MMO Economies

A nice post by one of the Devs Jayde

To an extent, inflation is somewhat impossible to actually avoid in an MMO environment. One can implement a lot of money sinks, and those sinks can be reasonably effective for a time, but there is a core issue that is generally unavoidable.

The primary issue in an MMO environment when it comes to economy is that there is no way to control the generation of money. In real-world economies, the amount of money printed is strictly controlled by agencies charged with maintaining relative control of the economy. They also monitor and control other key elements that dramatically impact or reduce the amount of fluctuation in the market.

This is not the case in an MMO. As resources, money, drops, etc. are all virtually controlled by the player's time investment, there is a virtually unlimited amount of money being "printed" in an MMO environment at any given time. The amount in the system is directly proportional to the amount people want to be in the system.

Due to this intrinsic fact, one simply has to accept that an MMO's rate of inflation will be higher than a real-world economy's rate of inflation. (Even then, real-world economies almost always suffer inflation over time, look at the American economy for instance. Inflation is just a normal process involved in growth.)

Gear destruction is an interesting topic, but I don't think inflation is something it would particularly stop. After all, by increasing the general "cost" of playing you are actually increasing the daily demand for money. This means players will be more inclined to farm or buy gold, increasing the amount of money in the system. This can potentially lead to more inflation, as the demand for new equipment goes high enough that suppliers can charge unfair prices. If supply vs. demand reaches a point where very high prices are the norm, you will have severe inflation rather quickly.

I've posted a bit about economies in the past (which should be able to be found on bymitra or something if one is curious) and it really is an interesting and complex topic. The real problem in MMOs is really the lack of control and oversight, and the fact that implementing such a system to do that efficiently would be extremely difficult--if not impossible.
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System Designer