Getting off the Gold Standard

Game designers face many challenges, and one of the largest of these is balance. Yet curiously, one facet that seems to garner a much smaller degree is the economy. That isn't to say MMO economics don't get a great deal of attention but as they stand the balance is more reminiscent of a band-aid than any real resolution.

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Excellent article. One thing that I remember in AC is that the developers actually created a new area called the Marketplace where players could put their Trade-bots for business. Even giving quick means of access the marketplace.

Also I am seeing in games like LotRO and WoW that the developers are using barter systems for gear, recipes, and such. The barter items still allow for a cash value on the auction houses, but in trade channels you do see people trading x number of Heavy Borean Leather for x number of Frost Orbs in WoW, or x number of Sturdy Hides for x number of Gold Ore in LotRO.

There's one very good reason cash is still king.

The issue is liquidity.

In a barter system you have to wait until two players have mutually satisfying needs. In a non-barter system both halves of the equation can operate independently, each player exchanging his goods for cash or vice versa. This makes trades much easier to execute.

In any environment with a variety of financial instruments or items, there is going to be a problem of asymmetric information, in that it is extremely difficult to communicate the value of a particular item to all potential buyers. Liquid assets, such as cash, do the job. You can say "I'm selling this item for $X" and every buyer knows what you mean and can objectively sort through offers. Without liquid assets, you run the risk of operating an inefficient market due to informational asymmetry between buyer and seller. It raises the cost of trade in two ways - 1) small-value trades are not worth the effort, and 2) potentially beneficial trades are missed because the seller simply never got around to checking out a particular offer (time constraint).

In an MMO environment, where any player can hop online and pick up some quick "cash" from quests, monster slaying, etc. you can assume a high inflation rate. Just look at EVE online - some player-run "banks" offer 7% monthly interest. In contrast, a typical American bank would give 5% *annual* interest (that was pre-credit crisis. now, that rate is approaching 2%). If you take out currency, something else will take its place. For example in diablo 2 cash got worthless quickly and a particular item called the "stone of jordan" (SoJ) took its place as the de facto liquid asset. There were a lot of them around, everyone knew exactly how they were obtained (so they knew it wouldnt hyperinflate as much) and everyone would quote prices in terms of # of SoJ's. The practice continues to this day and was even extended to a trading forum "d2jsp" with its own currency.

My point is, liquidity can and will manifest itself in any market, whether its cash or something else that buyers and sellers trust to remain relatively stable.

Cheers,
-az
azala.netfirms.com
azalathemad@yahoo.com

Is... is that an essay you've just wrote?

Nice article. I too remember the evolution of AC's barter system. I will disagree slightly with the articles contention that cash was useless though. Playing a mage I had significant resupply costs since reagents had to a chance to be consumed when using magic. So while I always had more money than necessary after a session of grinding and restocking, it was still very necessary to my progress in the game. It doesn't really diminish your thesis but I do think that it needs to be more properly accounted. It seems to me that one of the problems with the system was the ridiculous amounts of money you were able to procure over the small sinks that were implemented. The cash economy was a disaster.

If a game had a system where all of the best items were created from components that could be looted, or looting useable but not top tier items that could be broken down into necessary components for creating the best gear, it would be more amenable to a barter system. It seems like a game based on created items instead of looted ones, however, would likely have such a complexity of compenents that it might be too difficult for the average player to realize the proper value of most of those components. I think one of the things that contributed to the success of the barter system in AC was the fact that you had so few components to deal with. Conversely, a game like WoW where many of the best items are just looted (and soulbound to boot), would seem unlikely to have any hope of implementing such a system.

I don't think a barter system would solve any issues of disparity between brand new players with no financial means and rerolls/friends with heavy financial backing. Unless draconian measures were undertaken that might be more apt to hurt a game more than it helps, the rich are always going to be able to find a way to transfer wealth down to low level characters. It's possible that it might lessen the disparity, but it's something that would have to be implemented to see if it would have an effect.

Runaway inflation is something that needs to be addressed in MMO's. A well implemented barter system based on compenents that leave the economy is an interesting idea that might work to address this problem. I think it might just be easier to implement better money sinks and just stick with a cash system. I wouldn't mind seeing someone try and implement some of these ideas but I don't see it occuring in any major upcoming MMO, it's just too risky.

I too am an old school AC player, playing a mage is rather expensive, however with the social system of vassals it was easier to play when you had a decent patron. The patron in enchange for helping you to level would also gain XP, which is a barter in and of itself preset up by the dev's. The marketplaces though the players used a barter system all items also had a monetary value just in case the player did not have the required barter items. AC also introduced a way to change ones skills later in the game if your original choices were not working out for you, thus allowing end-game characters to still advance in other ways. I know for a fact that the end-game players when they maxed out their levels still gained XP for the sole purpose of being able to raise skills. Only once they had maxed out their skills was the XP totally worthless until they had raised the level cap from 126 to 275.