Open economies

 
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Tyche



Joined: 13 May 2005
Posts: 176
Location: Ohio, USA

PostPosted: Thu Jun 09, 2005 2:35 am    Post subject: Open economies Reply with quote

Has anyone tried linking stock and commodities market tickers or historical databases to their mud to simulate a large open unpredictable economy as opposed to a close player driven economy? Perhaps by associating real white noise such as pork belly futures on the Chicago commodity market to the virtual price of gold in Atlantis. I expect one could also get the same effect through random noise generators. Or perhaps a merging of what's really going on in the player economy with a much larger set of economic noise so that some influence of the closed mud economy is reflected in the supply of goods and prices.

Just some idle thoughts.
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KaVir



Joined: 11 May 2005
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Location: Munich

PostPosted: Fri Jun 10, 2005 10:13 am    Post subject: Reply with quote

Quote:
Has anyone tried linking stock and commodities market tickers or historical databases to their mud to simulate a large open unpredictable economy as opposed to a close player driven economy?


I've heard it discussed, but don't know of anyone who's done it.

Rather than simulating an unpredicable economy though, I'd be much more interested in simulating a predictable one. Not fully predictable of course, but just as people can make money on the real stock market, so it would be nice to extend something similar to the mud.
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Greggen



Joined: 16 May 2005
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PostPosted: Fri Jun 10, 2005 12:07 pm    Post subject: Reply with quote

Quote:
Rather than simulating an unpredicable economy though, I'd be much more interested in simulating a predictable one. Not fully predictable of course, but just as people can make money on the real stock market, so it would be nice to extend something similar to the mud.


I'd love to be able to do this - it would fit in very nicely with a space trading game. Unfortunately, I have little to no understanding of how stocks and shares work. Anyone know of a good overview for your typical layman? I've tried a cursory goggle, but I'm still a little hazy on the details.
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Cornelius



Joined: 13 May 2005
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PostPosted: Fri Jun 10, 2005 4:24 pm    Post subject: Reply with quote

Quote:
Unfortunately, I have little to no understanding of how stocks and shares work. Anyone know of a good overview for your typical layman?


Its not all that complicated really, but it does depend on many factors that logically have no business being related to economics but do anyway- therefore to create a good working stock based economics system you would have to create or cleverly simulate these factors...

Large companies take a lot of money to create and to expand, and the owners of these companies don't have all that money or perhaps it is tied up in other assets so they seek investors. What do investors get out of the deal? Profit share, or stock- a promise to pay a portion of the companies profits based on how much you have invested in it. When the company's profits go up the price per share goes up and vice versa... but that is just the beginning- this is the REAL cost of the share. The ACTUAL cost of the share is determined by the market as a function of supply and demand- this is the part that has to do with expectation and is where those other factors come in.

If I expect that a certain company will not do well in the future (profits will drop- and so will the price per share) than I may want to get rid of my stock while it is still high. I may even sell it for less than it is worth because I really want to get rid of it since I beleive the company will tank a lot worse in the future and I will potentially lose more money. Once I do this the price I sell it for now becomes the selling price of the stock and other people that get wind of this will start selling it for that price so they dont become the last ones at the party stuck with the bill... and once no-one will buy at that price they will sell lower. The price will continue to fall in this manner until someone else decides that the price of stock is worth the possibilty that the company will become more profitable in the future. At which point they begin buying all the stock that is now at a very low price. If this trend catches on then people will start raising the selling price becuase there are now buyers willing to pay it.

And if this same company is suddenly expected to start doing very well. People will begin demanding higher and higher prices for those who want to get in on the rising action. Now I will pay even more than the stock is really worth because I expect it to grow even more. And similarly once I do this the price I have paid for it becomes the new selling price of the stock and the cyclic process continues ad nauseum.

So the real price of the stock has very little to do with how much it sells for on the market, it all has to do with expectation. And what factors can affect expectation? Well, for natural stocks like pork bellies or orange juice- the weather or disease are common factors as these can affect the production of such things. For tech companies usually their stocks will be interelated with other companies- people will look at how many stores they have opened/closed versus how many stores their competitors have opened/closed- their annual fiscal report compared to past reports and competitor reports. Also, if they have recently patented a technology that no-one else can use for the extent of the patent, etc... Some factors may be further reaching than even these and sometimes seem downright whimsical- (i.e. chaos theory- see the 'jurassic park' explination).

ok... maybe it is a little complicated- anyway the point is that to create a stock market economy in a game you will need to promote or simulate entrepenuership, initial investment and all these other factors to create expectation... a lofty goal.

P.S.> there are some other interesting things that the stock market sometimes does that affects itself but I don't think my Macroeconomics 101 lesson can properly explain them so I will leave it to others.[/i]
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Kithrater



Joined: 29 May 2005
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PostPosted: Sat Jun 11, 2005 12:00 am    Post subject: Reply with quote

A rather easy way to simulate a neoclassical free-market economy is to remove all NPC merchants (ie, state intervention). Thus, you have firms (players) generating goods and services (equipment from mobiles, corpse retrieveal, etc.) and providing them to consumers (other players), the prices determined by market forces.

Virtual "investment opportunities" could arise - a group of warriors may need equipment, potions, mercenaries in order to raid a particularly nasty cavern which is fabled to hold all sorts of treasure. Interested parties contribute funds or energy for this enteprise, and in return are given a share of the profit accumulated. If everyone dies in the attempt, then that's money lost - the risk of investment.

This scenario depends on useful resoruces and good equipment being somewhat difficult to accquire, as well as there being lots and lots of players, but it could see many interesting player-born development; you could have players acting as "banks", encouraging people to give them money at a low rate of interest, and then investing that money in an adventuring group for a higher predicted rate of return. There could be a public area where adventure groups are posting up their forrays, and the money predicted to undergo them and the expected return (creating a stock market of sorts).

If the MUD has sufficiently interesting object-creation code for players, you could also see alchemists and mages looking to develop new potions and techniques, requiring a lot of money in reagents and materials to do so. The result would be a new, improved potion, and thus command a higher price. If the formula is kept secret, then the researching mage could make an impressive profit, and give shares of that to his investors.

And so on, and so on. I suppose my general point is that efforts to directly code in a free market based economy (while saying nothing about any other type of economy) seem to be working against the very principles of a free market economy - minimal state (code) intervention. Better to use the code to create scenarios from where free market economics can derive, creating some sort of framework.

Of course, this is all rationalist reasoning. I've no clue as to how these ideas would actually pan out in a MUD proper.

--- EDIT to add ---

There's an interesting article of the economics of a WW2 German POW camp, of how an economic system sprung up amongst prisoners using cigarrettes as currency

http://academic.bellevue.edu/~jpatton/micro/pow.html - definitely worth a look for an example of how a very lively economy can spring up in very restrictive conditions.
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Ashon



Joined: 11 May 2005
Posts: 86
Location: Seattle

PostPosted: Mon Jun 13, 2005 1:57 pm    Post subject: Reply with quote

Cornelius wrote:
Quote:
Unfortunately, I have little to no understanding of how stocks and shares work. Anyone know of a good overview for your typical layman?


ok... maybe it is a little complicated- anyway the point is that to create a stock market economy in a game you will need to promote or simulate entrepenuership, initial investment and all these other factors to create expectation... a lofty goal.



I think that If one were to implement something more in a game, in terms of economics, I would suggest sticking to a commodity mini-game. This would be easier to implement. But would require pre-planning. And it would require a little bit of tracking code.

People use goods. They Drink Beer in the Tavern, the Eat Bread from the Bakery, and they drink healing potions from the Alchemist. By having a system that tracks how much beer is drank, how much bread is eaten, and how many healing potions are quaffed. You start seeing more of Player Driven Commodity Market. Now all you have to do is figure out a way to track how much Wheat is produced, how much grain, how many raw products. Derive an algorithm to determine the individual costs of a 'unit' of a certain commodity. As the use in the end products increases/decreases the worth of the commodity and the price of the end product fluctuate.

Commodities, are easier to handle I think, then 'Stocks'. There's so much going on with stocks, that does not apply to MUD's well enough, it just becomes a nice idea.
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Sandi



Joined: 13 May 2005
Posts: 94
Location: Boston

PostPosted: Tue Jun 21, 2005 2:11 pm    Post subject: Reply with quote

I'm no economist, but I think the stock market is what it is because selling shares to the public provides, if you will, a "statistically significant sample size". I'm not sure basing the market on the actual transactions of a small mud will work, just as auction channels work better on Aardwolf, where there's a decent chance of several people bidding on your item, than they do on my MUD, where you're likely the only one that wants the thing. Smile

That said, I'm having pretty good results with this:
Code:

   mod = (number_range(1, number_range(1,26)) - number_range(1, number_range(1,26)));
   share_value2 += mod * ((share_value2 < 100) ? (share_value2 + mod) : (200 - share_value2 - mod)) / 100;


It keeps the share value between about 30 and 170 at extremes and it moves in trends with unpredictable blips and reversals, just like the real market.

A couple of points, though - there needs to be a way for the players to lose. Otherwise, they just hang on to their shares until things get better. Smile

Also, a range from 30 to 170 lets them quintuple their money. You'll need limits: perhaps shares per level, but adding a base number works better.

Code:
   if ( number_range(0, 37) < 13 )
   {
      share_value0 = share_value0 - 400;   
      mod = (number_range(1, number_range(1,20)) - number_range(1, number_range(1,20)));
      mod = mod * ((share_value0 < 100) ? (share_value0 + mod) : (200 - share_value0 - mod)) / 100;
      share_value0 += mod / 4;

      if ( share_value0 < 0 )
      {
         share_value0 = 0;
      }
      share_value0 = share_value0 + 400;
   }


This code wavers from about 480 to 520, a range that reflects a "Blue Chip" stock. A good long term investment, especially if you worry about the banks getting robbed on your mud. With only about a 4% profit over the long run, no worries about players getting too rich.

Note the above also occurs randomly, which means it updates more slowly, which keeps people from camping in the market waiting for changes, ready to strike. Smile


Sandi
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Tyche



Joined: 13 May 2005
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Location: Ohio, USA

PostPosted: Tue Jun 21, 2005 3:42 pm    Post subject: Reply with quote

Sandi wrote:
I'm no economist, but I think the stock market is what it is because selling shares to the public provides, if you will, a "statistically significant sample size". I'm not sure basing the market on the actual transactions of a small mud will work, just as auction channels work better on Aardwolf, where there's a decent chance of several people bidding on your item, than they do on my MUD, where you're likely the only one that wants the thing. Smile


Yes that's my theory. An economy entirely driven by players is a small closed economy subject to wild fluctuations and manipulation. And not all players will choose to participate in the subgame because it doesn't interest them.

There's a good example of this with the Yahoo Buzz game. The external factor in this economy is search engine buzz score.

Now the original design was subject to wild fluctuations and manipulation. However they altered that in April, and since then it seems more stabilized. However the significant part of that change involved an artificial rule of not letting players own two commodities in the same market. Something that apparently has more impact in a smaller market than it would in a huge market.
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Kithrater



Joined: 29 May 2005
Posts: 6

PostPosted: Wed Jun 22, 2005 6:31 am    Post subject: Reply with quote

Quote:
There's a good example of this with the Yahoo Buzz game. The external factor in this economy is search engine buzz score.


What's this? A stock market game where you can't act in a malicious, manipulative fashion for your own purposes? Acting in a malicious, maniuplative fashion for your own purposes is the basis of capitalism! They call this realism? A learning experience? Piffles, I say!

*ahem*

I think we're coming across a difference in what we want out of stock-markets, economies, etc. in a MUD. If you want a side-game where players can throw away a few thousand gold pieces in search of a profit, then some sort of code-regulated model seems to be the best bet.

If you want a system that determines the price of absolutely everything available in a MUD, transcending from a subgame to an economy, you need a few hundred constant players and some fancy objection-creation code available to the players.
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kelson76



Joined: 27 Jun 2005
Posts: 30

PostPosted: Mon Jun 27, 2005 2:18 am    Post subject: Economies.... Reply with quote

A thought that I've had is based on player own stores....

Basically, you tie in politics. Which impact tariff rates. You then need to go out and establish trading contracts with NPC or players in different countries, then contract out for shipping.

You can buy a product for resale at 60% of cost for example, then with a normal shipping contract, you pay a tariff for importing the goods. This impacts the GDP of the country originating the product. You can also attempt to smuggle the goods in, reducing overhead and increasing the profit margin.

These factors can influence currency exchange rates, making it cheaper to purchase in a certain country. However, it is very important to have exchange rates that move very slowly, to prevent player from making instant millions playing the currency market.

I think a fundamental concern if you are going to the trouble to create an economy is to make money worth something. It has to have real value, where the average player does not have millions in "gold". This is two-fold, you need to make money scarce, and at the same time, have something valuable for sale, so money actually has a real use.

It's very difficult to create balance, and still promote questing for items, which is one of the best ways to emphasize class differeniation.

Just some thoughts.....

- Kelson
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