not gonna be able to live. they stockpile their money and do not spend. if you put money into high level economy, this will not increase people's confidence to spend their money, they are not stupid.
they will spend their money if they are confident they can support themselves with regular income.

tiblanc, I need to point out to you first of all, that any currency is not real value. any currency is an I.O.U. from the bank of england(or america or wherever). all economic current system is based around borrowing even at the core level. I'm not sure what kind of impact that fact will have but i felt it was important.

what i really wanted to say though is reply to certain thing.

Quote:

If you give money to everyone in real life, the effect will be the same. This is because production does not go up to compensate. With twice the money, we're not going to be able to buy twice as much. The prices will go up because demand went up but offer stayed the same. Everything will be the same except for 2 things. Those who had cash are poorer and those who had debt are richer.

you said that production doesn't go up to compensate.. but i would have to ask you what kind of business models you have been looking at. if demand raises, then a logical business plan would increase production in order to maintain growth. more money in the consumers hands doesn't feed inflation, it feeds business growth which then feeds more job opportunities which then gives paid workers which then increases demand when they start spending. it spirals upwards from there. you give people money, they spend and feed the growth of economy from the ground up.

in terms of overseas trade, it becomes momre complicated and then inflation is an issue. but in a self contained (game) economy, inflation is non existent because you have no par.

Consumer fed recessions happen when the perception of risk rises too high (usually of losing one's job), and therefore people scale back spending in order to hedge against that risk.

To encourage people to spend, you could insure them... income and mortgage protection schemes are anti-recessionary in that they allow people (effectively) to have to save less by spreading the risk across more of the population.

In a world where you (as the developer) can create anything out of the thin air, I don't see how any kind of negative growth is even possible...