[MUD-Dev] D&D vs. MMORPG "complexity"

[Jeff Cole]

From: Dave Rickey
> From: Jeff Cole
>> From: Dave Rickey

>> *value* is created by scarcity.

> Not by scarcity alone.  Scarcity is just supply.  You also need
> demand to create "value"--at least any utile concept of "value".
> Economy occurs when the difference in value of a good between two
> actors exceeds the sum of the costs of transacting.

> Define value, then.  "The value of a thing is what it will bring"
> is the definition I'm most comfortable with, this would seem to
> pre-suppose demand.

That definition is fine.  Why doesn't that also pre-suppose supply?
Beyond begging the question, why is it useful to pre-suppose demand
but not value?

Consider an item with a given value based upon its supply and
demand.  If you increase the scarcity (decrease the supply) while
maintaining demand, you increase the value because as the price
rises above some consumer's reservation prices.  However, you can
achieve the same increase by increasing demand while maintaining
supply.

You're supply-biased analysis lends strong support for my assertion
that developers ignore demand as an effective economic management
tool.

The response to that, of course, is "How can we directly manage
demand for items?"  If your economy is solely (or, even, mostly)
based on big-ticket items like armor and weapons, then this is a
very legitimate concern.  The only way to increase demand is to
implement item decay and increase the rate of decay; but players are
likely to resent such a move.  I do not argue that for big-ticket
goods, demand-management might not be an option.

Hmmmm ... I would hope, then, that might inspire developers to more
closely consider the goods on which they base their economies ...

> But we've pretty solidly established that scarcity *alone* can
> create demand (in the case of rarities).

I am very interested in how scarcity actually creates demand.  I am
not sure I understand the mechanism.  I infer that you mean a
situation in which an item is desired simply because it is scarce.
I would argue that the while the scarcity might create demand for
the given item, it does not create the demand for something scarce.
For example, my ranger in DAoC looted Red War Paint ages ago.  It is
equippable and the graphic is a loot bag (we called it the "Loot Bag
o' Doom")--the only other one of which I am aware on Hib/Lance is
owned by a guildmate.  I would equip it while I was crafting and got
offered quite a bit of money for it.  I suppose you could correctly
argue that it's scarcity created demand in the object itself, but I
am not sure that such a concept is useful.  It seems that the demand
that is creating the value is the desire to distinguish oneself from
the other players.  That is, the demand which a developer would seek
to leverage is the general desire of players to distinguish
themselves from other players--to have something that others do not.
Is it useful to distinguish between player Demand to be different
from demand in something different?  I suppose scarcity can create
the latter (little "d" demand), but certainly does not create the
former (big "D").  Am interested in your take.

> However, demand alone cannot create value, we all demand a
> constant supply of air, yet it has no value.

Or: "However, scarcity alone cannot create value, there is only one
mug from which I drink my coffee (mostly, except when the gf wants
to make a point first thing in the morning), yet it has no value."

Something for which there is no demand can be the scarcest of scarce
and no "value" will attach.  Likewise, something that is fungible
and freely available can be utterly essential to a consumer and no
"value" will attach.

> It is hardly difficult to conceive of a market situation in which
> making a given good scarcer does not increase the market value of
> the good because there is a substitute good in the market.  That's
> just a market in the elastic region of the demand curve for that
> good.  It happens all the time in MMO*/MUDs as the supply of a
> given item increases and depresses the value of less powerful
> items (independently of the supply of the less powerful items).
> The decrease in value of the less powerful items much more often
> results more from the threat of item-substitution than from an
> increase in supply of the less powerful item--if only because the
> costs associated with selling the less powerful item will exceed
> that marginal value of the less powerful item.

> If people really reacted rationally to marginal value, yes.  They
> don't, small increments of utility at the top end are assigned
> value far beyond those of an "efficient" market.

Please explain how consumer rationality implicates market
efficiency.  I do not disagree that consumer rationality can impact
market efficiency, but I am not sure the nexus is quite as extensive
as you suggest.  However, if you *force* your players to make market
decisions irrationally, it seems a bit disingenuous then to argue
that players don't act rationally.  Without more, I cannot
meaningfully comment.

In EQ, you saw the increase in supply of substitute goods decrease
the value of other goods all the time.  I used to spend entire
afternoons in the tunnel just buying low/selling high just to see
what item I could acquire.  Start with a modest bankroll (few
hundred plat, a forest loop, batfang earring ...) and just buy and
barter.  That is something that has never occurred in Camelot.

> I am not aware of a MMO*/MUD that has manages its economy through
> dynamic management of demand for its resources.

> Camelot does, but through a deliberately indirect method.  Rather
> than floating the cost of making things through manipulation of
> ingredient amounts or some such means, I took advantage of the
> irrational response to small increments of utility value at the
> high end.

> <snip>

> It is my belief that any effort to *directly* moderate supply and
> demand is the equivalent of central economic planning: The natural
> "irrational" response of the economic participants will completely
> invalidate your efforts.  But if the moderating effects are
> "organic" to the system, and a byproduct of the participants own
> actions, the system will stabilize with a minimum of fuss.

Suffice to say that I am unimpressed with the concept of "economy"
as implemented in Camelot.  If Camelot's economy is especially
susceptible to irrationality it is because, by design, it forces
players to irrationally value items and not because all economies
per se are so susceptible.

Once developers shift the economic bases from "necessary" goods to
goods/services that support and complement such "necessary" goods,
then developers can more directly manipulate both demand and supply.
Resource sources and sinks can be managed more effectively *and*
from the players' perspective, organically.  Not to mention an
increase in the possible "professions" that players might undertake.

Yrs. Afftcy,
Jeff Cole


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