Norrath Economic Report Now Available

Edward Castronova writes "Some months ago, Slashdot posted a note about on a survey I was doing for a report on the economy of EverQuest. The report is done and can be downloaded (Scroll down for the Document Download button). Tidbits: Norrath's GDP per capita is higher than that of China and India; its currency sells for about a penny per platinum piece, which makes it more valuable in $US than the yen; a typical person can make about US$3.50 an hour working there by farming the bots and selling the loot; the deflation rate is almost 30 percent annually. There's also some microeconomic analysis and an overview of the MMORPG market. Comments and reactions appreciated. Thanks, Edward Castronova, Associate Professor of Economics, Cal State Fullerton."

Comments

Hmmm...

[Anonymous Coward]

I'm glad to finally see a useful application of economics...

Re:Hmmm...

[kiatoa]

Useful? I hope so. I still can't read the report (access problems) but I am very curious about how they did taxes. I'd really like to see an experiment like this where Henry George principles are applied (see www.henrygeorge.org). I tried it with a game of Monopoly and it seemed to work. The game never finished. Of course its not that hard for that to happen in Monopoly anyway so a more rigourous (sp?) study or experiment would be very interesting.

Re:w00t

[Anonymous Coward]

oh hah!

Need for interest rates like ECB

[zoefff]

30 % annually!! This is asking for a central banking system like the European Central Bank. I would think that in this case in Europe the interest rate would be something like 10 to 20%....

Re:Need for interest rates like ECB

[Seska]

Deflation is generally considered to be a bad thing in a real economy because it discourages consumption. In this case, if I wait a year I can buy 30% more than I can now. So demand drops and prices drop even further.

Of course, the usual arguments about savings and investment in a real economy don't apply; no-one is saving for their retirement from EverQuest.

Re:Need for interest rates like ECB

[GigsVT]

I've never played EQ, but from other MUDs and such I've played, there has always been inflation.

I mean, when monsters appear, don't they carry some money you get when you kill them? This would cause inflation. I'm curious to know how the value is being taking out of the EQ system, and still allowing new players to make enough money to get good equipment.

Re:Need for interest rates like ECB

[johnburton]

You get money when you kill things, yes.

But the main reason for *deflation* is that fact that items that were rare, and therefore people would pay a premium for become more common over time, and therefore lose their value.

Prices become cheaper over time, not more expensive. Money needs taking out of the system to make prices stay *up* not to reduce them. This works because if people need money more, they are more likely to sell their stuff. Otherwise people don't bother.

Re:Need for interest rates like ECB

[ajs]

This is exactly correct. A great example is the Wurmslayer. This is a weapon that used to be one of the very best in the game. Ignoring the fact that that is no longer the case, let's look at how it came to be valuable in the first place:

It requires a quest which involves killing a fairly tough dragon. So, only people who are high level and can call on a few other high-level folks to help will have the item. Also, the dragon only shows up ("spawns", in the lingo) infrequently, so this further restricts supply.

Ok, so you have very few of these, and they're hotly contested. This jacks up the price and people who do the quest get well rewarded.

After a few months, however you start to get secondary sales. People get better weapons (their "epics") or they decide to stop playing a class that can use such a weapon, so they decide to sell it. This creates a second wave of availability from folks who expect to take a little bit of a loss from what they paid (sellers rarely expect to make more money than what they paid in EQ).

So, now the price bumps down a notch, but it's still fairly high, and rewards those who do the quest well. However, as time goes by and more people do the quest, you begin to reach an equilibrium where there are more folks selling Wurmslayers second-hand than there are doing the quest. Now, the price can drop BELOW the level where it's worth doing the quest at all!

In the end, an item that started selling around 5-10k is now down to about 2k after just 2 years since the expansion's release.

More dramatic drops happen when items first come out in an expansion though. The recent release of Shadow of Luclin created a flood of neat new items people were willing to pay a great deal for until they realized that they were relatively common.

Re:Need for interest rates like ECB

[the_2nd_coming]

why do they not make an expansion where an item can only be had by such a few number of people....say 10% of the people.........then rather than having slaes, you have wars over who controls the weapons.....you can get clans to ambush the carrier of an item, kill him/her, then take their weapons.

I would say though that being PKd should not result in an experience level or XP penalty.....it could ann an entirely new dimention to the game....scarcity of resources.......and we all know that when a resource is scarce and you do not have the funds to get it from those that own it, the next move is to take it :-)......the game would be so much more exciting......of cource you would need some complex rules like PKs can only occure between folks that are 10 levels appart or between those that are in a group with a player that is 10 levels appart from the attacker....this would help to keep groups to neer like levels because of the threat that can occure to the newbie level guys, and it would keep some from an unfair advantage, like a big bully mentality.........
and perhaps no PKs until level 20, unless you are in a group of people that is over level 20/within 10 levels of an attacker.

Re:Need for interest rates like ECB

[Zathrus]

EQ is not a PvP game. There are servers that are PvP, with different rules (the original, Rallos Zek, is wide open PvP within x levels of your own. Later came team based PvP, and most recently alignment based PvP).

The fact of the matter, however, is that EQ is not designed for PvP and so PvP sucks.

Scarcity of resources is a nifty concept. It'd work great for my guild - since every other guild on our server is 9 months behind us. But that's rather unfair to others.

Currently items are removed from the economy by making them NO DROP - that is, once you loot the item off the monster's corpse, you can't trade it, sell it, give it away, drop it, etc. You either wear it, keep it in your inventory/bank, or destroy it. It's not a perfect solution, since it just means that all the droppable items of lower quality get sold more often, but it does keep the highest end items restricted to those who have earned them and reduces twinking.

Oh, and interest would be bad. Deflation is GOOD for the EQ economy. It's the ONLY way things fall out of the game really. I currently have over 600,000 platinum in my bank, and have another million or so worth in items to sell (I'm the guild treasurer). At one point my guild controlled 40% of all the platinum on the server. You really want us earning interest on that?

How do we spend all that cash? Well, burning 10-20k per day in peridots and other reagents is one way. On the rare occasions that a total wipe out demands necro's doing corpse summons that costs another 5k or so. And there's the odd items, quests, etc. that can suck up plat. I expect for there to be many large money sinks in Luclin still.

Re:Need for interest rates like ECB

[pcidevel]

why do they not make an expansion where an item can only be had by such a few number of people....say 10% of the people.........then rather than having slaes, you have wars over who controls the weapons.....you can get clans to ambush the carrier of an item, kill him/her, then take their weapons.

Well.. this will never work in EQ because there is little or no player vs player (so players can't kill each other for the items).. but they tried something similar to this in UO and it failed drastically.. basically they said there will be X amount of resources in the world, in order for those resources to replinish they must be used to create something and that something must be used until it wears out.. which makes sense.. but they ran into a major problem.. people would stockpile ANYTHING.. it was crazy.. you'd have people with 10,000 useless woolen shirts stored up in the bank, and that would be the ENTIRE wool supply for the whole world.. sitting there.. collecting dust.. in some guys bank..

So what will happen is, people will start getting items that aren't as good as their current weapon (or armor or whatever), then instead of returning it to the game, they will put it away and never use it.. which will keep access away from the rest of the world.. eventually there will be a clan or guild that owns all the best equipment in the world, AND they will own all of the crappy equipment also, hidden away.. so that no one can ever get an item.. ;(

Re:Need for interest rates like ECB

[core10k]

Would making items 'decay' with time solve this problem, in your opinion? Just curious...

Re:Need for interest rates like ECB

[mindstrm]

From my MUD days...money was never really a big deal in any mud I played. I'm sure some were different.. but mostly, money was a sort of nuisance. Aside from being handy for newbies, you used it to buy food and water, and the rest, you did nothing with.

The money supply is ever inreasing in EQ, by the sounds of it.
But the value of equipment is dropping faster than the amount of money in circulation.. so the net result is deflation. Your money will buy more stuff tomorrow than it did yesterday.

Re:Need for interest rates like ECB

[Anonymous DWord]

no-one is saving for their retirement from EverQuest

Hey, speak for yourself. I play ~18 hours/day- at $4.00/hour that's 17 grand a year TAX FREE. And you poor bastards have to get a real job for slave wages. I just stay home. Hah!




Note to the IRS: I don't really do that. I pay all my taxes like a good little citizen. Please don't arrest me.

Re:Need for interest rates like ECB

[tiilikainen]

Too late now. EQ's been out since 1999; people are used to the fact that their equipment does not wear out. Old habits die hard.

Not only that, but you should read some of the message boards and peruse the numerous accounts of the ungodly amount of man-hours and real dollars that are spent to acquire some of the 'uber' equipment. We're talking some serious time; plane-clearing raids and such that take well over a day's worth of contiguous (i.e. uninterrupted) real time to prepare for and execute. Can you imagine the absolute uproar if some of the items acquired during those raids started to decay?

Re:Need for interest rates like ECB

[tiilikainen]

The thing is, however, is that as your money becomes more valuable, so does the price of the equipment that is deemed to be "average" for your character's level, because Verant keeps introducing newer and newer items into the game.

In the old, old days, like someone said above, a person could be considered uber for walking around in bronze armor. Today, you *might* see a twinked character running around in bronze armor, but that would indicate to you that the twink owner's main character could not afford to buy anything better.

So, equipment that was revered and held up as 'uber' a year ago is now used as "poor man's twinking equipment" today. You can buy more bronze armor with your money today than you could a year ago, but you wouldn't want to.

Re:Need for interest rates like ECB

[Squeeze Truck]

Yes, but whenever you use money at a store that money goes out of circulation permanently.

...Unless it was the weaponsmith that bankrolled and equipped all those monsters... hmmm...

My fellow adventurers, I think we're being scammed.

Re:Need for interest rates like ECB

[GigsVT]

Man, what's a twink?

Re:Need for interest rates like ECB

[the_2nd_coming]

so make the items ware out with age....and make it age exponetialy as the number of Items you stock pile increases....so ig you have 1 woolen sweater, it will age at a slow rate if not being used....if you have 10000 woolen sweaters, you should have a hard time keeping up with production in order to maintain that amount.....infact, I would say that having an ammount of anything that exceeds its reletive usfulness to the player/game, you can have diffrent amounts of age decay.........wood decays faster at lower levels if it is being stock piled than.......ummmm pick axes....that sort of thing.

Re:Need for interest rates like ECB

[Anonymous Coward]

youre an idiot...

Not a Nerd?

[bildstorm]

I don't know how one could be on slashdot and miss EverQuest, or not know what an MMORPG is. So definition time.

First, MMORPG - Massively Multiplayer Online Role Playing Game.

Everquest - Although I've never played, Everquest is a huge fantasy role-playing game which has monsters, characters, a running economy, etc. I've avoided it primarily because I used to blow enough money on Magic: The Gathering cards and know and addictive game when I see one.

Everquest characters at least used to be auctioned on EBay for quite a lot of money.

Re:Not a Nerd?

[MrSeb]

I used to play Asheron's Call (another MMORPG).

Individual items sold for upwards of £500 on Ebay.

I knew a few people who sold their accounts (sometimes even single *characters*) for upwards of £10,000 ($14,000). Eventually there were people who only built up accounts, then sold them... They could get an account to ~$10,000 in value in around a year.

~$10,000/year, for a kid who's in college, it's not a bad salary at all.

Exchange Rate?

[Pentagram]

So when are we going to be able to exchange platinum pieces in bureaux de change? And has anyone got a page showing the currency against the dollar/Euro?

But the idea of these virtual economies is quite interesting. How about using them to experiment with possible economic models? Why not set up a modern-day game with different shards representing economic models and see which one works best? The US government or the EU could fund it. Players could play for free and the government could see how they'd react to e.g. different interest rates.

OK, it's a bit stupid, but it would be a cool experiment.

Re:Exchange Rate?

[GiorgioG]

I don't think its especially stupid... Something like a Career Simulation. You can work for others, you can choose to start your own business, invest in stocks, you have to spend money to live...I guess it would be like The Simms - MMORPG style (is this what "The Simms Online" is supposed to be?)

Anyway, it would be interesting to change things in the virtual economy and see how people react...

Re:Exchange Rate?

[vsavkin]

What if game masters (or anyone with root access to game servers) decides to cheat themselves some money? Could they become filthy rich in real life?

Re:Exchange Rate?

[swb]

Because of the small size of the virtual economy any attempt to give yourself money would probably have the same impact as conterfeiting would have in a small cash economy -- you would likely introduce inflationary pressures that would devalue the currency.

This is the usual thing that happens when central banks or governments try to print money to solve its financial problems -- at best its inflationary, at worst its runaway inflation that leads to wheelbarrows of money being required to buy a loaf of bread.

It's been a while since I took economics, but I think the reason that printing money is inflationary is that it only increases demand but not supply, which pushes prices higher.

The best way to cheat would probably be creating both money and goods at the same time to keep inflation in balance somewhat, but that may lead to deflation as you're oversatisfying demands.

Of course the best way to cheat would be to steal or corner the market on a needed commodity.

Re:Exchange Rate?

[Anonymous Coward]

Actually, printing more money causes a different problem. Recall that the money we use is just a piece of paper with no inherent value. We all understand and agree that certain pieces of paper are "worth" more than others. The real value of the paper stems from the rarity of the printed paper itself. When you print more money, the total rarity of all money is decreased, thus it's value is decreased. Since the value of the dollar is decreased, it takes more dollars to cover the production of an item. In order to make up for that cost, retailers increase the price of the item to consumers. Inflation at it's finest.

Re:Exchange Rate?

[cwebster]

at playerauctions.com, you can find platinum auctions, and depending on the server you can get between 50 and 100 US dollars for 10,000platinum in game cash.

Economy Schmeconomy

[Anonymous Coward]

Let's see an analysis of the Diablo II (+ expansion) realms economy, starting from 1.01 till the latest duping craze.

Re:Economy Schmeconomy

[The Living Fractal]

Yea they think EQ's economy is changing, they haven't seen D2XP.

My store made over 20,000 in a few months, then the duping craze hit. Since then, we've made exactly 75 dollars.

lol

Re:Economy Schmeconomy

[Skuld-Chan]

Or Phantasy Star Online - rare items are so plentiful because of online cheating that they are nearly worthless - and online money can be had so easily its nearly worthless. Not to mention you can only hold so much money.

Re:Economy Schmeconomy

[Anonymous Coward]

Looks like the new dupes are now vanishing.

I've often heard claims that the new dupes are generated with unique IDs. To which I often respond: "how do YOU know?" Looks like those claims are not founded in truth.

My legit full damage-reduction grandfather stormshield barb can finally reign supreme once more :)

Interest rates are pointless in deflation

[bildstorm]

If there's 30% deflation, then money is worth more and more ever every year. Inflation works the other way, in that prices increase every year, and the money loses real value.

I'm hoping that's a typo, but if not, it makes for a very interesting economy.

Re:Interest rates are pointless in deflation

[anno1602]

I'm hoping that's a typo, but if not, it makes for a very interesting economy.

I'm in the danger of getting to real-world here, but in fact, it makes for a dead economy. 30% deflation means it basically impossible to loan money even if interest was at 0%. You loan 1000 pieces now and get quantity 100 of x for that, if you wnat to pay the 1000 pieces a year later, you have to pay the equivalen of 130 x. It's like having a 30% interest rate. And no loans -> No investments -> economy going downhill.

Re:Interest rates are pointless in deflation

[b_pretender]

Generally, 30% deflation makes for people to barter and store commoditties rather than money (e.g. Jewels, magic items, etc.). It is in players' best interest to spend money as fast as they can recieve it.

I feel that this deflation is neccessary to make the game more enjoyable. For example, new players and experienced players are not going to *work* in the game in order to earn money from other players. Thus, more money has to be constantly introduced into the game in order to keep the game enjoyable. This has a negative effect on any savers since their stash depreciates at such a high rate.

Additionally, since new magic items/Jewlery/etc. are constantly being introduced to the game (for the same reason as above), these items depreciate too.

My solution to this constant downward economic spiral is to introduce unique magic items and creatures into the campaign. Built into the game should be a history that is reported and recorded for each item. As an example, a vorpal sword +3 is one thing, but a if it had a unique name and a history that it killed the first dragon ever introduced to the game (or was wielded by a famous character), then suddenly it would have value. Depending upon the history and uniqueness, it may even increase in value with time... possibly offsetting the depreciation inherent with the rest of the economy.

A final question that this brings up is the following...
Is appreciation a good idea? Maybe depreciation in these games is a good idea. If we had appreciation and interest rates, then the oppurtunity would arise for players to start banks within the game. Having large banks run by players might be detrimental to the world for the developers. The developers would not be able remove the bank without having a detrimental effect on the game world overall.

Re:Interest rates are pointless in deflation

[Qwerpafw]

>It is in players' best interest to spend money
>as fast as they can recieve it.

Actually, no. Deflation measn the amount of "goods" or "gear" or whatever a given amount of money buys INCREASES over time.

--therefore, if I have 10k pp and I keep them for 1 month without spending any of them, I will be able to buy *more* after that period of time than at the beginning.

To simplify, *money increases in value over time*

This means that everCrack players are better off never spending their money, as tomorrow they would be able to get more for the same $$.

You were thinking of inflation. No normal economies have deflation. In fact, I cannot think of *any* economy that has had deflation in recent times.

Re:Interest rates are pointless in deflation

[ehikory]

> You were thinking of inflation. No normal economies have deflation.
> In fact, I cannot think of *any* economy that has had deflation in recent times.

Japan 1998 to present. Only about 0.5%, rather than 30%, but it keeps interest rates at 0.1% or less (CDs get almost 1% annually, and are thereby
pretty good).

Re:Interest rates are pointless in deflation

[Anonymous Coward]

Oh it's most definately deflation. A year ago a weapon called a Wurmslayer sold for ~6,000pp. That item now sells for ~1,500-2,000pp.

Due to the ever decreasing value of items, I have long since learned that I should sell everything that I do not absolutely need *now*. After all, if I need it at a later time I can buy it back for much less than I sold it for.

Re:Interest rates are pointless in deflation

[merigold77]

you're describing what sounds exactly like the economy of buying PCs.. no, not player characters... personal computers. If you keep your money for a month you can buy a better computer than you could have a month back.. etc!

Re:Interest rates are pointless in deflation

[SkipSmith]

Actually, Japan is currently experiencing deflation. It's a big problem because they are also in a recession, but interest rates are about zero, so the central bank can't reduce them to help out.

Economic growth of Boring

[Anonymous Coward]

Oh my, this is the most boring thing I've ever read at Slashdot. A double-spaced paper on the economy of a virtual society.

I typically find economics papers fairly boring. This one maximizes it's boringness by adding the words "cyberspace" and "virtual".

I speculate that this story was the most boring story ever. OK! Perhaps now someone write a paper proving of disproving my speculation. THAT would be exciting.

Re:Economic growth of Boring

[Anonymous Coward]

I agree! Boring is an art - this one succeeds.

Deflation rate?

[Qwerpafw]

Perhaps its because I dont play Everyquest regularly, but I really *dont get* how the EverQuest universe has a deflation rate of like 30% annually...

I mean, theoretically, as more people play and level up characters, wouldnt that increase the general money supply, thereby causing *inflation*?

Plus, from the macroeconomics courses I have taken it seems like deflationis really hard to pull off, and requires people not to be buying stuff and a *loss* of overall money as compared to overall goods/items.

Maybe deflation is possible if less and less people are playing everquest (less *active* money available, therefore prices go down) but from talking to my evercrack addicted friends it sure doesnt seem this way...

typo? or more explanation?

Re:Deflation rate?

[buzban]

Plus, from the macroeconomics courses I have taken it seems like deflationis really hard to pull off, and requires people not to be buying stuff and a *loss* of overall money as compared to overall goods/items.
this might happen in this model if the model does not put more money into the system (loan more money out, or in oldentimes, print more money) as more players arrive.

Re:Deflation rate?

[Nicolas MONNET]

Simple:

Tradeable items do not decay, and their appearance rate is either constant, or increasing as avatars gain in average level, therefore the offering grows while the market is roughly constant.

Secondly, new items are being discovered as avatars gain in level or as the world is expanded, reducing the value of older items.

Re:Deflation rate?

[fhknack]

It's pretty simple, actually. In a nutshell, items don't leave the economy so supply goes up even as demand remains steady. Characters upgrade their equipment as the gain levels, but their old stuff does not degrade or disappear. Further, it's rare for someone to stop playing, particularly if s/he has a high level character (lots of time invested) and even when they do leave, most of the good stuff is passed out to friends before leaving.

Re:Deflation rate?

[Anonymous Coward]

Yes, the money supply does increase as the people level. Those same people are getting better equipment to replace their older stuff. At the same time younger people are out getting that same "older stuff" off of the creatures. The prices always start to fall once the market is saturated with an item.

The only effect the people with large amounts of cash have are to drive up the cost of newly discovered equipment or rare items. But as all the others before it, the item will eventually fall in price.

Verant, the makers of the game, have also added "money sinks" in to the game. Designed to pull cash out of the economy. Things you may be required to buy for spell use or vendor only items (meaning you can't kill something to get it, you have to buy it).

Re:Deflation rate?

[bafangoo]

True, but there are 2 major flaws in this argument. 1) new players kill more beasties , and this means an influx of money . 2) the resources are not more scarce in this case.
Since the same amount is avalible to a greater number , (Supply and demand are eaqual) and more money is in the economy (like a drop in the interest rate) inflation goes down.

Re:Deflation rate?

[Moose4]

As a longtime Evercrackhead, I can give you some examples of why the economy deflates.

When the game started out, relatively mundane items were pretty powerful because no one as yet had gotten to the high-level areas with the "phat loot". Early on, a guy running around in simple bronze platemail was a rare sight. Weapons with a damage/delay ratio of 1:3 (or 1:2 for two-handed swords and the like) were godly and commanded godly prices--if they were sold at all.

As time went on there was inflation, as people gained thousands of platinum pieces (the EQ currency) and bid up the prices of those items. But the inflation reversed itself after a while.

Items don't decay in EQ. They don't wear out. The only way they leave the world is if they are destroyed by a player, on a character when it is deleted, or poof when a corpse poofs. So as time went on, more and more of the items entered the economy, and better and better stuff was found. Verant has added three expansions over the past two years, and each one has had better toys and phatter loot. As that stuff enters circulation, the former "godly" stuff becomes less valuable and typically gets passed down to lower-level "twinks" (alternate characters equipped with hand-me-down or purchased loot that's better than what they could get on their own) or sold.

Using an example--there's an EQ weapon called a Short Sword of the Ykesha. It looks like a Ghurka khukri knife, and will occasionally hit a target with a 75-point damage spell. In the early game, it used to be the bad-ass one-handed sword, a rare drop off a tough level 40ish monster in a very tough dungeon (Lower Guk). When they would be sold, which was rare, they would go for 8,000+ plat.

Well, since the Kunark, Velious, and now Luclin expansion packs, there's stuff out there that makes the Ykesha look totally lame--plus, the number of Ykeshas on the server gradually increased over time, as more and more people entered that dungeon and killed that particular monster. The price of the weapon spiked up on my server as people started scoring a lot of money, but once the better weapons entered the picture the price went into freefall. Now "Yaks" go for 1000 plat or even less.

It's an odd combination--people have more plat than ever before, but prices are simultaneously falling. The result is that there are level 5 twinks running around in gear that my warrior didn't have at level 40 18 months ago.

The same thing happens as new servers are brought online, but it happens faster there because people already know exactly where to go to maximize their income and their chance at items.

Verant has tried to introduce money sinks to reduce the amount of money in circulation (horses that cost 110k plat, for example), but that won't solve the deflation. Item decay might, but it's way too late in the game's lifecycle to introduce that. If I end up spending 15 hours of my no-life to camp the Frenzied Wumpus for the Ass-Kicking Widget of Doom, there's no way I want my widget to break or wear out in a couple months.

In short--the deflationary aspect in EQ doesn't seem to have much to do with the money supply, it's got more to do with the supply of items that people want to trade for.

Re:Deflation rate?

[UnknownSoldier]

Great analysis.

You missed one thing though -- The lack of items wearing out, is part of the problem, but it's not the cause -- an INFINITE supply of items, is. This is the *REAL* reason we have deflation in MMPRPGS. Once the market "saturates" -- enough people acquire enough extra items to trade, and the item becomes common -- the price will start dropping.

UO, and D2 have the exact same problem of deflation. (D2 has a completely USELESS gold economy, but that's another rant.)

Now resource gathering in UO has sort of "stablized" because
a) it still takes a relatively lot of time to gather a huge amount of them
b) not too many people find mining, Lumberjacking, gather of hides, etc, fun.

Ironically in UO, you pay more for a bigger order, because it takes the supplier longer to get the raw goods.

Last year in UO, ignot prices doubled because the miners realized they could get away with it.

A working virtual economy on a large scale is very difficult to do -- I haven't seen anyone do it right (yet).

Re:Deflation rate?

[Anonymous Coward]

If tradeable items do not decay (which is a fact), and there is constantly being added new items to the game, then that would cause inflation of items. Which should lead to deflation in price.

However to calculate total inflation/deflation of the economy, you also need to take into account the average growth in wealth of the population. If you compare it to that, the overall economy is surely in inflation (in my experience). Especially since money and items are litterally being created within the game. The only thing that could slow it down is quitting players that don't sell of their equipment and characters on Ebay (romantic people like me).

In fact, the level system almost demands it. On average, each Norrath citizen has more to spend with than previously and their wealth is usually proportional to their level. Unless they got twinked, but that evens out on the average.

That new "inventions" and discoveries reduces the value of older items, is also a property of inflation.

Unless I got it all wrong of course ;*)

Re:Deflation rate?

[ThePlague]

So the value of a given item decreases over time, much in the manner of computer equipment, and for the same reason: the appearance of better stuff makes older stuff less valuable. Eight years ago, a 486/66 would have cost at least 2k, while today you'd have difficulty giving them away.

If one simply wanted to amass as much money as possible in the game, it would be best to sell items as soon as they are acquired because their value will only go down. Of course, such a behavior would probably negatively impact the ability to acquire more items.

Re:Deflation rate?

[watanabe]

Well, a working _real_ economy on a large scale is very difficult to do -- I haven't seen anyone do it right yet. All of these games have economic issues, but, so does the real world. I could imagine a day when MMORPGs hire an economist to manage the money supply.

I think the point is, as the games' economy becomes sufficiently sophisticated to interest gamers, the ramifications will become increasingly sophisticated.

Interestingly, this has been a problem since MUDs in the late 80s. For example, at one point, my brother started a large casino in a MUD, he programmed all the machines in Forth, etc. etc. After a few months he had something like 40% of the money supply of the entire world. They reset the money supply, but they didn't take away the casino..

Re:Deflation rate?

[the_2nd_coming]

they should introduce Item decay, player aging/death, and Playerkilling rules that allow others to steal equipment that should be made scarce and finite to a small minority of people who hold it.....this would cause wars between clans for control of those weapons.......rule should be in place however, to keep
-lowbies from getting killed by other players up to a cetain point,

-you should not be able to kill some one that is more than 10 levels under you, unless they are the aggressor.

-you should be able to kill a lowbie if they are in a group of players comprable to your level,

-lobies should not be able to carry a weapon, not even pick it up to transport it, until they are with in 5 levels of being able to weild it.

-geting playerkilled should not result in a loss of experience level or points.

institute these rules allong with a finite scarcity of special weapons, and you have a very interesting game with interclan war, a growing economy, and interesting stratagey.

Re:Deflation rate?

[InfoVore]

I've played EQ and I now occasionally play Dark Age of Camelot (DAoC). Mythic, the makers of DAoC, tried to address many of the economy problems inherent in games like EQ.

One approach was broadening the currency base: 100 copper = 1 silver, 100 silver = 1 gold, and so on up through mithral. It is much harder to accumulate the higher denominations for a given high level character. The combination of hard to earn plus depth of economy helps slow down the deflation. So, in EQ a platinum piece is almost worthless, in DAoC it is a real measure of wealth.

Another DAoC economic feature is the variety of money sinks. The most prominent of these is loss of Constitution Points when your character dies. To gain these points back, you must visit a non-player character healer in a town or village. For a fee, the healer will restore your constitution points. The fee is tied to level, so, as your character gains levels, it costs more to restore constitution. In addition to being a money sink, this is a mechanism for encouraging grouping, since several character classes get the ability to resurrect dead characters without loss of constitution points.

One of my favorite money sinks are dyes. Most clothing and armor in the game can be dyed. This is a huge money sink for characters who wish to maintain a certain color-coordinated look. Dye prices go up dramatically based on the color. Many players can and do spend an inordinate amount of time and money fooling around with their character's appearance.

I think Mythic's biggest attempt to stabilize the DAoC economy is item decay. As noted above, EQ's economy suffers because items never leave service. All objects in DAoC, on the other hand, experience decay with use. The items do not disappear with decay, but they do lose effectiveness. This process can be delayed by frequently repairing items (another money sink). It cannot be stopped though. All items have a finite usable lifespan. After that, they lose most of their effectiveness and are usually sold or given to low level characters. This disturbs the economy very little, since the effectiveness and worth of the item are very little. Most of these devalued items eventually end up being taken out of the economy by being placed in storage or sold to a non-player character vendor.

Also because of item decay, lower level characters are harder to "twink" with high level items. Items that are too high a level decay and become worthless at a vastly accelerated rate. Items thus tend to get passed down slower, thus slowing economic deflation. Low level characters can and do receive "twink" items, but the very high level items are generally placed in storage until the character is at a level they can effectively use the item. This item banking serves to further remove items from the economy, thus slowing the deflation rate.

Mythic's approach isn't perfect, but it does point out that there are techniques for balancing a virtual economy and thereby improve game play.

I.V.

Re:Deflation rate?

[Zenjive]

I'm not sure, but I think there is a fixed amount of money in the game. So, as people level up and hoard money, it would create a wider gap between the wealthy and the poor.

A Bolshevik revolution in Norrath, now that would be interesting!

Re:Deflation rate?

[TheReverend]

1000pp for a yak? It's worse than that, I bought one for 350pp last week (Terris-Thule server).

Re:Deflation rate?

[Anonymous Coward]

There are 3 reasons for deflation:
1) You can easily farm items, yet farming cash is difficult. When you try to sell the items to merchants you get next to nothing for them. Therefore, more items enter the game (more wealth is generated) in comparison to money.
2) With each expansion new items are added that make the previous generation of items worth less (though not worthless). This causes the value of the previous generation of items to decrease in value significatly
3) Most recently Verant added horses which can only be purchased with CASH from merchants (biots, whatever). This created a selling frenzy where people were selling anything and everything no matter how valuable just to get cash to buy these horses. As the amount of cash in the game reduces and its value increases you have huge deflation!

Re:Deflation rate?

[Nicolas MONNET]

Player killing in a persistent environment is not as fun as it appears at first sight. When you play Counter Strike, and you encounter grief players, cheaters, stalkers, spawn killers or plain dumbasses, you can just connect to another server, or play with people you know, etc.

In a persistent world, when you encounter such situations, you have no option but to pull the plug. That's probably why out of 40ish EQ servers, only 4 of them allow PvP, and most of them are in the lower end in the number of players.

New games such as DAoC are trying to change this by allowing you to decide when you want to engage in PvP combat, which is probably a good way to go.

Re:Deflation rate?

[lcalc-maven]

Hmm, sounds like the price curve for old computers in the presence of Moore's Law. I wonder what the deflation rate is for, say, a 16 MHz 386 machine with a giant 20MB hard disk?

Re:Deflation rate?

[FunkSoulBrother]

and thats a pretty new server. I shudder to think what they go for on Povar.

Re:Deflation rate?

[TheReverend]

For whatever reason, prices for all the mid-range items on Terris-Thule are really low... I saw someone selling a mithril two-handed sword for 200...

Re:Deflation rate?

[FastT]

A working virtual economy on a large scale is very difficult to do -- I haven't seen anyone do it right (yet).

Well, I suppose it depends on what you mean by right, but it seems like the only thing required is to exactly mimic the real world--allow items to decay, limit the number of items, decrease the availability of large numbers of powerful items, etc.

Although this would ostensibly create a realistic economy, it wouldn't be very fun to play relative to games that provide an easier road to riches. The fundamental aspect here is that people like struggle and challenge, but only to a certain point. After that point, unrelenting struggle becomes a source of unhappiness, and so much so that people will stop playing such a game.

The problem is that other than the minimal community aspects of these games, they don't (yet) provide the same sort of fulfillment we can get in the real world. Whether they ever will or not I suppose is up to debate, but so much of our Earthly happiness is based on fulfilling our base desires like eating, sleeping, and mating. It will be a long time, if ever, before a game can provide the same level of satisfaction these activities do. Until then, the hyper-reality aspects that cause deflation will likely remain a popular element of these games.

Furthemore, it's not clear how you sustain a realistic economy with the ability of everyone to have equal opportunities to become richer. This certainly isn't how the real world works, and the premise of equal opportuntiy stems exactly from the abiity to just go out and do what anyone else does to become rich. If you can go farm items from the same pack of biots that a richer person does, the only difference between you is in the length of time each one has been doing it. In the real world, the means of becoming rich are carved out and protected by the rich, meaning equality of opportunity goes out the window.

Re:Deflation rate?

[stripes]

One approach was broadening the currency base: 100 copper = 1 silver, 100 silver = 1 gold, and so on up through mithral

That doesn't have a real effect (unless they let the exchange rate between say copper and silver float). The USA econ would be the same if we got rid of dollars and priced everything in pennies.

Item decay does sound like the kind of thing that can make a huge difference. This makes the item supply more or less finite, assuming monsters take time between respawn.

Not sure the money sinks would help that much, but my econ theory is a bit weak.

Mythic's approach isn't perfect, but it does point out that there are techniques for balancing a virtual economy and thereby improve game play.

One thing the paper didn't focus on is whether having a "more realistic" econ would actually make the game more fun ("more realistic" in quotes because VW's have their own economies each perfectly realistic for their worlds, they just don't happen to mimic the physical world economies very well).

Re:Deflation rate?

[the_2nd_coming]

Muds have done that for a long time.....hell there are some muds that you have to opt in for PK if you are to advance after a certain level.

Re:Deflation rate?

[Anonymous Coward]

"it's not clear how you sustain a realistic economy with the ability of everyone to have equal opportunities to become richer. "

Of course not.
Some people are, hmm, less gifted.
That should be familiar to you ...

Re:Deflation rate?

[Anonymous Coward]

Where can I find a good opressed farmer sim these days?

reminds me of Descartes

[dario_moreno]

who said more or less that "after all,
the world is maybe just an illusion
that devils move in front of our eyes".
(the point being that the only certitude
is that we think).

The confusion of virtual and "real" worlds
is indeed a step in that direction.

Re:reminds me of Descartes

[GigsVT]

Descartes does "debunk" his evil deceiver theory later on in the book.

The reasons he says it is impossible are pretty lame though, basically he says "God wouldn't let that happen".

Re:reminds me of Descartes

[jc42]

So how is Everquest any less "real" than our monetary system? After all, most of the world's money now consists solely of magnetized spots on disks (and backup tapes). Even currency has value only because the players agree that it has value.

Yet a lot of people, including financial experts and economists who should know better, persist in treating money as if it were a real commodity.

Re:reminds me of Descartes

[Walrus99]

If the doors of perception were cleansed, everything would appear as it is, infinite. --W. Blake Break on through to the other side. --J. Morrison

Not That I mind...

[until(0)]

Not that I mind... not at all.

But I must say this is the geekiest thing I have ever read on slashdot over the past 6 years...

You guys can still surprise me.

Re:Not That I mind...

[Anonymous Coward]

I must agree. However, when I see stuff like this, I think:

Slashdot:
News for Nerds. Stuff that... Well, dangit, I guess just Stuff.

-b.a.t.

Re:Not That I mind...

[Anonymous Coward]

This really is the saddest thing I've seen in a while. If someone spent good time on this they really need help.

Re:Not That I mind...

[TheRowk]

If someone spent good time on this they really need help You're kidding me right? Anyone who would do this, doesn't have good time, they just have time. If the paper was done by President Bush, then it would be 'good' time. If it was done by Colin Powell, it'd be 'good' time. However, the person who wrote this paper isn't spending 'good' time writing a paper on the economics of an online game. Their spending 'their' time on it. Now if they wrote it at work then they're wasting their company's time. ( like me writing this post ) -TheRowk

Re:Not That I mind...

[FunkSoulBrother]

Nah. The good time I wasted on EQ as a player was far sadder.

Chinese

[Anonymous Coward]

Maybe they should all play Everquest, form a virtual country and take over the world muhahahaha.

Everquest Hardware

[Anonymous Coward]

Bizarre story on Cnet about Gateway making Everquest optimised PC's. Seems a bit pointless - the only criteria these machines seem to require is 512MB RAM (!) and a 32MB graphics card. I wonder if they'll remember to throw in a modem?

Re:Everquest Hardware

[Anonymous Coward]

With the release of the newest expansion, a lot of people, like myself, found that even though their computers met the recommended requirements, their computers still had trouble running the game. Quite a few of my friends bought a new computer just to be able to play the expansion.

Verant has done some work to help the game run faster, but I still wouldn't want to run the game without meeting the recommended requirements and a good video card.

Re:Everquest Hardware

[Anonymous Coward]

Actually, that's what the box says. EQ won't really run well (with all options on, like you would want) on a machine without the following specs:

1G RAM
1+GHz processor
3-4G available HD space
Geforce2 or better

Which I think makes it the most hardware intensive game there is.

I think they may have programmed this in visual basic.

Re:Yadda yadda yadda

[I.T.R.A.R.K.]

Why go to the grocery store for news that is two weeks late and fictional when we can come here for it instead?
Not to mention, the spelling errors are a bonus!

Let me get this straight...

[Anonymous Coward]

My god, *somebody* has too much time on their hands. Where is that "Get some priorities" troll when we need him. ;-)

Re:Let me get this straight...

[Anonymous Coward]

You own a mirror, right? ;)

Who offers me $3,50 a hour to play EverQuest ?

[Quazion]

I can play around 16-18 hours a day, and i need a base monthly fee of $60 dollars for the Internet and EverQuest accounts, then after that you can pay me for the number of hours i have worked(played) and everything in the game i gathered will be yours ofcourse, too sell or to keep as thee likes.

Quazion.

Re:Who offers me $3,50 a hour to play EverQuest ?

[ph0rk]

speaking as a evercrack veteran, hell no!

~17 hrs * 30 (yes you'd play 7 days a week, don't lie) * $3.50 + $60 = $1845.

$1845 a friggin month, towards the pursuit of... well, nothing.

hell, the only 'goal' worth mention in the damn game is aquiring gear, take that away and you might as well be using IRC. (you could afford a nice pipe for $1850 a month, or even a laptop and a merlin card...)

on an entirely different note, if you ever were paid to play evercrack for a sustained period, say a week or so, you would probably never really enjoy playing for 'free' (recreation) again. That ain't BS, thats just psychology.

Re:Who offers me $3,50 a hour to play EverQuest ?

[ethereal]

Maybe you could spend your free time vacationing on that other world. You know, "Earth" or some lame name like that. It's not as boring as it sounds - we also have PKs and economic problems here :)

Admittantly, I haven't read the article...

[Kjella]

But usually in a (MMO)RPG, money has a very much more "come in - disappear out" existance than in real life. Money usually "appears" into society through finding treasure, monsters dropping gold (or items tradeable to gold) or value added (crafters making items) or rewards for quests/tasks, and disappears through every non-player, like healer services, merchants (buy cheap, sell expensive), leveling/training etc. Inter-player trades don't change the total amount around.

It's very possible that more money is spent than what is brought into the society. This would lead to deflation. Just like in real life I'd think this was bad for a game-world economy, but unlike real life Everquest has every opportunity to change it if they feel the need, so if it works for them, fine.

Kjella

Trade barriers

[CaptainAlbert]

What I'm wondering is whether a "real world" economy and a virtual economy are strongly coupled. So, if the virtual economy collapsed, would it affect GDP of real countries? In this case, no, because the amounts we're talking about are tiny. But if the "Entropia" project mentioned towards the end of the report were to succeed in its aims, perhaps it would.

Would economic trends in the real world influence the virtual one? In this case yes, to some degree; if people can't pay their subscriptions, they can't exist in the virtual world and production will fall. Consider this quote:

> It is important to stress that the external
> market for Norrathian goods is
> underground. Sony has stated that Norrathian
> items are its intellectual property
> (Sandoval, 2001). Trading these items for US
> currency is considered theft. Nonetheless,
> trade goes on.

Scary, no? Enforcing such a law would be equivalent to forcing the devaluation of the virtual currency. So, the virtual world economy would continue to function, but with its ties to the real world (partially) severed.

Does that bode well for Entropia? If the virtual items and currencies are the (intellectual) property of one individual, or corporation, or government, then can virtual economies be any use at all?

Or, to turn that on its head, can EverQuest be used as a model for the distribution of intellectual assets in the real world?

Having read that last sentence, I'm sure I've had too much coffee. :)

Re:Trade barriers

[rvsrvs]

For an example of virtual economies affecting the real economy, I suspect that Albania ca. 1995-1998 is a pretty good example. They completely disconnected their banking system from the real world and ran it as virtual economy with no controls on bad behavior.

An Interesting Excuse

[Estimator]

The 30% deflation makes for a very interesting excuse for playing Everquest. You are not playing Everquest, you are researching a hot investment. Out here on Earth, you would find it very hard to locate an investment opportunity that earned 30% a year. Apparently, Everquest paraphernalia does just that. Of course, you might have to do a lot of research so you can determine which are the best items to "invest" in.

Re:An Interesting Excuse

[mikeplokta]

Deflation, not inflation. Everquest paraphernalia loses 30% of its value per year.

Re:An Interesting Excuse

[Anonymous Coward]

Are you one of those people who think that shorting should be made illegal? Up or down, it doesn't matter, you can still make money.

Re:An Interesting Excuse

[fizban]

You must be stupid. Shorting involves selling something you don't have and buying it back later at a lower price. I don't believe you have the ability to sell goods you don't own in this game!

Re:An Interesting Excuse

[The Raven]

Not exactly.

First, recognize that the original article is wrong. The game does not have deflation.

It has inflation, coupled with fast item depreciation. The depreciation occurs faster than inflation. Thus, you do not have the ideal situation in which to bank money... you have the WORST situation in which to bank money. Any goods you buy will be worth 30% less in a year... you did not gain money, you lost it.

Your best investment, as an EQ player, would be to sell your character, then buy it back in a year for 30% less than you sold it for.

Raven

Re:An Interesting Excuse

[ethereal]

Although that would be cool - EQ needs a futures market in goods, and then you really could short things like that. It would be virtual speculation on items that are themselves virtual. And to attain stratospheric levels of abstraction, the EQ market could then also have a derivatives market of its own.

Re:An Interesting Excuse

[Winged Cat]

Shorting involves someone to take the other side of the bet. "One month from now, I will buy this type of blade for you for whatever the price is at the time, then sell it to you for today's street price".

1. Instant gratification - who in that world would wait a month to buy something?
   
2. Persistance - how do I know the character I made the deal with will be around (player still has an active account) in a month?
   
3. Contract enforcement - even if someone signs the deal, what is to stop the other party from simply reneging when a month passes and the other party realises it is a bum deal for them?
   

That last one is the real killer for being able to short.

Dragon effects on economy? :-)

[MtViewGuy]

Given that dragons do exist on Norrath, you really have to openly wonder how that would effect the economy of that place.

Their greed and the threat of extortion ("Give me all your town's treasury or you will all be eaten") could have some very interesting effects on the economy of any population center in that world. Dragonslayers will be paid handsomely, that's to be sure. ^_^ The closest Earth equivalent is a protection against what amounts to piracy.

Re:Dragon effects on economy? :-)

[Anonymous Coward]

unfortunately eq has nowhere near that much depth

the dragons of norrath mindlessly attack everyone they see for no good reason. they also never enter a town, or talk, or do anything remotely interesting.

just like every single other monster in the game, its completely mindless.

Re:Dragon effects on economy? :-)

[ethereal]

Now there's an idea for folks who were thinking of finding a money sink in the game - random dragon conquerings of whole towns or parties that take their valuables. On the other hand, would the game be that fun if you could randomly lose it all like that? The experienced players wouldn't have any problems getting it all back quickly, and the newbies would just have to do it the hard way the second time in a row.

On the plus side, that would be a good way to introduce new quests. Rather than always creating money by having people solving the same quests that others have solved, the system should be set up so that if people win one quest, that dragon is gone forever, but another dragon (or other evil creature) triumphs over some people elsewhere. There would be a karmic balance between avatars and biots throughout the game. As more people join the game, the number of biots on the other end of the balance would be gradually increased.

Now if there was only a way to make sure that such karmic levelling only happened to people who could survive it and recover fairly easily.

Re:Dragon effects on economy? :-)

[Alsee]

you really have to openly wonder how [dragons] would effect the economy of that place.

Their greed and the threat of extortion ("Give me all your town's treasury or you will all be eaten could have some very interesting effects on the economy of any population center in that world.")

Here there be dragons

Dragonslayers will be paid handsomely

Now THERE's a cool idea!

The closest Earth equivalent is a protection against what amounts to piracy.

The dragons are the pirates? LOL. Now THAT irony is just TOO perfect!

-

What have horses done to this?

[johnburton]

An interesting question would be how has the introduction of horses affected the economy.

For those that don't know, the latest upgrade (Shadows of Luclin) introduced horses to the game. You can buy a horse which lets you travel fasters. (And look cool).

The thing is, they are *very* expensive. The cheapest one is about 10000 platium for a slow horse going up to well over 100,000platinum for a fast one.

Even the cheapest one is more than the vast majority of players can afford and the expensive ones only a few people can affort at the moment.

I'd be interested to see how this affects the economy.

Obviously it's a huge money sink, which should reduce the prices of things. (If people have spent all their money, they won't pay so much when they want to buy things)

But also, it means that many people have got all the old junk they had in the bank and started selling it. So does this reduce prices as there are more for sale, and people want whatever they can get, or does it increase prices because people want the money to buy a horse and so are unwilling to part with items for a bargain price.

It's interesting. But I have no answers.

Re:What have horses done to this?

[Caball]

How many people do you see with horses? not many is the right answer... Other than the top of the line horse who has a fast run speed, horses offer no benefit other than being a status symbol (look, I have cash to waste!), most players would rather spend their cash on gear improvements or sell their extrap plat on playerauctions.com.

I don't believe horse have taken much plat out of circulation... at least not as much as Sony hoped.

Re:What have horses done to this?

[johnburton]

Well there are probably a few people who had enough spare money to buy one when they came out. But most people will need to save up for a few weeks or months to afford one, so I wouldn't expect a sudden huge number.

Re:What have horses done to this?

[dAzED1]

How many people do you see with horses? not many is the right answer... Other than the top of the line horse who has a fast run speed, horses offer no benefit other than being a status symbol (look, I have cash to waste!), most players would rather spend their cash on gear improvements or sell their extrap plat on playerauctions.com.

I don't believe horse have taken much plat out of circulation... at least not as much as Sony hoped.

you are incorrect. Horses have a /very/ good use. The most expensive one runs faster than the fastest spell will allow, and the cheapest one runs a little faster than a non-speed buffed person can run.

"So what," you say? I haven't mentioned the best part. You see, you just picked up 1,000 stones of weight with your little enchanter, and he has a 75 strength. How the hell do you move? You summon your horse, and ride it all the way to a vendor.

Horses are very useful. They take care of being overburdened. They also keep you from losing stamina while running. Speaking as a player of a high-level high elf cleric with a base str of 60, this is a HUGE benefit. I'm hoping to afford even one of the cheapest horses soon, as it will allow me to carry stuff.

Which, btw...is going to backfire on Verant. There are LOTS of things that are left to decay simply because the person who could loot them can't carry the item. Now though, they don't have that issue. This, of course, increases item and money circulation, as there is no longer a need to destroy all copper, silver, and even sometimes gold due to being weighed down, and one can loot everything once they have a horse, instead of leaving it to decay on a corpse.

Different servers are different

[johnburton]

There are about 40 servers now, and prices vary between them. It would be interesting to see an analysis of this - to see if things end up differently although the game is the same. Of course the ecomony is so differnt from a real one that it probably isn't very useful, but it might be interesting to see.

For example, I play on "Antoinus Bayle". Which is the only server outside of the USA (it's in the UK) and people transferred to it from all of the existing servers. The economy on there is now weird with prices fluctuating dramatically from day to day. I suspect because people have different ideas of what things are worth brought with them from their old server.

Re:Different servers are different

[Bonker]

Also, if you look at the 'Test' Server, Verant's beta production game server which has a siginificantly lower population than the other servers, you'll notice that the economy is much weaker than on an 'established' server.

Part of this is due to the ever-present threat of an item wipe or character wipe due to beta problem concerns. Part of it is becaue there is such a low population, barter and outright charity are more common.

Re:Different servers are different

[Anonymous Coward]

The older the server, the more items that are there and the more people that are there with tradeskills. I have a cleric on Rodcet Nife who has a high blacksmithing skill. However I cant sell any smithed armor because there are soo many other smiths and because the armor that is dropped off of easy monsters in the new expansion areas is better than I can make. When EQ just started you could sell Fine Steel for a lot of money because it was great. Now people are throwing away stuff that is better. . So, I'm giving up smithing

Deflation rate!

[Narril Duskwalker]

Here's a Real World example of the defaltion:

When EQ first came out Narril Duskwalker, joined with many other players to kill one of the few Dragons on norrath. After killing Lord Nagafen, Narril enters a lottery with the other members of the killing party and is awarded with a "Cloak of Flames." For the next year the CoF remains priceless because it imbues Narril with a haste rate of 36% to all of his attacks.

Sony releases an expansion.

As part of the expansion they create epic quests that require many weeks of work to finish but at the end of the quest Narril is awarded a dagger that give him a hate rate of 41% and the haste does not stack with the CoF, there for the CoF is worthelss to him. The people that haven't completed the quest are willing to pay Narril ~150k pp for the CoF as it is still an amazing item for them. A few new dragons are also introduced in the expansion and the value of the CoF slowy decays to ~100k pp

Sony releases an expansion.

Many new higher level dragons and quests appear that give rewards that are greater then the CoF. CoF ~75k pp

Sony releases an expansion.

Narril saw a CoF for sale for 35k pp the other day, and thought it was horribly overpriced.

Re:Deflation rate!

[Anonymous Coward]

tell me, does Narril always speak of himself in the third person, and cite his experiences in playing the game as "real world" examples?

Project Entropia

[bornie]

Project Entropia for a MMORPG wth real money and MindArk for the company making said game.

UO & EQ are done, is D2 next? :-)

[UnknownSoldier]

Excellent!

We have an analysis of the (broken) economy in Ultima Online @ The In-game Economics of Ultima Online

And this story describes EQ. We just need a paper discribing the history of D2's economy (i.e. the ramifications of the massive dupes this last weekend will have, the SOJ gamble trick in the early versions, etc.)

Inflation vs Deflation

[Thomas M Hughes]

Okay, this seems to be a point of confusion from the comments I have read.

30% deflation means that the currency of EverQuest can buy more EverQuest stuff every year.

30% inflation would imply that your same amount of EverQuest money would buy you less EverQuest stuff.

Thus, the value of items in EverQuest depreciate drastically over time, in opposition to the real world. As many people have pointed it, this is because items in EverQuest that were once scarce become phased out by new items that are better and replace the old high value items.

Thus, if you hold large quanitities of money in EverQuest, its better to hang onto it for awhile before making a purchase, because you will be able to buy more later. However, if you hold large quantities of valuable items, you'd better sell them fast, because they are only going to lose value over time.

Re:Inflation vs Deflation

[tiilikainen]

Sounds like the same problem with any type of computer gadgetry, really. New components outdate older components -- the SuperUber graphics accelerator replaces the older UberPlus model. The iPAQ that I bought in August for $599 is now worth $400 from a vendor, $300-$350 used. The Pentium III I bought two years ago for $1400 is now worth about $600-$700 or so, if that.

I would get better use out of the money by sticking it into a MMF and gaining 4-6% annual interest. But at some point in time, I will absolutely have to upgrade my computer to do everything that I want to do.

So, on some level, the EverQuest economy does mirror a certain segment of the "real" economy.

Diablo II economy in hyperinflation mode

[WIAKywbfatw]

Thanks to the latest duping hack (don't bother, the loophole's been closed), the Diablo II economy has taken a hit bigger than Elvis.

If you're really interested then check out DiabloII.net for more, but suffice to say that items that were gold dust are now as common as mud.

A quick look at the prices on Ebay (yes, I know that selling items in this way violates the D2 EULA but people do it and Blizzard's turned a blind eye to it) would show that D2 rares are way, way down in price.

The only real-world parallel I can draw is early 1930's Germany when people had to take wheelbarrows of notes to buy a loaf of bread as hyperinflation kicked in. Bank notes literally weren't worth the paper they were printed on.

D2 (sadly) looks like it's going the same way.

Re:Diablo II economy in hyperinflation mode

[Anonymous Coward]

I think you mean hyperdeflation. In fact it's the absolute complete opposite of what happened in Germany.

Real world questions

[ManualCrank Angst]

How many natural disasters occurred during the period in question?
How many wars?
How many recessions?
How many terrorist attacks?
How many public gaffes by major corporations/gov't leaders?

In short, how valid is it to compare a virtual, entirely deterministic world with a real economy?

www.playerauctions.com

[FileNotFound]

Go buy yourself a lvl 60 warrior for $600+.
Or the EQ currency Platinum.
For referance. A level 1 character loots about 2 silver a kill. 10 silver are 1 gold. 10 gold is 1 plat. 10k plat ~ $75-$100. A level 60 can make about 300pp a 'night' ~5 hours just from the money that drops, that does not include actual items that can sell for as much as 150k+ (We're talking VERY rare dragon lvl drops such as cob bp etc)

Player Auctions

eBay removes all EQ auctions due to them being against the EULA. (All EQ items are property of Sony etc..)

Now possible to sellback horses

[ancarett]

Players are now able to sell back the horses (albeit at a slight loss) to certain NPCs with the patch of 23 January, 2002.

That weakens their role as a platinum sink in the economy.

How has EQ affected the real-world economy?

[technopinion]

You have to figure, with all these people getting addicted, not showing up for work, getting divorced, being kicked out of college, not eating, etc, all because they're hopelessly addicted, that there would be some measurable affect on the real world economy.

For everyone who *hasn't* read the paper...

[Dan Crash]

You might like to. It's quite fascinating, and is written in a Lewis-and-Clark explorer-in-the-New-World fashion. It reads like a good sci-fi story.

semi /. effect

[odin53]

It's funny -- as a law review article editor, I'd get tons of article submissions from many authors. Often, they've posted their articles on SSRN (the site to which the post is linked). Those authors always cite how many times their article has been viewed, in order to convince us of their publication-worthiness. I think this /. posting will launch Prof. Castronova onto the top ten downloads list of all time! We're probably helping his career. :)

Server is /.'ed, please post a mirror

[Anonymous Coward]

Can someone who picked this up please mirror it?

Thanks.

But unique items suffer inflation

[Remus Shepherd]

Everyone's already pointed out that Norrath is suffering deflation as a result of unlimited natural resources -- new items constantly reappear, driving down the cost of the old items.

But I'd be interested in seeing how the prices are changing for the few items that are truly unique in the game. Manastones and Rubicite armor are two examples that come to mind -- they were discontinued a few years ago, and they cannot be found anymore. But the original pieces still exist, and are floating around somewhere. I'd like to see what price they're going for these days -- I suspect they will have been subject to very high inflation.

Re:But unique items suffer inflation

[Moose4]

Prices for those items, when they're sold--which isn't often--have gone up as more platinum has entered the economy. These super-rare items that don't drop anymore are often held as "investments". I've known a couple of people that have had rubicite that just hung onto it until they needed the money for some useful item (high-end weapon or haste item, etc.) and then sold it.

Take rubicite armor. Rubicite, early in EQ's life, was considered to be excellent armor. It only dropped in one place (the Temple of Cazic-Thule), very rarely, and when compared to the armors existing at the time--banded, bronze, etc.--was strong. C-T turned into a campground with people trying to get rubicite. It was a mess.

So they yanked it out of the game and replaced it with various mid-level class "quest" armors--crafted for warriors, darkforge for shadowknights, etc. They didn't do anything with existing pieces of rubicite, but it simply disappeared from all the monsters' loot tables.

Nowadays, rubicite is crap compared to what 2/3 of the twinks on the server are wearing. But it's red, and it's rare, and it has a sort of old-school legendary quality, and people are willing to pay a lot of money for it. So, players that have the stuff hang onto it and sell it when the price is right. It doesn't sound any different than the real-life equivalent of buying rare art or collectibles--by themselves, they aren't "useful", but for whatever reason there's people out there willing to pay excessive amounts of money for them.

There's other no-longer-dropping items, like manastones and pre-nerf Circlets of Shadow, that keep their value because they're actually useful. (Manastones let you turn health into spellcasting mana instantly, and the CoS used to allow the wearer to instantly turn invisible. Verant changed it to have a 5-second casting time, but they left older ones as instant-cast.) Rubicite just looks cool as hell. Personally, on my server (Innoruuk) I don't keep up with trading that much because I'm bad at it. But from what little I know, manastones, rubicite, super-rare stuff from zones like Temple of Veeshan, etc., are subject to inflation. They don't enter the economy faster than the money supply increases, unlike 99% of the other items in the game.

Really, the problem seems to be that items enter the economy faster than money. It's hard to earn more than a couple thousand plat in a night's play, even if you're camping things like hill giants that carry a lot of coin and sellables. (And remember, you'll probably have to split that money among your group, up to six ways.) But it's trivial to go into, say, Old Sebilis, sit for a couple hours and score 10k worth of items to sell.

All the plat aint gonna pay your mortgage though.

[Fizzlewhiff]

I played for roughly two years. Towards the end of my EQ career I took my play time and put it towards against my billable rate at work. Had I spent all that play time working on projects I'd be a few hundred thousand dollars richer.

I'd like to see a study on how MMORPG's effect people's lives. Several people who I met in EQ had their marriages go down the tubes because of the time they spent in game. When you add up the neglected jobs, wives, kids, pets, etc I am sure these games have a big impact. I'll admit I neglected a few things I shouldn't have because of it.

no drop

[Anonymous Coward]

and at higher lvls. and in top guild, the items are no drop, you have smaller chance of getting plat or items to trade.

If you post here, you live in a deflationary econ.

[Anonymous Coward]

Yes tech-heads there is a deflationary economy. Its called high-tech. In 2000, a P4 1.4Ghz machine with 128meg cost $2000. This year, same machine brand new, $400. That is over 80% DEFLATION! And don't confuse that as devaluation, I am not talking about reselling a used computer with 1k of wear and tear. Goto Pricewatch, a BRAND new 1.4Ghz spec'ed as above

Complete sys - Pentium 4 1.4GHz, WIN 98 OS LICENSE . 1yr warr. 128mem,20GB HD, 8/32 MB AGP VIDEO, SOUND, CD-ROM NET CARD/FDD 2USB KB/MS/SPK MID ATX 300W $ 405

A brand new mid-size car costs %60 more than 1992 ($16000/$10000), a brand new high-end computer costs $2000 the exact same as my 486 in 1992. High tech is as massively deflationary as you could envision.

And they did mean EQ is deflationary. Shortsword of the Ykesha ran 5k plat 18mo ago, about 3500 a year ago,1k 6mos ago, and my friend got one for FREE last month because someone was tired of carrying it. Yikes!

Not quite, chief...

[heathrow]

There are still quite a few characters/items that are sold via Ebay. They can't catch them all...

Re:Not quite, chief...

[FileNotFound]

Oh but they try.
Player Auctions has no problems at all.

EQs infrastructure is to simple

[dmouritsendk]

I think the EQ pp will continue to decrease, because of the way the poweritems are implemented. Certain items can be located through quest, and others are NPC drops. And thiese quest/npcs are static, meaning you can do them over and over again. Example, stein of moggok quest. the class enchanters can do this quest at lvl 12, takes about 3 hours. And the stein is worth 200-300pp, then when u have it u sell it. And do the quest again. Also there is the EQ guilds, which are making pretty much impossible for varant to implement really godly weapons anymore. When a really cool new weapon is released, they will locate the poor NPC that carries it. And send a shitload of lvl50+ chars out to kill it. And kill it and kill it and kill it.. And pooof.. suddenly the weapon will get common.

The Starwars galaxies infrastructure seem to have learned from this, most quests will be player generated. And poweritems will have to come from players. The EQ player will ask "Wont the poweritems just all be the same anyway then? Like all Jewellers in EQ make the same pieces of jewelly?" no, not at all. If you are really good at (as an example) enginering - Blaster construction. You will be able to modify the blueprints (the blue prints will then go into a machine to produce a prototype, which is then manufacturable. You will even beable to hire a NPC to sell them for u) and make your very own masterblaster. It will even carry a tag to show which player that have created it. And this is just the tradeskill stuff, if they implement 2% of what they are promising over at starwarsgalaxies.com . SWG will have a insanely complex infrastructure. Than wont share the same fate as EQs.

Ecomonics 101 people

[Gaijin42]

The world of norrath has alot if inflation in fact, because the money supply is infinite. However, the individual items depreciate faster than inflation is going up.

The way to tell that there is inflation : Compare the tier-1 item prices at any given time.

For example, a year ago, what was the best one handed weapon, and what price did it go for. Today, what is the best one handed weapon, and what is it going for. The price is more correct? Thats inflation.

There is no deflation. There is depreciation, coupled with inflation.

Re:Ecomonics 101 people

[Anonymous Coward]

That's not necessarily accurate because the best 1 handed weapon this year is probably dramatically different than the best 1 handed weapon last year. Also, since the game has been out so long people expect overpowering weapons instead of things that are more appropriate for their level.

This is akin to saying last year this canoe cost me $50, but this year this high powered speedboat costs me $50,000. It's a bit inaccurate to say the cost of boats has risen...

Re:All the plat aint gonna pay your mortgage thoug

[Anonymous Coward]

Several people who I met in EQ had their marriages go down the tubes because of the time they spent in game.

Thus demonstrating the importance of homes having multiple computers, so the wife can play too.

International commerce

[Casca]

What is really interesting about this virtual economy are the possibilites for untraceable international commerce transactions. Someone can now make a payment to another, in another country, and it is nearly untraceable. It is a little farfetched, and not very practical at this point, but it does open up some possibilities.

How it all makes sense

[autocracy]

In the real world and the game world (which is what I'll refer to Everquest as), older things become worth less as newer, better things are discovered, particularly as the supply of older things increases for at least some frame of time. The factor that separates the game world from the real world is human time. People get paid for work. A demonstration of what I'm talking about is best found in The Sims. You get paid not for physical things you claim, but rather for the time you're out of the house doing your job. You don't gain money in the game world just by being there (as some can do in the real world - The Sims differing in that it tries to approximate the real world). The ONLY reason inflation doesn't exist there is that The Sims uses a static money market model.

I'll fill in further details later to as replies to explain away everyone who tells me I'm wrong...

Star Wars: Galaxies

[The Raven]

SW:G is not out yet, but a lot of attention is being spent discussing the economy that will take shape when it does.

The developers (and the thousands of fans trolling the boards) are spending a lot of effort analyzing the fountains (things that bring money and resources into the economy) and drains (things that remove money and resources from the economy) in an attempt to make a relatively stable player economy.

In current Massively Multiplayer Onling RPGs (MMORPGs) nearly everyone is a fighter, and those that are not fighters are usually mules to help support the player's fighter character. One of the primary goals for the developers is to make crafting, and associated skills (such as mining) interesting enough in their own right to be viable alternatives to fighting characters. For this to work, they need a viable, working player economy... so they have far more incentive to get it right than most MMORPGs do.

You can read more on the developer's forum or in the FAQ. It is not expected to be out till late 2002, or early 2003 if it slips a bit, so we'll see how it turns out in reality... but I can hope...

Raven

OT Question: WTF is Everquest?

[Anonymous Coward]

Please tell me? This article makes little sense otherwise. Is it an RPG? What? Who? Where? How about Slashdot info boxes inside the story blurb which concisely describe some terms or things which might not be common knowledge.

Re:OT Question: WTF is Everquest?

[toby360]

Everquest is a very successful "MMPORG" or "Massive Multiplayer Online Roleplaying Game". It takes place in a 3d environment and is very involved for a few reasons.

1. Because the game is online, and there are several thousand people playing on a server at any one time, there is a huge social aspect to the game. You can trade, talk, fight, form guilds.. or do anything you really want with other people.
2. The game follows in the paths of D&D style gaming, a much more modern version of old MUD games. You have a character which you play for long (and I mean LONG) periods of time to achive certain goals such as gaining levels, new skills or learning new spells.
3. The game is HUGE, when I first started playing everquest you could spend literally days exploring the game, and with new expansions being continuously added to the game, you can explore all sorts of new terrain, towns, creatures etc.
4.Challenging, the game forces players to use their brains in combat, grouping with other people to fight larger monsters is very very common, and there's always a monster bigger than you to fight, and fighting larger monsters means larger rewards.

I hope this sheds some light on what is everquest. If your thinking about buying the game, you need a pretty decent computer and have to play a small monthly fee to connect to the servers. Belive me when I say the game is very very addicting, some of my friends have dedicated over a year to the game, I myself stopped after a few months, had withdrawal symptoms and came back again. I've stoped since, but it wasn't easy ;)

Re:OT Question: WTF is Everquest?

[Anonymous Coward]

walk into any computer software store and you'll see a big stand for everquest somewhere in it. its an online mmorpg - like ultima online or anarchy online. if you havent heard of those - then move on.

A possible solution

[nagora]

I've not played the game but having read the article and the comments here it seems to me that a good solution would be for items to wear out except ones gained from the first ever successful resolution of a given quest.

TWW

3 pvp servers

[kel-tor]

there are only 3 red servers and they do run eleaborate pk rules like your idea. all the other servers are teamwork servers, the goal is to group up and use teamwork to defeat the computer. they create enough servers to almost satisfy the player demand, and they only have enough players that want to do pvp for 3 servers. ie most eq players dont play for the pk. you can still duel on the blue servers, but both sides have to consent or go to an arena area to fight, and there is no xp loss due to pk. some peeps use player death for a free tp to their respawn point heh. the problem with scarcity and item decay is its fun to get good items, now if it was something like an item decays a tiny tiny bit each time it is traded, that would slowly remove the stuff you are willing to trade from the game, while leaving 'your' stuff intact. anyway my 2c

Everquest Time VS Real Time - Inflation

[toby360]

I would like to argue that saying that everquest has a 30% inflation rate per year can be somewhate misleading, since in everquest, a day in everquest passes every few hours so in a real day, you would actually be going through several everquest days.

If my memory serves me correctly, I belive everquest also has less than 365 days a year.. 350 or 300 or something like that. So staying true to the "virtual world" idea, I would have to say that statistics should reflect this too. Instead of a 30% inflation rate in a real year, It should be represented as a fraction of this .. maybe 1-2% inflation in an everquest year.

Re:Everquest Time VS Real Time - Inflation

[technopinion]

Actually, when you play everquest, real-world time continues outside of your frame of reference, but it stops for you. You don't eat, you don't sleep, you don't do anything except play (I personally believe you don't even age while playing). When you finally stop playing, perhaps because you've fallen exhausted and unconscious from your chair, you find that weeks, perhaps months, have gone by in the real world, while you have merely sat at your desk for what seemed like only a moment or two. And then as soon as you've managed to wolf down whatever presented itself for consumption at the front of the fridge, you do it some more.

Re:All the plat aint gonna pay your mortgage thoug

[kel-tor]

I know of at least one friend who was heading strait for a divorce, now wife and him play together almost everynight, and he doesnt seem all irritated all the time when we get together. I know other people that prolly got divorced over it too though.

Deflation isn't so weird...

[foxtrot]

Imagine, that when the first version came out, I got me a +2 Sword of Fu. I could sell it for 2000 plat.

Three expansions later, I now have a +40 Sword of Fu. I can sell it for about 2000 plat, and my original Sword of Fu +2 is only valuable in that I can give it to a newbie learning the game.

When the first version came out, I had a Pentium 90, and I bought it for about $2000...

-JDF

And you failed it.

[Kjella]

Inflation: Same amount of money buys *less*

I have 100, prices now are 100, in a year they'll be 105. 5% annual inflation.

What is happening here is that everybody gets "richer" at the same time, in the terms of having better equipment than before. You can equip your avatar with better equipment for 100pp today than for a year ago. That's deflation.

The reason it doesn't feel right is because *relative* to the rest of the players, you're worse off. But nominally, compared to your character a year ago, you're better off.

Kjella

Re:And you failed it.

[Gaijin42]

I did not fail it, I majored in it.

Thats exactly what I said. The same ammount buys less. Thats the same as the same thing costs more.

You can talk about how much one apple costs, or how many apples you can get for $1. Either way it is inflation.

The prices on items are dropping, because they are depreciating. At the same time, the money is becoming devalued because of inflation. However, the depreciation is happening faster than the inflation - so you see prices falling. If new items stopped coming out, prices would go up, as the money supply keeps increases.

www.everquest.com

[heathrow]

This will help. IMHO- it's my addictive crack game of choice. ;)

You've got death, you need taxes!

[Drake42]

I'm not an EQ player, but it seems like the answer to hording is simple. The banks tax you on the items/money stored. If I put in 100Kpp and let it sit for a month. I should come back to only 95Kpp in the bank. That way I'm motivated to sell it, spend it or carry some and risk losing it.

Spot On

[crisco]

Stories vary but from what I've heard, a few months back someone figured out how to 'Dupe' items in Diablo2. These were undetectable dupes, for all intents and purposes real items in the game. Supposedly they quietly did this for a while, selling the goods on eBay and then finally sent instructions for the hack to Blizzard so it could be fixed. Somehow the hack leaked and over the past weekend, many players were duping stuff, in effect, printing money for themselves. Enough did it that the economy of Diablo2 is completely changed. Blizzard has corrected the bug that allowed duping but the economy has permanently changed, unless Blizzard does something drastic like a player reset or figures out how to eliminate the duped items.

Dragonslayers?

[Rupert]

I already have a champion against greed and extortion.

Um, you are totaly wrong

[autopr0n]

deflation is the opposite of inflation.

M: TG

[Christ-on-a-bike]

Remember the other kind of gamer crack?

There have been much bigger 'virtual economies' before, like Magic: The Gathering, Star Wars, etcetera etcetera... even baseball cards. What EQ and other MMORPGs have is similar in that game tokens acquire significant real-world value. Trading-cards have also been highly deflationary in the tournament scene, except for 'killer' rares that are in tightly limited supply, and potentially allow busted decks. And they get legislated out of play sooner or later.

Of course there are significant differences, like the CCG companies never claimed the cards were their property so as to clamp down on the secondary market.

Really the kind of 'economics' shown here in EQ is so like these traditional 'stamp-collecting' patterns of artificial scarcity control, I don't think it's interesting yet. If a MMORPG can get big, say half a million users or so in a contiguous environment, with no stupid restrictions on resale or internal trade, there might be interesting phenomena.

MUD had inflation issues for ages.

[Anonymous Coward]

The in-game inflation problem is not new. MUDs
had to counter it or to undergo economic
collapse, much like real world economies.

No sane MUD admin would allow unlimited addition
of wealth and items to the world. That's why
item decay in various forms is present in lots and lots of MUDs.

IMO EQ will have to introduce items decay or collapse.

Being an EverCrackHead cost me a lot

[Anonymous Coward]

I lost my job last year, had car repossesed and had to file for bankruptcy. Also, due to the collapse of the dot-com market, I make 2/3 of what I was making a year ago. Being an EverCrack-head cost me a fortune. About $30,000 so far. But in the shadow of 9/11, it does not hurt so bad anymore.

DOES THIS ACCOUNT FOR PVP ?

[teambpsi]

Trust me on this one, you can make a lot more money by playing on the Player-VS-Player servers where "player-kill" or PK is allowed.

Interesting socio-economic questions arise when you talk about the society based not on trade, or agriculture, or technology, but one based on theft!

Oh wait...isn't that called a patent ;)

Deflation

[attackiko]

Economy with 30% deflation is in serious trouble. Czech republic used to have it, but not 30% that would kill the economy very soon.

Re:Deflation

[tiilikainen]

Yeah, I think I can agree with that assessment. Taken to its logical conclusion, this can be quite humorous. In EverQuest, they'll have to keep introducing newer and newer items with ever increasing stats dropping from super-uber-godly monsters to keep players interested. Sooner or later these level 60 players will be able to take out the Sleeper (EQ "end-game" mob) in one hit. A level 60 player will have 120 strength naked, 62000 with equipment, and millions of hit points. The uber encounters of the future will involve mobs which hit for damage in the hundreds of thousands, and will have hitpoints in the billions.

This will continue until we reach a machine limitation in the size of an integer that can be stored. ;)

Re:All the plat aint gonna pay your mortgage thoug

[ethereal]

For most people, though, the game also provides a break from real life. You could say the same thing about any recreational activity, like reading or watching TV. You wouldn't think "Oh, if I had worked instead of watching 20 hours of TV this week, I'd be 100k richer", because if you weren't watching TV to relax, you'd be goofing off some other way.

It's just fortunate that it is possible for people to make money in the EQ economy while doing something that they love.

You're confused, but made an interesting point

[FastT]

Thats exactly what I said. The same ammount buys less. Thats the same as the same thing costs more.

Sorry, Gaijin, Kjella is right, but please read on.

You said, "The same ammount buys less". No. The same amount of currency today buys the same item for less money than yesterday. It only buys "less" if you are thinking in terms of what an item can do as its inherent value (meaning its suitability for a given character at a given level).

This isn't correct for an analysis of value of money versus item value *in terms of money*, but is an interesting idea. You are talking about the inflation that occurs based on the decrease in item value *in terms of utility*. It's interesting to wonder if this is an offsetting factor in the overall economy.

I'm sorry, but that's incorrect

[FastT]

Any goods you buy will be worth 30% less in a year... you did not gain money, you lost it.

Think about it. If you invest in money, you make 30% *relative to item values*.

What you've suggested is that there is depreciation of the value of items coupled with inflation (meaning depreciation in the value of money). These are opposite trends, and are mutually exclusive. Why? Because item values are defined in terms of the value of money, and the value of money is defined in terms of what items it can buy. A change in one means an opposite change in the other. (Note, once you start stating the value of items in other terms, like how quickly an item helps a given character kill a monster, that's another matter entirely.)

This is like the well-known equivalence of mass and energy. They are the same thing, just different forms. In the same way, items and money are the same "thing" in terms of fungible value, just different forms. And, just as in physics, you must pay a price to change from one form to another. However, the shoe is on the other foot here--the seller pays the price instead of the buyer (by selling at a lower cost than the item cost initially).

What the author suggested was that items become cheaper over time because there is an influx of items of increasingly greater value over time. There is no similar influx of money into the world (AFAIK)--you must sell items to make money. If you could mine platinum to make money, then things would be different. What this all boils down to is that making money is predicated on finding items. Since the influx of value based on money into the world is small compared to the influx of value into the world based on items, there is a pressure on players to only spend within an absolute range of money for any item. In other words, you have a range of money valuation that ranges from 0 to X, and you have to fit increasingly more items within that range in a marketplace.

I believe all of this was exactly what the author described--if you keep a given amount of money, it increases in value in terms of items over time. Meaning, over time, you can buy more stuff for the same amount of money.

Again, it's another matter entirely if you start stating that a given amount of money buys an increasingly smaller amount of "badass-ness" for your character. This is thinking of item values in terms of their utility. And this is exactly how most characters think of items--that's where the fun of the game is to begin with. But, it's the switching between the two valuation models that confuses everyone I think.

What a POS website

[Anonymous Coward]

Anyone got a mirror to the document?

(I'm 16 hops away with a 50ms ping, and the download is timing out. wtf)

5k a month on player auctions

[Anonymous Coward]

I currently sell on http://www.playerauctions.com and bring in about 5k a month in sales from EQ. If I really wanted to put more time in I could easily make double what I am now, but I don't currently have the time available to do so.

Where Is Yap Ranked?

[tino_sup]

Nothing like an economy based on LARGE carved stone discsas on the island of Yap?

Gives new meaning to the phrase "pocket change". :)

http://www.galen-frysinger.org/yap.htm

egads

[SkipSmith]

The value of money is defined as how much "stuff" you can get with it. You can't have inflation (meaning a fixed amount of money buys less stuff in the future) and item depreciation (meaning a fixed amount of money buys more stuff in the future) at the same time. Since prices are declining, that's deflation, meaning the value of money relative to goods is increasing over time, even though the money supply is likely increasing. The guy who wrote the report has a PhD in economics. He knows what he's talking about.

DE-flation

[SkipSmith]

It's impossible to have inflation (meaning the value of money relative to goods is decreasing) and depreciation (meaning the value of money relative to goods is increasing) at the same time.