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The Model Economy
- Scatter ///\oo/\\\
Reviewing Muds
- Selina Kelley
Applying a MUDpack
- Chris Caines
Mud Governments
- Griffin
Who's Who? A look at Character Sharing
- Kethry
The Lessons of Lucasfilm's Habitat
- Chip Morningstar and F. Randall Farmer

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The Model Economy

by Scatter ///\oo/\\\

One aspect of life that is rarely implemented well in a mud is the economy. Many mud designs don't take any steps to implement a workable economy at all, effectively just assigning values to objects and hoping for the best. Others make the attempt but fail due to unforeseen complications or unexpected playing methods. Either way, a sure sign of a failed economy is simple to spot - any player who has played for any length of time has a ridiculously massive amount of cash available. In the rare circumstance where they need more money than they have, an hour or so of 'harvesting' can easily fill in the needed amount. Usually this harvesting involves going to specific areas where NPCs can be slaughtered with minimal risk and cash can then collected direct from the corpses or obtained by selling off the unfortunate creature's equipment.
Camelot!  It's only a model

Camelot! Not really, but it is not a model either.

These super-rich players can afford anything they like in the game. Anything they want, they have the money for. This is a problem not only because it destroys any semblance of theme (if gold was that common that everyone can have millions of gold coins in the bank, it would never have been used as currency in the first place) but simply that it destroys the challenge of the game. Ironically, helpful rich players are a problem in this circumstance as they tend to give large sums of money to new players, to help them get started.

There are several courses of action that the troubled mud's administrators usually take to try and combat this problem.

The first is reducing or limiting bank accounts. The normal result of this is simply to annoy players (who naturally resent having their riches lost or limited) whilst doing nothing to solve the problem because players can still easily harvest cash when needed.

The next is limiting harvesting, through reducing cash carried by NPCs and reducing the sale value of items carried. The problem with this approach is that all it really does is slow harvesting down. Players have to spend more time to make their gold mountains, but still end up just as rich in the end. It also has the effect of making life much more difficult for new, low level players who don't yet have the skills needed to go harvesting but still need to make money for training and equipment.

The other common approach is to try to suck out these riches by creating desirable things that cost obscene amounts of money. A common example is personalized rooms, clan halls with customized features and so on. The costs are massive, often thousands of gold pieces just to construct one room. Unfortunately the very fact that these objects are desirable means that players simply go harvesting until they can afford them - effectively they encourage an unwanted behavior pattern.

The key problem that none of these methods address is that there is no real cost of living that can absorb the players' income. For low level players, their training costs can often match their income, but as soon as they are capable of going harvesting they have an income that massively outweighs their costs. What is needed is some form of ongoing time-based costs which are being incurred constantly. Thus when the player goes harvesting, they are accruing debts as well as collecting income. If the balance is right, the vast majority of the income is immediately forfeit due to the costs that have arisen over the time taken. The profit margin from harvesting can drop severely and make it no longer worth the time spent.

Of course, care needs to be taken that the desirable methods of play, whatever they may be, can provide sufficient income to offset this cost of living.

Some possible ways to implement a cost of living are:

  • Taxes - where the land in which you live exacts a regular toll for the upkeep of cities, payment of the army and so forth.
  • Rent - not meaning the old inventory-rent idea that still crops up occasionally but rather things like renting rooms or houses within a city to personalize and live in.
  • Wear and tear - weapons, amour, clothes, etc. all get damaged and wear out and must be replaced or repaired.
  • Followers - allow players to recruit mercenarys, bodyguards etc whom must then be paid a salary.
Of course, this is by no means an exhaustive list and depending upon a particular mud's theme, many other possibilities undoubtedly exist.

A carefully balanced cost of living can absorb most of the income that players would normally hoard. The remainder of the excess income can often be mopped up by desirables - things that players want (but don't need), and ideally that are either temporary and have to be replaced or cause more ongoing expenses. For example, a player that wants a horse to ride around upon needs to pay for stabling, food and services of a groom in addition to the cost of purchasing the animal.

Another line of attack is to make hoarding itself difficult to do. For example, don't have a secure central bank. Without bank accounts to drop those thousands of coins into, building a massive cash reserve becomes a very tricky prospect. A player might have to buy or rent a room, install a safe, hire guards - and still risks the money being stolen.

With luck, what you end up with is a carefully balanced economy following the "faucet/drain" model. The basic idea of this model is that value constantly trickles into the world like water from a faucet (or a tap to us UK folk). This value usually takes the form of objects being cloned into rooms or into NPC inventories. For example, an NPC that is killed and has its possessions taken will often be recreated after a delay period, creating a fresh set of possessions in the world - all of which are worth something.

This value then trickles out of the world when objects are destructed - like water running out of a drain. The trickiest part for muds is usually to make sure value drains at the same rate as it trickles in.

If value trickles in faster than it drains, then the amount in the world constantly increases - triggering severe inflation with ever more wealth available in the world. Alternatively, if it drains faster than it fills, poverty sets in as there is less and less wealth in existence. In most cases problems at either end of the scale are made much worse by fixed price shops which sell objects at given prices regardless of prevailing economic conditions.

There is an alternative economic model sometimes used in muds, which is referred to as the "loans standard" model. A key feature here is that there are no fixed prices - these are determined entirely by supply and demand. The idea is that in the real world, the amount of value is fixed - it neither grows or shrinks. When an object is created, it isn't built from nothing - it is built by converting other existing objects - raw materials into product. This conversion results in no overall change in value in the world. Prices are divorced from value - simply a convenient agreed exchange rate of objects. In effect, prices are continuously chosen by players - a sword is worth whatever someone else is willing to give for it. All prices are relative.

In a mud, there are problems with running an economy this way - especially if the mud wasn't designed with it in mind from the start. It means, for example, that you can't have that reappearing NPC described before - it can't be recreated with a fresh copy of its possessions because doing so would add value to the world which is not allowed. You could allow it by treating it as a loan to the world which must be paid back but this generates the new problem of ensuring that the loan is paid back.

The biggest problem with this kind of economy in the mud environment is that the mud world is neither static nor fully defined. In the real world, the amount of value is a fixed amount - everything that is, already is. Things are made by converting raw materials into products and destroyed by reducing products into raw materials. In the mud the amount of value is not fixed. The mud does not have a finite supply of raw materials that are put together to make objects - objects are generally created whole, 'as if by magic.' In addition, the size of the world is continuously increasing as more areas are coded.

So, in order for this kind of economy to work in a mud there has to be needs to be global tracking for object creation and destruction - effectively a 'world bank' to make the loans and accept return payments to ensure that the overall sum is zero. If the sum is not zero, then inflation (or less likely, deflation) occurs. It also means that every single object created into the game world must be tracked and listed as a loan, and every single object destructed must be tracked and listed as a payment. New areas added to the game significantly affect the balance, which must then be compensated for as a special case. Not only does this significantly complicate the mud's basic object management, it also adds a cpu overhead to operations that occur very frequently.

Further complications are added by the fact that huge chunks of the mud world are simply implied rather than simulated. For example, there may be a city with a population of over half a million people yet there will be nowhere near half a million NPCs wandering the city. Yet the economy needs to act as if they really do exist. The city may trade by sea and land with other cities that are unlikely to be coded for some time, but the economy needs to act as if they did exist. Players are the key 'effectors' in the mud, but the economy must behave as though they are a tiny fraction of the world.

My other main disagreement with the loans standard model is that of theme. In my own mud, I am aiming for a coherent, consistent, strong theme. I don't want prices to fluctuate arbitrarily depending on player actions, I want to be able to decide which areas are poorer, richer etc. I want to make sure the currency reflects a believable medieval system, with appropriate relative values and purchasing power.

Therefore, I'm following the simpler faucet/drain model, where the idea is to prevent inflation/deflation by keeping the amount of value in the world roughly constant, with valuing flowing into the world as objects are created (faucet) and is removed from the world as objects are destructed (drain). If the world is made bigger, the amount of value in the world increases and then stays at this new level. The faucet is largely left alone, with objects created as needed by the game world. The management issues with this economic model are with the drain - effectively with making sure players spend money rather than hoarding, as described at the beginning of this article.

This kind of economy management allows you to manage things like pricing at the area-design level and lets you address problems without being forced to revalue your silver coins. It lets you assess pricing based on object rarity, effort etc. taking the implied parts of the world into account.