Ultima Online Economic Theory

In many ways, the in-game economy is similar to a real world economy – goods and services are traded to mutual advantage and are mediated in currency or barter. In other ways, the economy is very alien; for example, some commodity prices are determined by a robotic simulation of business profit motivation.

The economy is highly planned by the UO game designers; this includes everything from the possible items which can be manufactured to the rules which govern supply and demand. However, the economy did not behave as expected in many ways.

Lessons Learned

*Hoarding is rampant. (Failure of closed economy.)

*The economy must maintain liquidity; tying the input flow rate directly to the output flow rate was a bad idea because hoarding froze the input making the game uninteresting. (Failure of closed economy).

*Over emphasis on the macro-economy and under emphasis on the micro-economy made setting prices on NPC goods difficult and inefficient. (Failure of NPC vendor economy).

*Institutions and opportunities for player-to-player trade need to be thought out and provided but not overly developed. (Failure of the NPC vendor economy).

*Some design elements had unintended economic consequences. Economic motivations and incentives need to be considered on all design elements.

*Incentives to overproduce, result in oversupply and devalued prices

*Players expect to make a profit for their labor if that labor is encouraged through game mechanics. This profit expectation can cause unrest

Another way to look at this is to state what happens when a game economy fails. In a poorly functioning game economy:

*Advanced players give newbies high-powered items because the advanced players have more than they will ever need.

*Advanced players throw away items which a newbie would love to have because it is not worth the advanced player’s trouble to find a newbie to give it to.

*A newbie has nothing to offer a medium level player who in turn has nothing to offer an advanced player.

*Players continually hoard items increasing the size of the database.

*Players litter the world with old items which cannot be sold to free up space for new items.

*Players lose interest in the game because there is nothing left to acquire.

*Players resort to barter as the currency hyper-inflates or disappears.

*Prices fluctuate wildly due to inefficient microeconomic institutions.

*Players can find the items they want for sale and can’t find buyers for the goods they have been encouraged to produce.


As originally designed, Koster admits, the closed economic system of UO wouldn’t have worked perfectly either; he calls it a “mistake,” with mechanics that ended up gutted because they just weren’t fun.

The UO Evolution staff has recognized the past mistakes that were made by the original designers of Ultima Online and have tried to cure the known issues, create more gold sinks and develop a healthier player economy.

Economic Failures of Ultima Online

The original design that Ultima Online used was the macro-economy. All of the gold drain paths lead back up to the top, forming a closed loop. The reason for this design was to prevent resource inflation; the theory being that a fixed quantity of resources would simply circulate from abstract to concrete and back again thus preventing the inflation that had plagued many similar on-line worlds. While this sounded good in theory, it was a failure in practice.

What the designers had not counted on was the deflationary effects of hoarding.

Quote from Koster:
"Players are incurable hoarders, which means a large amount of resources in the game will just sit around in someone’s bank (or a shopkeep’s bloated inventory) rather than keep moving through the world"

...the designers attempted to solve the deflation problem by pumping more resources into the world – they simply increased the total quantity of resources in the bank. But, no matter how much they added, the resources always flowed into inventory and just sat there. The problem, they concluded, was the lack of drains – not enough stuff was flowing out.

New drains were proposed: taxes, maintenance fees on housing, etc. Unfortunately, many of these drains feel too much like real world "work" and are therefore politically unacceptable changes to hoarding rules, such as limits on the number of objects which can be practically kept inside of a house