Now that we know what constitute a solid currency, how do we price things? Or rather what determines the value of things?

Production Value

In a player-led economy, one of the main factors that will define if an item is produced or not is the production value of it.

Basically the idea is that the player will always focus on the production of whatever brings the most money back for the least amount of efforts.

Quite intuitively, we can understand that the player will constantly try to focus their effort on what is the most rewarding.

If I have easy access to a ton of wood (let’s leave the dragons be today) but the wood is worth nothing on the marketplace, I will try to focus on something that brings me more. Now if I have a hard time getting my hands on obsidian stones but these stones are worth a lot of money, I might be tempted to start digging for them. It’s up to the player to decide if the juice is worth the squeeze. Some will be happy to spend 5 hours looking for 1 obsidian stone as long as they feel that the compensation for their time is satisfactory. On the other hand, others will not want to bother with the grind and prefer opting for quicker (though less financially interesting) alternative.

Value factors

There are several factors that influence what we would call the perceived value of an item but, overall, they revolve around three points: « What is the use of the thing? », « How well does the thing perform its use? » and « How useful is the use to me? ».

Let’s explore the multitude of reasons why humans buy stuff.

Social Reasons

One of the important reasons an item can have value is through the social impact it has. Owning and using this item will be important in your social interactions with others. These aspects can be fleeting since the dynamic and the reputation of the item can change quite quickly. I remember when having Kanye’s shoes was cool (was too poor to afford them though). However from one day to the next, the value of an item can also explode if it’s considered hype.

Status

The item can be a marker of a social status.

Having an expensive car is an undeniable status marker. Is it important that your car can reach 350km/h? No since you will be subject to the same frustrating speed limitations as the guy next to you who has a 1992 Renault Twingo that is worth 2o€ and a mars bar. But having a Bugatti shows that you have taste and that you have money.

The status is not limited to the external signs of wealth, it can also be a badge of honor. There is a reason why all French politicians display their badge of the Honor Legion even if they haven’t done a single honorable thing in their life.

Having a diploma and hanging it on the wall is an achievement status item.

In short, the item is used as a marker of a class of people who has achieved something (be it wealth, excellence or something arduous).

Identity Marker

An item can be used as a marker of belonging to a certain group of people.

Like having the shirt of a football team for example.

As such, people are not showing that they have achieved anything but simply that they are part of a community (and that they might insult you if you are part of a different community).

Relationship fuel

The item can be used as a present or as a trade item to reinforce the bond between them and someone else.

In that case, owning the item is not important, it is more about giving it to someone else.

To that, is added a whole slew of different factors that are more related to the next section such as showing that one cares by offering an item that has importance for the recipient of the gift.

Personal Reasons

Sometimes the value of an item is in the eye of the beholder. These reasons are not necessarily the easiest for us to play with when creating an item but we can always keep them in mind.

Emotional Attachment

The user has a special emotional attachment, it usually comes from the memories that are linked to this item. For example, an item will be valuable to a player because it was given to them by another player or an NPC they appreciate.

It’s difficult to play with this aspect in my opinion in a normal game given that all items are basically equivalent to any item of the same sort. However, the Web3.0 space has brought us an interesting toy to play with on that front: NFTs. For those of you who are not at the edge of the web3 technology, NFTs are files that are considered Non-Fungible (that’s the NF in NFT). Which means that if I issue 500 NFTs of the same item (let’s say a picture of a monkey), each one of these NFTs will be slightly different with different characteristics written in its description (encapsulated in the code of the file). Now it is possible for the owner of an NFT to voluntarily or involuntarily change the characteristics of their NFT. We can therefore imagine a system where anyone owning the NFT at some point « etches » their name into the description of the NFT. In that case, a famous player owning an NFT would increase its value.

Personal Attraction

This one is pretty simple, the user simply has an affect for the item. Doesn’t really have to be explainable. The person just likes the item. They find it cool or pretty or anything.

This can be played with by making the item itself as well as its icon visually appealing.

Practical Reasons

Now we are entering the more concrete aspect of things. What is the function of the item and how well does it perform. These aspects are somewhat reliable but they will not create a frenzy around the item (except if the need for them suddenly becomes greater). People will be after the item for very pragmatical reasons.

Problem Solving

The item is the perfect tool to solve an issue that the user is currently facing.

We all have had that moment when we need a tool for one job. It doesn’t matter if we never use the tool again, right now we damn need that tool. Well that’s kind of like that. The user faces a situation that requires a special item.

Making the situation recurring and the item a consumable makes it that the value of the item will remain consistent.

Need Fulfilment

The item is used to feed a need encountered by the user.

Contrarily to the problem solving aspect, the need fulfilment aspect as more of a maintenance aspect to it. If the user doesn’t obtain the item, they will suffer some negative effect of some sort.

As long as the need remains, the value of this item will stay high and consistent.

I think that’s a good enough place to stop for this time. There is a second part after this one but I need a break from typing for now.