[MUD-Dev] Simpson's "In-Game Economics of UO"

[Timothy Dang]

On Fri, 21 Apr 2000, Paul Schwanz - Enterprise Services wrote:
> 
> I thought so as well.  I was especially fascinated by how the
> "improve-by-doing" system for gaining skills can throw a wrench in the
> whole economy.  However, I have a suggestion/question.  What if the
> model were changed slightly to "improve-by-failing?" 

This could help alleviate it some, but really doesn't fix the problem. The
problem comes from directly associating getting better with producing.
Over the range of production where skill is gained from producing, this
creates "decreasing marginal cost", which (roughly) is a condition for
natural monopoly in the real world, because those who have been in the
business a while can produce more cheaply than those hoping to get in.

In games or the real world, this decreasing marginal cost means it's in a
producer's interest to accept some loss as they learn what they're doing,
so they sell below cost.

Only granting skill for failure would be one way of shrinking the range
over which there's decreasing marginal cost for a particular item, because
once you're pretty good, you won't fail so much. This would be similar to
the effect of giving greater skill gain for more challenging attempts
(whether they fail or not). But neither fully removes the problem.

One other approach is to increase the opportunity cost of production. If
it took a significant amount of time to make a crude dagger, and a similar
amount for a really nice halberd, then those capable of creating the
halberd wouldn't be competing with those creating the daggers. This might
alleviate some of the competitive pressure on folks just starting out, and
let them charge higher prices. Again, not enough, but something. I
also don't know if the overall effect on gameplay of requiring more time
would be positive or negative.

If people were solely motivated by the profits from a skill, and thought
about it, then the whole thing wouldn't be quite as much of a problem,
because fewer people would get into a production field once it was mature.
But folks also want to be a blacksmith for the sake of being a blacksmith.
I'd be curious to know about the frustration level of folks starting out
in a trade. If it weren't for existing opportunity costs (gotta choose
between killing trolls and crafting swords), one would expect that every
profession would be a money-loser, since the competitive price for an item
would be the price charged by those already skilled at production.

I would also expect the problems to be exacerbated by item durability.
There's actually some special economic theory for durable goods, one of
the main pieces of which (due to Coase) predicts that even a monopolist
will set an item's price equal to the marginal cost of production.

> Also, give the character the opportunity to choose whether they are 
> attempting to increase skill (resources automatically consumed) or
> attempting to make a saleable item (item created if successful).

This would solve the problem (while possibly causing others). Anyone know
how the spell research market in EQ is working? It's special in that one
can practice the "research" skill without producing anything, and at lower
cost than if one attempts to produce.

------------------------------
Timothy O'Neill Dang / Cretog8
520-321-4015
One monkey don't stop no show.




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