[MUD-Dev] Economic model..

brian at thyer.net brian at thyer.net
Sat Feb 28 08:36:28 New Zealand Daylight Time 2004

Matt Mihaly <the_logos at ironrealms.com> wrote ..

>> Players selling for lower than manufacturing cost is a concern of
>> mine.  Game theory dictates that manufacturers should sell for
>> the lowest possible cost in an informed open market economy, that
>> is an ideal economy for consumers.  However, Game theory also
>> says that manufacturers, wherever possible, should behave as much
>> like a monopoly as consumer's elasticity of demands allows them
>> to get away with.

> One has to wonder what that has to do with the reality of running
> an online game. Informed open market economies are myths
> established by economists who want to write neat little papers
> that don't take into account actual consumer behavior.

"Informed open market economies are myths established by economists
who want to write neat little papers" Ouch.  Okay...but it's true =)

Everquest has, what I've seen, as the closest thing to a Perfect
Information Market, and that is the Bazaar.  You can go in, bring up
your window, put in either the name of the item you're looking for,
or maybe just some stats to narrow it down to a handful of items,
and bang, you're looking at a list of every single item fitting your
query, who's selling it, and what it's price is.  This keeps items
fairly competitive.  I know personally I would never buy an item in
the Bazaar if there weren't 3 or more others of them for sale as

In the real world, I think the Internet is coming close to providing
something like this.  Eventually there will be more sites that
provide the right kind of information, but (let's take computer
hardware as an example) you can find some sites now that will
provide information like this for the customer interested in
comparing.  Pricewatch or the Ars Shopping Engine, will lay out for
you the price of the same product as it is between many different
stores.  Or an even bigger example, Ebay.  A nearly perfect
information Flee Market / Auction.

Now that the idealistic economist in me is out of the way, I'll
allow the rest of me to say something.

I don't expect my online economy, or any for that matter, to have a
real perfect information economy.  However, I do expect to see
players behave, in the most part, as game theory predicts.  Why?
Because if you're competiting against another player in a "how low
can you go" price war, you are going to keep dropping the price as
low as you feel you can (baring any kind of OPEC like agreements).

I guess one way you (I) can try to prevent this is in the nature of
the economy itself.  If Gold is scarce enough people will value
value.  Meaning if they're in a market where they feel like they
have to sell their product for less than it's production cost, my
hope is that they'll feel that isn't worth wile, since they need the
revenue from the sale, and they will pack there bags up and move to
a new market where they can sell their goods for a better price.

- Brian
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