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Posted: Aug 24th 2008 7:45PM (Unverified) said

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I know I've passed up the AH simply because whatever I had wouldn't be worth the hassle of selling. MMO economies are drastically different to normal economies in the way that there is a virtually unlimited supply of goods. Time is the only limiting factor. I would agree that auction fees create a small amount of dead-weight loss in the overall economy but I feel like very few people are dissuaded by the fee. At any given level a player is going to do only what is worth their time and usually absences of goods in the AH is due to their own personal time-value of money.

In particular this is a detriment to lowbie players since the goods they need are almost always obtained by higher level players who would normally find the trade not worth the pricing or bag space.

The true use of auction fees is two-fold: to limit the amount of frivolous auctions created and more importantly to create a money sink in an economy where there are virtually no outflows save armor repair. Money can be continually collected driving up inflation to the point of Diablo II where gold rivals Gigli dvd's for meaningless dribble. What an MMO economy needs to be truly effective is a velocity of goods through the system, created by loot or crafters and lost by wear and tear. With a smart anti-inflationary design and forms of item degradation people have a reason to create and find and loot. Time's value rises with more people desiring goods. Money has to move.

Posted: Aug 25th 2008 10:15AM (Unverified) said

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I'm not an economist, nor do I spend time contemplating economies all that much, but I've always found the concept of the money sink to be an interesting one and I wonder how consideration of it would affect your claim that game economies are getting closer to real economies.

The money sink is arguably a necessary part of the game economy. No one with any sense wants inflation and there are few ways (any?) to get around an endless supply of currency besides an endless destruction of currency. Still, the very fact currency is in an endless supply means it conceptually may have less value to a consumer and they will be willing to pay more for items. This notion will only increase as they get higher in lvl, more poweful in gear, etc, and it's even easier to acquire cash. Also, a new influx of cash (through say the SW dailies) makes prices rise because there's no new money sink to counter it. Yet, the only people able to take advantage of it are the 70's. Sure, they're the majority but how detrimental is that to those less than 70? It seems to further marginalize them, creating a market that is only of use to people with a lot of cash already. There's a market available of lower level people who need stuff but since they're only capable of paying less than the market (of 70s) can bear, fulfilling their needs isn't worth it to the suppliers.

I've also always found it interesting how the entire server is like one big workshop focused on Illi or KJ or Arthas. There's the people constantly leveling alts and selling their peacebloom so the raiders can powerlevel alchemy and get their trinket. Or there's the people who are 70 and don't raid but who farm mats for money so the raiders can buy 200 ironshields per week. I don't think each of these groups actually thinks of each other very often but it does work that way a lot of times. (yes, there are lots of people who aren't in any of those groups).

Posted: Aug 25th 2008 11:36AM jrunken said

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I really liked this article and I would love to see Alexis look further into the economy of MMOs and how they mirror the real world. I agree with Ditzypoo's comment that time is the only limiting factor in most MMOs to amassing wealth.

There aren't very many ways to make an MMO mirror real life because of a number of factors. The first big factor is that in the real life, money usually comes from another person and ignoring the money being printed by the government and the multiplying effect of banks, money circulation should be a zero-sum game. However, in MMOs, you can always sell random items to an NPC even if that item is worth nothing to any real players. This means that NPCs in MMOs are basically printing more and more money at a humongous rate as compared to the real world where the amount of money that the governments continuously adds to the economy is a very small percentage of how much money there is circulating.

Another problem with MMOs is the launch of the game. In the real world, the economy has slowly developed after thousands of years of transactions, but in an MMO, the launch basically signals the start of a brand new economy and everyone that starts out gets money from NPCs and not from each other. There can be no zero-sum money circulation at the start of any MMO or else the economy would just fall apart immediately because everyone is poor.

One solution that an MMO could implement would be that every person starts out with a certain amount of gold at the very start and that would be all they ever get. They wouldn't be able to sell any items to NPCs for cash at all, and the only way to make more moeny would be from transactions with other living people. With every person that enters that world, a certain amount of money would be added, but at the least the the continuous stream of cash being printed by NPCs wouldn't exist in this MMO.

Another solution that would probably be a little less extreme then the above solution would be more feasible would be for every player to automatically earn a certain amount of gold for every level they get to and that's all the money they would get. This solution would work much better for a video game because it would give each player an incentive to continue playing and at the same time, it would cap the amount of money each player gets thereby mirroring the real world economy a little bit better.

Anyway, I hope there are more articles about the economy of MMOs because they are really fantastic things to study.

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