Anyone remember Asheron's Call 2? .. no, of course not. They tried this. It didn't work.

Buying and selling goods takes time, is monotonous, and requires having goods worth buying and selling. It's why player economies in games are all focused around the "better items" and not rat fur #6billionand4. Even if every item is useful in some way, some will inevitably be less useful than others and will become the grey 'garbage' items, kind of unavoidable. Sure, even in wow you could sell your grey total crap items, but who would care or want to buy them? Also it's been shown that having too many valuable items makes them seem worthless and having no items at all, while possibly a break from the grindhouse games of yesteryear, will inevitably have issues keeping players interested (and isn't really what you were going for anyway). In short, I would love to see it happen but I just don't really see it working that well.

Being able to initiate high risk, high payout business maneuvers is exciting. Being able to make long term plans is exciting. Being able to actually affect the market is exciting.

These options will unfortunately be limited to a few people who can afford to do so...just like in real life.

In real life, you can set up businesses with other people, work for businesses, take loans, use derivatives, all kinds of stuff; you aren't limited to simply buying and selling physical goods with whatever coin you have in your pocket.

I'd like to see a MMO try giving players the power to define binding economic contracts via scripts, so they are automatically enforced by the engine after players have activated them.

A simple example would be a loan agreement that needs to be activated both by Joe and Bob because it contains some actions only one of them can give permission for:
Prerequisite - Joe must have X creds. Execution - X creds are transferred from Joe to Bob at time of signing. After 5 days, if Bob has 1.1*X creds, that amount is transferred from Bob to Joe; else contract-enforcer nanomachines permakill Bob.

Such a scripting system might also let players setup joint money or asset-holding accounts with asymmetrical rights, to conditionally place some actions behind locks so they need the permission of several people, or launch scripts from account event hooks, like auto-forwarding a certain ratio of creds incoming to an account to another account. These things would pave the way towards larger player-ran companies, with sufficient transparency to be agreeable to investors but also suitably restricted to minimize damage from insiders.

Buying and selling goods takes time, is monotonous, and requires having goods worth buying and selling. It's why player economies in games are all focused around the "better items" and not rat fur #6billionand4

If it took 10k rat fur to make the better item, then they would be all about rat fur. That doesn't devalue rat fur though, it keeps it's value depending on how many rats are in the world and how long it takes to "harvest" the fur and what it's used to make. It's all about supply and demand. The problem most MMO's have is they make the demand for certain resources obsolete the higher level you go. If they didn't do that and combine that with pulling currency out of thin air (the more you kill the more money you make from out of nowhere) and things get out of hand fast on these items.

If you need a light feather to craft the Epic Sword of Kickass and the higher level you are the more money you make from killing things, then the light feather will cost lots more because people know you need it to craft that sweet sword AND that you have the money to spend, so the price is much higher (and out of the reach of beginners), than if the money situation wasn't so easy to come by. If it was close to a zero sum game with rare injections of currency then money wouldn't be so meaningless and prices wouldn't go all crazy. Enter the real world. Money gets passed around and stays in circulation, with "rare" injections from the government.

Wouldnt that lending thing then become: Joe lends to Bob, Bob buys some fancy Item, Bob gives fancy item to Bob2, Bob gets deleted, Bob continues happily as Bob2?

Though overall I think going without NPC for directly buying/selling to would be possible. But I think there needs to be a suitable replacement, like a very easy and for the players low maintenance auction house, that works like a real stock exchange. That means standardized items, all stackable as much as you want, anonymous bid and ask market orders, limit orders, stoploss orders, stopbuy orders, all splittable automatically and automatically executed and fullfilled, preferably with orders from other people hidden from the players and just some cummulated bid and ask numbers shown. Then hope people just drop anything crap or not into the market, easing it with as low amount of typing as possible(2 or 3 clicks should be enough if one isnt interested in customizing the order), so that people dont just let crap loot laying on the ground because it would take more time than normal npc sale which is not available.
Also you would need to be extremely careful to not make any monopolization of items possible, for example no boss monsters or conquerable areas that are camped by a few players giving others no chance of obtaining their drops.
Then anything needed by anyone should also be worthwhile for crafting, as in not too many or too rare ingredients, no huge amount of clicking while crafting (let them craft whole stacks easily with a time bar maybe), as otherwise noone would bother doing it.
Careful balancing would then be needed that anything be it adventuring, colleting materials, crafting, rare hunting, ... got a comparable useful return in gold per time spent, so not all people are just trying to do the same high reward thing.

But lets say WoW required that you eat a balanced diet to perform at your max. Anything but a proper diet and you would start being docked efficiency in damage and armor. This gives people an incentive to get food. Now let's say this means you have to eat meats, veggies, fruits, grains, dairy, and even sweets! That's 6 different kinds of food that you need in a decent amount of quantity. You couldn't possibly gather all that yourself to be efficient. So now if you give people a way to grow these resources but it requires a decent amount of time and care to do so, then these resources just became valuable and the AH will have a thriving market for them of people selling to other people.

This is the same as in real life. But in real life, the food industry is tough - most of the cooks are low paid and it is not easy for anyone to make significant profit by making it food and selling it.

You can argue that some chefs open their own restaurants and make big profits. But there are so few of them, compared to the vast majority of the cooks and chefs who are earning low wages. Also, because the food industry is a competitive capitalistic market, top chefs have to spend many years and put in a lot of effort to rise above the rest.

If you want to make significant profits in the food industry, 3 hours of gathering ingredients from the supermarket and baking it into a cake isn't going to do that for you.

We need to figure out why your game's economy will reach an equilibrium different from what is happening in real life.

In real life, you can set up businesses with other people, work for businesses, take loans, use derivatives, all kinds of stuff; you aren't limited to simply buying and selling physical goods with whatever coin you have in your pocket.

In real life, setting up a business is extremely risky. Google for "90% of businesses fails" and see for yourself.

Also, it is not that easy to set up a business in the first place. Certainly not as simple as "just take out a loan" when it comes to raising capital. Just look at this forum, so many "ideas guy" with no money to start their own game development team.

Most people are stuck working as employees.

If you want to make significant profits in the food industry, 3 hours of gathering ingredients from the supermarket and baking it into a cake isn't going to do that for you

Game time != real world time. The reasons I think not having NPC's for an economy is possible is because we get to adjust all sorts of different variables to see what works. We get to play with population size by how many we let on a server, game time, supply, & demand. We can change all of these to see how things play out to "simulate" the real world at game time speed.

Your example of a restaurant is fine, but markets would be the main choice for people to get food, like it is in the real world. Restaurants would be a luxury like it is in the real world. In game restaurants could have instant prep time so the perk in game is that there is no prep. You go from 0 to full in no time, but you'd pay for that luxury. If you're busy cutting trees down and your hunger bar is low, you can prep and cook your own food which will take x time or you could go to a near restaurant and buy food that is instant, but costs more than if you prep/cooked it yourself. There is a trade-off with time and money.

I think the key to making this system work is to simply make the economy a smaller part of the game. Focus on a skill based action game with very few collectible resources that make a decent (useful) variety of weapons and gear. This gear wears out over time and needs repaired or replaced, thus enters a nice shallow engaging, player created and player driven economy. If the players want to expand that economy, they will always find a way (diablo 2 and ebay is a good example of this) thus a developer can focus on DLC expansions on these community driven designs.

Here is another suggestion, create in game systems to allow players to decide on how to handle theft and fraud. Allow players to earn the authority to, for example exile a player from a city (city guards upkeep this authority) or force them to fight in an arena (bigger draw backs to arena death) or even get right into the gears of the game and strip players of hard earned skills and items. Bounties, coops, elections, drafts, etc. Plenty of systems of power earning, enforcing and power distribution exist, giving players the chance to incite change within a game is what really makes an economy fun. Economy is the distribution of power not things that drives peoples. Enabling players to empower themselves based on the opinions of other players, I think, is the key to this system. I mean how incredible would it be if players of an MMO discovered a better way to govern and socially organize?

Democrats, republican and the WOWicans, it would only be a matter of time if we give players the tools to play at socially organizing.

Removing the NPC economy has several (possibly undesirable) effects:

1) You lose control of the economy. It is now subject to chaos and market forces.

As others have pointed out, it can be hard to balance such an economy or fix issues. Also, there are much research on the unpredictability of the economy, even by PhD economists. E.g. www.nytimes.com/2007/04/15/magazine/15wwlnidealab.t.html?pagewanted=all&_r=0

You don't lose control. You need to use different control mechanisms. You get all the tools of real governments, which in some cases are great at controlling markets. But you also get complete control over the world. Iron is too expensive? You can arbitrarily make more mines.

Solely operating on bartering is messy. There's a reason why the world doesn't work this way. Depending on the game, you could have lots of people who just aren't online at any given time. Some sort of 'NPC-run' shop which just services player transactions, while providing no materials would be extremely useful, I'd think, in keeping a large market going when you don't have tons of people online at any given moment.

A while back I tried creating a thread, although I did very poorly at the time, to explain a co-operative economy where NPCs do not buy or sell anything. Players would harvest/collect resources from the world to craft with. Players could then trade/sell to other players, or donate it to their "realm", realm being the NPC faction they are affiliated with. Upon donating players would earn contribution points. There would be an initial contribution point reward and as the item gets donated more and more, the contribution reward would eventually go down, but never to zero. Overtime this level would regenerate if goods cease to be donated. Donating goods would always return at least some contribution points. Contribution points can also be earned by other means than purely donating goods.

After a period of time passes contribution points are totaled and weighed against each other to determine how much a player receives for their contribution points. The more wealth a realm has the larger the pool of currency to be divided is. The more contribution points you earned in that period the larger the percentage you may acquire. Everyone, as long as they earned contribution points, will earn some currency. This is how realm currency enters the game, not through hunting/questing.

Players would have to determine how much they value inventory/storage space versus the player market available for the item or whether or not they wish to donate the goods to their realm's NPC government. Contribution points can be veiled from the player and be a background operation to prevent players trying to manipulate the contribution system if it is required.

At work, so that is all for now.