2001-10-30: Vex on the Economy, Part II

Vex on the Economy, Part II

Oct 30 2001 4:00PM

This was originally posted to Development at uo.com.

UO's Economy, Part II

Howdy! This is the second installment in a series of comments from me on the state of, and our future plans for, the virtual in-game economy of Ultima Online.

Recently, we made some changes to UO that were intended to increase the availability and stabilize the prices of reagents. Those changes worked as intended, but there was an unfortunate side effect. The availability of many other commonly used supplies increased enormously as well. Leather, boards, ingots, arrows, and crossbow bolts suddenly became widely available at cheap prices. In-game resource gatherers were heavily impacted by this.

Now, we just need to do some fine-tuning.

One thing that the original UO designers and the current design team share is a desire to see a well-functioning economy in the game. As I've stated before, I believe we are halfway there. However, certain economical factors (namely, NPC prices) cause choke points that adversely affect pricing and availability of commodities in Britannia's marketplace. Here are the biggest issues:

1> Inflation

Currently, the way UO is set up, the amount of gold in circulation steadily increases over time. Basically, the amount of gold that can be created through monster loot in any given day is a considerable amount. Gold cannot leave the system at a comparable rate. Over time, with gold in greater and greater supply, two things happen. First, for the big-ticket items like rares and houses that are traded strictly between players, prices will tend to rise. Second, since prices for many items are fixed by the system and can't rise to meet inflation, they inevitably lose some of their value.

How do you address inflation? Basically, we need to find ways to take gold out of the system. An issue we face is that we can't simply take the gold away. We have to return value for the gold lost. This means things like taxes may not be all that effective. Instead, we feel a combination of two approaches will help the situation. First, we need more big-ticket "gold sinks" that sufficiently motivate players to spend the money. And second, we need to find ways to attach reasonable and small recurring costs to new game features that don't hurt players but steadily siphon off gold a little bit at a time.

Ideally, it should be possible for gold to exit the system about as fast as it comes in. This can be accomplished by having gold drains that are proportional to the amount of gold in the system. If there is a limit to the amount of gold created per unit time, and a percentage of that gold is drained out of the system per unit time, then there is an equilibrium point where gold enters and exits the system at more or less the same rate. This point would vary depending on many factors, like how much people hunt and loot, and how much people utilize the gold-draining features of the game.

2> Hard-coded prices

This is related to #1 above. When prices are fixed and can't adjust to inflation, the value of different items becomes skewed. The prices that NPCs charge for their limited supply of things are vastly different from the prices that players charge each other for larger quantities of the same things. For example, the way it used to be, players would tend to pay more per ingot based on the size of the transaction. Players were exchanging gold for time -- it was worth paying an extra few gold per ingot to get a huge number of ingots all at once. The player-to-player ingot price reflected fair marked value based on real supply and demand and inflation. NPCs didn't figure into the picture because they didn't stock many ingots. Now, all that has changed. Huge quantities of ingots can be bought at a fixed price from NPCs, and the player-to-player ingot trade has been affected by this.

To address hard-coded prices, some fair means must be found to take NPCs out of the equation. This basically means a system that allows NPCs to adjust their prices based on the actual market, using a non-exploitable algorithm. We think we have found a workable solution, which will be discussed in a moment.

Given the need to combat inflation and the undesirability of hard-coded prices, there are other factors to consider as well. Number one is availability. The game's virtual economics shouldn't adversely affect anyone's playstyle. This is why, for example, we couldn't just remove NPC merchants from the game completely. If nobody is on selling what you need, then your time is being wasted. You'll either resort to playing differently than you want to (like, making a sword instead of just buying one to kill monsters), or you'll log out and go elsewhere.

So, here's the solution. For those commodities that can be gathered/created by players in bulk, NPCs will now adjust their prices based on actual activity and have unlimited quantities in stock. For now, these items are: boards, ingots, leather, arrows, and crossbow bolts. All other items (like reagents, etc.) will continue to be traded by NPCs exactly as they do now. But, for these five items, NPCs will trade them differently.

1> Players may buy or sell up to 500 of these items to/from an NPC at one time.

2> For every 1000 units sold to a player, the NPC raises its price by 1 gold per unit.

3> For every 1000 units bought from a player, the NPC drops its price by 1 gold per unit.

4> The NPC always pays players 1 gold per unit less than the price at which it sells the item.

5> NPC prices for these items are stored in the backup, meaning they won't reset in the morning.

6> There are other features in place to prevent problems cropping up from shopkeepers being killed or deleted.

This means that players who need these items will find them always available. It also means that the prices for these items will adjust to meet a fair market price. The idea is that as consumers buy these items, their prices steadily increase. As prices increase, players will be motivated to sell back stockpiles (or go create some more and sell them). Now, since NPCs pay one gold less than they charge, their activity begins to act as a gold drain that is only a small amount per transaction, but over time will remove huge amounts of gold from the system.

The new NPC behavior lessens the possibility of exploits. It may also make available a new in-game merchant profession, where players will buy from one NPC at a low price and sell back to another at a higher price. Players will be able to profit by this short-term, but since that activity will stabilize prices, the profit potential is limited. There may be big gains to be made early on, but down the line prices will have to be watched carefully and price differences used quickly. It's even expected that this change will somewhat increase inter-facet travel, as enterprising merchants expand their horizons in search of a better deal.

If successful, we would eventually like to expand this system to cover everything traded by NPCs in the game. However, in order to do something like that, it would require a lot of changes to be made. Foremost, players would have to be able to gather or create any commodity (like reagents, blank scrolls, etc.) in amounts large enough for supply to meet demand.

For those who have questions or concerns, visit the Discussions forum. I'll try to answer as many questions about this as I can.

Michael "Vex" Moore Designer, UO Live

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