[Theory] Online RPG Game Economics and You, Part 1

I'm sure that this has definitely been done before, but here's my quick musings on multiplayer game economics.

Multiplayer economics is often a tricky subject because the designer doesn't know what factors, incentives or disincentives exist. However, there are some wonderful key factors here that I feel have been ignored in the larger scheme of things.

Resources are created for "free" but they are never permanently consumed.

For example, there are two primary sources of obtaining in-game wealth. The primary source of income in a game is any system in which the game gives the players currency. This includes the reward of gold or money or items that could potentially generate gold and money. This is the first major break from reality, as it represents an unlimited money supply which must be addressed.

The secondary source of obtaining in-game wealth is the trade of items of value with other players in exchange of items for wealth in trading systems. This is the main "economy" problem that players speak of.  The main problem with economies in general is the fact that if in-game wealth or gold is generated at too fast a rate from "nowhere" then there is no point in trading for it.  The game then needs to revert to a Barter system, where items are primarily traded for other items.

Improperly managed resources/economies can lead to trade "lock", where no parties are willing to trade.

A barter system would be fine as a secondary currency, but only *if* there are sufficient units of lower denominations available to make "change", so to speak.  I would gladly trade my sword of vorpal destruction for your shiny shield of gold. But if my sword is vastly superior to your shield, I would need something extra to compensate the difference in value. However, if there is no agreed upon secondary currency, then the trade cannot continue and the barter system will break down as everyone is locked with the items they possess.

The primary failings of both the money based and the barter based systems is the fact that the supply is essentially infinite and with no external systems, there is an infinitely growing supply of items. This problem is sometimes exacerbated by the  introduction of real money trade in the system in games that are dependent on micro-transactions for their cash flows.

The rate at which resources are obtained, inevitably favor those who are more powerful.

The second major fallout in multi-player game economics is from the rate at which wealth is acquired. Naturally, as players progress through the game, they obtain more powerful and more desireable items. They also receive increased rewards to discourage players from taking the easy road. There is also usually an increase in "cost-of-living" expenditures such as perishable consumables and item costs in general (as barriers to player growth) and thus neccesitating a rise in the ability to obtain in game wealth.

I'll give an example here, as that may have been too wordy. Our level one hero finds one gold on a slime. This is fine because his sword only cost 5G.  If our hero gets one gold a kill, he can obtain his sword in 5 kills. Now, if the next more powerful weapon costs 100G, our hero will need to kill 95 slimes in order to obtain his sword. But what is usually termed as "fair" in an RPG is that, as our hero acquires more power and defeats more powerful enemies, he should be rewarded more gold as well. That is, our hero can now kill demons and get hundreds of gold per kill.  If we only awarded our hero one gold per demon kill, our hero might as well just kill slimes instead as they were much easier.

However, with an increase of power, also comes the increased ability to gather wealth. A high level player in online rpgs can gain gold perhaps tens or hundreds of times more than a new beginning player. This creates a serious discrepancy in the wealth accumulation of the system as now, the vast majority of the wealth in the system is controlled by proportionately few people.  In real world economies, this would rapidly lead to: Price inflation and Price fixing.