Opportunity Costs

In the world of supply and demand, 'cost' is the magic word which regulates demand to coincide with supply. A simplified view of an MMORPG is one of several coexisting economies. In addition to the monetary/equipment economy, you have the 'inventory' economy, the 'race' economy, the 'class economy', and on a more general sense, the 'gameplay economy'. Each of these economies has it's own system of supply and demand that must be balanced.

It's complicated to discuss these balances, because the parties who fill the roles of suppliers and consumers switch back and forth between the two quite frequently. However, if thought of as each economy holding several micro-balances it can be explained. For example, in the race economy, there are the relationships outlined in the following table:

DEMANDSUPPLY
The player want interesting race choices. The game offers a variety.
The game fiction wants a certain racial balance. The players create characters of varying types.
The players want companionship, but also no overcrowding. Each race has several spawn locations distributed through-out the world.
Cities need a balance population Players choose where their new character starts.

It is the job of the game designer to make sure all of these relationships are balanced. They achieve this balance by manipulating the costs involved. The best way to attach costs to these relationships is by using 'opportunity costs.' These costs are relative to the rest of the world, and will always be appropriate. Other 'pricing' schemes can lose their value because of the nature of the MMORPG world.

An example of this can be seen in the 'tradeskills/construction economy.' In order to make tradeskills a viable part of the game, there has to be a profitable market for those skills. That means supply cannot exceed demand. This is the first relationship under this heading. The way to limit supply is to increase the costs associated with producing the items. Many methods exist to do this, from expensive/hard to find components, to restricted production locations, to pre-requisite equipment or skills. Some of these methods work, and some of them don't. The one's that work are based on 'opportunity costs.'

> Opportunity costs are the things you 'give up' in order to do something. It is a 'relative' form of applying cost, and therefor is always consistant. It's is already used effectively in many of the supply-demand relationships of an MMORPG. Inventory systems are a quick example. If you want to hold that staff, it's weight/size means you have to drop that shield. So, the 'cost' of carrying the staff is the 'opportunity' to carry the shield.

The same type of system needs to be used for limiting the supply of craft items. If you only use monetary cost as the limiting factor, as game goes on, more and more money is introduced into the system. Quickly you reach a point where monetary restrictions hold no cost what-so-ever to the players, so anything is easily attainable. Supply has over-reached demand. If you limit the supply of craft items by imposing some opportunity costs. Those will still remain. An illustration is: In order to raise cattle to produce quality leather, you can't own a horse. Now, no matter how much money you have, or how common horses have become, if you own one, you are dependant on someone else for your leather needs.

> Unlike the real-life economies, there is no such thing as 'scarcity' in a MMORPG world. Money is regularly 'created' as are all types of resources. The closest comodity to being 'scarce' is time, and that is arbitrarily dependant on the player, so it can't be used as an equitable limiting factor. This means that ANY resource, or supply that needs to be limited for the game-systems to work must be based on 'opportunity costs.'
- Marc Hawke