On Server Size and the Functionality of Virtual Economies

leftylefty REGISTERED, Developers Posts: 4 Developer
edited December 2014 in Science!
This post is a reply to a question raised by @spacedot in the Science! forum and on a livestream event: I do remember your question from the Dtoid live stream, but I thought you had phrased it differently and I'm still not 100% clear from your above post at exactly what you're asking, but let me take a crack anyhow. I'll try to be as non-technical as possible.

If the question is along the lines of, "will the virtual economy work on small servers (versus large ones)?," then the answer is (generally) YES (but sensitive to the definitions of an economy and a market).

A very different question is "will the virtual economy function the same on a small server as opposed to how it would function on a large server?" Generally, the answer here is no - with another caveat:

When markets are small (few buyers, few sellers, or both) two important things can happen:
1) Information becomes slower to transmit between individuals - fewer people means a smaller network and slower word of mouth about prices, market conditions, etc. When values change, a lag in information means that prices will not change immediately to reflect actual value, creating an opportunity for arbitrage profit (buy low sell high ).
2) Players begin to act strategically. By recognizing the inter-relatedness of their actions / decisions / consequences, players' choices become highly interdependent in a systematic and somewhat predictable fashion (see references for Game Theory if this interests you). A fewer number of agents makes it less difficult for these agents to monitor one another's actions so that strategic behavior is still profitable to engage in. If there are too many agents to keep track of (too many "grains of sand"), acting strategically may have high unexpected costs related to the need to monitor a very large number of individual actions. When the market is large, it may be easier to make decisions based off of observing some publicly available signal (like the average market price) rather than trying to track and predict the actions of every individual in a strategic fashion.

Simply put, the smaller the market, the more bargaining power individuals have in determining / manipulating prices strategically. In larger markets, you're essentially a small fish in a big sea (or a "grain of sand in 'the desert,'" if you will), and will have little ability to affect the price through your purchase decisions.

For example, if you tried to manipulate / inflate the price of sand by buying up a TON of sand from the above mentioned proverbial "desert" in an attempt to create an artificial shortage (making sand relatively more scarce, and hence, more valuable), it wouldn't work because the ton of sand that you've hoarded is only a very small fraction of all of the total sand that is available to everyone - the total market output.

If you owned the ONLY ton of sand anywhere, then the situation changes dramatically. Think about why you don't negotiate for the price of your groceries at the checkout when you're at the supermarket (it's actually pretty arrogant that sellers even post a price TELLING you what to pay, but that's another issue entirely). Surely, some other buyer in the "desert" that is the supermarket is willing to pay what you may not be if you tried to drive a bargain in the checkout line...

So, will the small server economy and market interactions differ from those of a larger server? Absolutely - but the extent to which they will differ does depends on the level of freedom afforded to players across (between) servers in the small server case (ie: can you trade items found in one server / play session with people from another server / play session)? If you think of many small servers linked together through some centralized market activity (but still with people making decentralized decisions), then the server size becomes less relevant in limiting the size of "the desert" - as the number of connected servers grows individual bargaining power decreases provided people are connected across these servers (and not just within).

If servers are segmented from one another, so that an individual A playing on server A never meets an individual B playing on server B, then your relevant network of players available to interact with is much smaller, giving players more potential to exert negotiating / bargaining power and manipulate market outcomes within a small server. There is of course, another intermediate case where A and B may be segmented from each other during a play session between servers but could potentially run into one another in a later play session on a different server or in some sort of centralized / curated "auction house."

For these reasons, one should not think of server size as the limiting parameter in the ability to have a fully functional virtual economy in-game. The relationship between servers and the types of freedoms afforded to players plays a crucial role in establishing the conditions under which markets will form and operate.

Comments

  • spacedotspacedot REGISTERED Posts: 416 Seed
    Thank you for writing out a such a long post. You covered most of what i wanted to know but i still have a few questions. What are the population numbers for large vs small? How does this compare to the two thousand that was quoted as being the max sever limit. What about trade the possibility of trade routes and/or player run business/corporations? Do you want things like the aforementioned in game?

    I have concerns about players coming into the game and not seeing a automated npc run auction house and being confused about how to even trade without one, which could lead to them not playing. If the economy will suddenly collapse due to players lack of understanding of a more realistic trading system. I know that might be fun to study but its going to be horrible to play in for a lot of people.

    The end of your post you talked about the possibility's opened up by inter sever travel and trading. Is this something that's going to happen? I have a idea for it but its really a question of if you guys want it in the game or if its even possible.
  • EndrioEndrio REGISTERED Posts: 1
    Slow to the punch getting my intro. up, but hopefully people remember me from wayyyyyy back during our Kickstarter campaign from that very first video (we've come so far!), so let's call this a re-acquaintance.
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