Games & Virtual Worlds Series

Economies

Understanding Games: How Video Games & Board Games Work

Michael Filimowicz, PhD

Published in

Understanding Games

10 min readJan 3, 2023

Game economies are systems that model the exchange and flow of resources, goods, or services within a game. The main components of a game economy are:

Currency: This is the medium of exchange used within the game to buy and sell goods or services. Examples include gold, coins, or other in-game currency.

Resources: These are the raw materials, goods, or services that are produced, consumed, or traded within the game. Examples include raw materials, such as wood or ore, or finished goods, such as weapons or armor.

Producers: These are the entities within the game that produce or create resources or goods. Examples include characters, buildings, or other game elements that are responsible for producing resources or goods.

Consumers: These are the entities within the game that consume or use resources or goods. Examples include characters, buildings, or other game elements that require resources or goods to function or perform certain actions.

Market: This is the system or mechanism within the game that allows players or game elements to buy and sell resources or goods. The market can be influenced by various factors, such as supply and demand, market competition, and player behavior.

Supply and demand dynamics are economic principles that describe the relationship between the quantity of a good or service that is available, and the desire or need for that good or service. In a game, supply and demand dynamics can be implemented by creating a system in which the production and consumption of resources or goods is influenced by player behavior and the availability of those resources or goods.

For example, a game might implement supply and demand dynamics by allowing players to produce and sell goods or resources to other players, and by creating a system for tracking the availability and demand for those goods or resources. If the supply of a particular good is low and the demand is high, the price of that good might increase, encouraging players to produce more of it. If the supply is high and the demand is low, the price might decrease, encouraging players to consume more of it.

Games can also implement supply and demand dynamics by creating systems for resource scarcity or abundance. For example, a game might limit the availability of certain resources, creating a situation where the demand for those resources is high. Conversely, a game might allow players to easily access abundant resources, creating a situation where the demand for those resources is low.

Assets & Resources

Assets and resources are terms that are often used in the context of game design to refer to different types of game elements.

Assets are generally defined as any game element that has value or can be used to create value. This can include things like characters, buildings, items, or other in-game objects that can be used by players or game elements.

Resources, on the other hand, are generally defined as raw materials, goods, or services that are produced, consumed, or traded within a game. Resources can be used by players or game elements to perform actions or create other assets or resources.

The main difference between assets and resources is that assets are generally defined as game elements that have value or can be used to create value, while resources are raw materials, goods, or services that are produced, consumed, or traded within a game.

Some examples of assets in games might include:

Characters: Players or game elements that can be controlled by players

Buildings: Structures that can be constructed or acquired by players

Equipment: Items or tools that can be used by characters or game elements

In-game currency: A medium of exchange that can be used to buy and sell assets or resources

Some examples of resources in games might include:

Raw materials: Natural resources that can be harvested or collected, such as wood, ore, or stone

Finished goods: Products that are produced using raw materials or other resources, such as weapons, armor, or tools

Services: Actions or tasks that can be performed by players or game elements, such as crafting items or repairing equipment

Information: Data or knowledge that can be used by players or game elements to make decisions or perform actions

While these two terms are often used interchangeably in everyday speech, in game design one should be more precise and define assets as game elements that have value or can be used to create value, and resources as raw materials, goods, or services that are produced, consumed, or traded within a game.

Kramerleiste

The German word for the perimeter scoring track found in many board games is “Kramerleiste,” and it was popularized by Wolfgang Kramer’s games. The track serves as a scorekeeper by keeping a tally of the points scored by each player. Among the benefits provided by the kramerleiste are:

Everyone can see when a player’s score is changed, so there’s less room for mistakes or cheating.

Current standings are always displayed.

Since any player can easily add or subtract points, there is no need for a designated “scorekeeper.”

Instead of manually adding or subtracting points, simply moving a piece around accomplishes the same goal in a fraction of the time.

The kramerleiste made victory points a standard mechanic in Eurogames. The fact that keeping score of victory points is now relatively easy may account for their recent popularity.

Open & Closed Economies

An open economy is one in which players can exchange resources or goods with one another, or with entities outside of the game, or when new assets can be added to the game state (such as when a pawn gets promoted to a Queen in chess). This can involve trading with other players, buying and selling goods or resources in an in-game market, or exchanging goods or resources with entities outside of the game, such as through real-money transactions, and other ways in which assets can increase in a game.

A closed economy, on the other hand, is one in which players can only acquire or exchange resources or goods within the game itself, and those assets are in limited supply (no new assets can be added). This can involve producing or consuming resources or goods within the game, or trading with other players or game elements, but there is no ability to exchange goods or resources with entities outside of the game.

An open economy can allow players to bring in external resources or goods, which can create imbalances or affect the in-game market. A closed economy can create a more self-contained and balanced system, but may also limit players’ ability to acquire certain resources or goods.

Faucets & Drains

Faucets and drains are terms used to describe mechanisms that affect the flow of resources or currency within a game economy.

A faucet is a game element or mechanic that adds resources or currency to the game economy. This can involve generating new resources or currency, or providing players with a way to acquire resources or currency through gameplay or other in-game actions.

A drain, on the other hand, is a game element or mechanic that removes resources or currency from the game economy. This can involve consuming or using up resources or currency, or providing players with a way to lose or spend resources or currency through gameplay or other in-game actions.

Faucets and drains are important components of game economies because they help to balance the flow of resources or currency within the game. Too many faucets can lead to an excess of resources or currency, while too many drains can create a shortage. Game designers must carefully balance faucets and drains in order to create a stable and balanced game economy.

Auctions

There are several different kinds of auction formats that can be used in games:

English auction: This is the most common type of auction, in which players take turns bidding on an item or resource, with the price increasing each time a bid is made. The auction ends when no player is willing to make a higher bid, and the item is sold to the highest bidder.

Dutch auction: In this type of auction, the starting price for an item or resource is set higher than the expected selling price, and is gradually lowered until a player is willing to accept the current price. The first player to accept the current price wins the auction.

Japanese auction: In a Japanese auction, players make sealed bids for an item or resource, and the highest bidder wins the auction. However, if the highest bid is not high enough to meet the seller’s reserve price, the auction is repeated with the highest bidder from the previous round excluded.

Reverse auction: In a reverse auction, buyers submit bids for an item or resource, with the price decreasing as each bid is made. The auction ends when the lowest acceptable bid is reached, and the item is sold to the highest bidder.

All-pay auction: In an all-pay auction, all players must pay their bid, regardless of whether they win the auction or not. The player with the highest bid wins the auction.

Each type of auction has its own unique rules and dynamics, and game designers can choose the most appropriate format based on the goals and mechanics of their game.

Trading & Negotiation

Trading and negotiation mechanics in games refer to the systems and rules that allow players to exchange resources, goods, or services within a game. These mechanics can take many forms, such as direct trading between players, auctions, or other types of negotiation or bargaining.

Some examples of trading and negotiation mechanics in games might include:

Direct trading: Players can directly exchange resources, goods, or services with one another, either through in-game systems or through player-to-player communication.

Auctions: Players can bid on items or resources in an auction, with the highest bidder winning the auction and receiving the item or resource.

Bartering: Players can negotiate the exchange of resources, goods, or services with one another, using a variety of methods, such as offering specific items or resources in exchange for others, or using in-game currency as a medium of exchange.

Diplomacy: Players can negotiate or bargain with one another in order to achieve mutually beneficial outcomes, such as forming alliances, trading resources or goods, or forming partnerships.

Bibliography & Further Reading

A Game Design Vocabulary: Exploring the Foundational Principles Behind Good Game Design by Anna Anthropy and Naomi Clark
A Theory of Fun for Game Design by Raph Koster
Advanced Game Design: A Systems Approach by Michael Sellers
An Introduction to Game Studies by Frans Mayra
Basics of Game Design by Michael Moore
Blood, Sweat, and Pixels: The Triumphant, Turbulent Stories Behind How Video Games Are Made Blood, Sweat, and Pixels: The Triumphant, Turbulent Stories Behind How Video Games Are Made by Jason Schreier
Board Game Design Advice: From the Best in the World vol 1 by Gabe Barrett
Building Blocks of Tabletop Game Design: an Encyclopedia Of Mechanisms by Geoffrey Engelstein and Isaac Shalev
Character Development and Storytelling for Games by Lee Sheldon
Chris Crawford on Game Design by Chris Crawford
Clockwork Game Design by Keith Burgun
Elements of Game Design by Robert Zubek
Fundamentals of Game Design by Ernest Adams
Fundamentals of Puzzle and Casual Game Design by Ernest Adams
Game Design Foundations by Brenda Romero
Game Design Workshop by Tracy Fullerton
Game Mechanics: Advanced Game Design by Ernest Adams and Joris Dormans
Game Writing: Narrative Skills for Videogames edited by Chris Bateman
Games, Design and Play: A detailed approach to iterative game design by Colleen Macklin and John Sharp
Introduction to Game Systems Design by Dax Gazaway
Kobold Guide to Board Game Design by Mike Selinker, David Howell, et al
Kobold’s Guide to Worldbuilding edited by Janna Silverstein
Level Up! The Guide to Great Video Game Design, 2nd Edition by Scott Rogers
Narrating Space / Spatializing Narrative: Where Narrative Theory and Geography Meet by Marie-Laure Ryan, Kenneth Foote, et al.
Narrative Theory: A Critical Introduction by Kent Puckett
Narrative Theory: Core Concepts and Critical Debates by David Herman, James Phelan, et al.
Narratology: Introduction to the Theory of Narrative, Fourth Edition by Mieke Bal
Practical Game Design by Adam Kramarzewski and Ennio De Nucci
Procedural Storytelling in Game Design by Tanya X. Short and Tarn Adams
Professional Techniques for Video Game Writing by Wendy Despain
Rules of Play by Salen and Zimmerman
Storyworlds Across Media: Toward a Media-Conscious Narratology (Frontiers of Narrative) by Marie-Laure Ryan, Jan-Noël Thon, et al
Tabletop Game Design for Video Game Designers by Ethan Ham
The Art of Game Design, 3rd Edition by Jesse Schell
The Board Game Designer’s Guide: The Easy 4 Step Process to Create Amazing Games That People Can’t Stop Playing by Joe Slack
The Cambridge Introduction to Narrative by H. Porter Abbott
The Grasshopper, by Bernard Suits
The Routledge Companion to Video Game Studies by Bernard Perron and Mark J.P. Wolf
The Routledge Encyclopedia of Narrative Theory by David Herman
The Ultimate Guide to Video Game Writing and Design by Flint Dille & John Zuur Platten
Unboxed: Board Game Experience and Design by Gordon Calleja
Video Game Storytelling: What Every Developer Needs to Know about Narrative Techniques by Evan Skolnick
Writing for Video Game Genres: From FPS to RPG edited by Wendy Despain
Writing for Video Games by Steve Ince
100 Principles of Game Design by DESPAIN