I encourage everyone to read "The In-game Economics of Ultima Online" by Zachary Booth Simpson.  It was written way back in 1999 during the early years of UO and had some great insights on the inner workings of a virtual economy.

This paper, along with some good advice, I was able to avoid many of the pitfalls that the original Ultima Online experienced when I created a shard.  I was determined to design a player economy that worked

After operating a shard for over 7 years, I learned a lot of information from trial and error as well as from this paper

Last week I was reading this paper again, and decided it was time to update this information for the 20th anniversary of Ultima Online. 

Let me start by saying everyone has an opinion about how economies should work.  Right or wrong, we have tried them all in an attempt to create a dynamic virtual player economy.  It seems simple enough to follow the basic economic rules, but with a college education, experience in business and with an Ultima Online Shard has taught me it is not the simple task players think.  I have read many opinions and papers related to this subject and have added some of their insights and excerpts along with my own thoughts about the best way to run a UO economy.

I have outlined some of the basic economic principles for review and have attempted to show how we apply them to the UO Evolution Shard.  Please read over this information carefully before arguing with the staff over our decisions.

Feel free to post your economic theories, gold sink ideas or any other pearls of wisdom you might have to improve the shard

http://www.mine-control.com/zack/uoecon/uoecon.html
The In-game Economics of Ultima Online

Zachary Booth Simpson, Origin Research Fellow
7 Apr 1999

Bartle, Richard. Hearts, Clubs, Diamonds, Spades: Players Who Suit MUDS. http://journal.tinymush.org/v1n1/bartle.html

Chamberlin, Edward H., 1948. An Experimental Imperfect Market. Journal of Political Economy 56(2):95-108

You should be impressed with the UO Evolution economy. Eight years ago we set the
value of 1ed=100k gold and it has been stable, with zero inflation since day one,
til now!  No other shard has successfully managed the economy for this length of
time without complete failure/closure

Even the original OSI production shards failed at their economy, and have reset
many times, only to repeat the mistakes and suffer from runaway inflation

Kane - commenting on the Player Economy.  "I treat this very seriously, this may be
a game for most but I spent 10 hours a day making sure that the next day is good. 
Most of our staff puts in hours every day that also have this same focus.  Let this
Economy go to hell and this shard will be done, let me assure you if you have ever
been on a shard where the Economy collapses you will understand why I am the way I
am and make the decisions I do"

Many of the new items we create are originally offered as a free bonus item to
encourage donations.  A month after, we do add the item to the game for ED and then
we introduce the item into a quest or some other creative way for players to obtain
in game. This is planned and an important part of the economy

We do have a new "Market" system we are adding to the shard soon.  It will be an amazing new addition and will help distribute every item in the game in a fair and random way to keep items rare, but still make players play and trade

You can read about this important new Custom Virtual Market System on the wiki http://uoevolution.com/wiki/index.php/Market_System

Virtual Market System

We have a new "Market" system we are adding to the shard Friday.  It will be an
amazing new addition to the shard and economy. This system will help distribute
every item in the game in a fair and random way to keep items rare.  It will also
encourage players to log in daily to communicate and trade.

Make sure you read the wiki for detailed info and commands
http://uoevolution.com/wiki/index.php/Market_System

You will need some ED to test the system, so make sure you have some before the
system goes live.  There will be hundreds of items during testing, so this will be
a good time to purchase rares that have never been sold before!

Benefits of the new Market System

*Distributes all items in a random, fair way to all players
*Gives you 24 hours to buy an item from the gump
*Randomizes the high/low price range
*Prevents over-saturation of rare items
*Controls the pace of the addition of new items
*Sets a price cap to control inflation
*Encourages players to communicate and trade items daily
*Removes the Evolution Dollars from the economy, rather than recyle them between
players, lowering inflation
*Automates the trade between players, eliminates the need for GM assistance
*Available 24 hours a day, works for all time zones and players