How to design a plausible economic model?

[lozina]

I am planning to develop a game based around industrial revolution which is basically an economic simulator and the player can develop land to collect resources, or factories to produce goods from those resources and trade with other players and sell to world populations. I guess a game like kapilands (browser based game) is the closest game I can think of to what I am envisioning.

Trouble is, I have only taken basic economics studies which have long been fragmented and corrupted in my cerebral cortex. I need to determine how to model the general economy - the population's supply & demand. And how to simulate trends in popular demand, like why a product suddenly becomes popular and demand jumps and then why it drops (is all purely marketing or more to it?)

Any suggestions on what books or articles to read that is not difficult to understand?

 

[Markbnj]

Interesting question. I think you probably need only very basic understanding to develop an economic model for a game. If you can simulate supply and demand and the external conditions that cause changes in those factors, then you can probably develop some simple heuristics to derive value for a given transferable thing at a given point in time. Beyond that it's just implementing a mechanism for recording ownership and effecting transfers. Depending on the type of game you probably wouldn't attempt to do these things at the level of granularity of an individual transaction, but rather roll them up in bundles, i.e. all the food produced and sold in a given city, all the cost to maintain a given province's armed forces, etc.

Just some ideas off the top of my head. Sounds like a fun project.

 

[lozina]

Interesting question. I think you probably need only very basic understanding to develop an economic model for a game. If you can simulate supply and demand and the external conditions that cause changes in those factors, then you can probably develop some simple heuristics to derive value for a given transferable thing at a given point in time. Beyond that it's just implementing a mechanism for recording ownership and effecting transfers. Depending on the type of game you probably wouldn't attempt to do these things at the level of granularity of an individual transaction, but rather roll them up in bundles, i.e. all the food produced and sold in a given city, all the cost to maintain a given province's armed forces, etc.

Just some ideas off the top of my head. Sounds like a fun project.

Thanks for the input!

Yeah good point, I would definitely be rolling up people into groups based on several factors I am currently considering: location (city), education level and wealth. This is because I want a high society type of city such as London having large demand for high end finished goods while a city maybe in rural China would have virtually no demand for that. One objective of players would be to help develop cities so that they can expand the markets for their more profitable high end goods..

Then I figure there would be a mechanism for the player to generate demand in locations through funding advertising campaigns to also expand their markets, perhaps even to the level of promoting their own brand of a product so they can get a population to demand their version of automobiles instead of the other player's automobiles for example. Still trying to determine if I will be able to handle that level of complexity though.

 

[sdifox]

Just some arbitrary rule you setup. Assuming there is a finite amount of a certain resource, prices go up as available stock for sale goes down. You can make it more complicated by throwing in random event like discovery of deposit or natural disaster crippling output by x amount for n months.

 

[lozina]

Just some arbitrary rule you setup. Assuming there is a finite amount of a certain resource, prices go up as available stock for sale goes down. You can make it more complicated by throwing in random event like discovery of deposit or natural disaster crippling output by x amount for n months.

OK, that makes sense, but how can I go about developing the formulas/algorithm for determining what a population would demand in the first place? IS that what you were referring to when you said arbitrary rules? I was hoping to come up with some dynamic, universal formulas for coming up with what goods people will buy, and what prices they would pay depending on their disposable income and other factors, and the elasticity of the product in question (life sustaining, basic needs vs. luxury type goods)

 

[Markbnj]

Thanks for the input!

Yeah good point, I would definitely be rolling up people into groups based on several factors I am currently considering: location (city), education level and wealth. This is because I want a high society type of city such as London having large demand for high end finished goods while a city maybe in rural China would have virtually no demand for that. One objective of players would be to help develop cities so that they can expand the markets for their more profitable high end goods..

Then I figure there would be a mechanism for the player to generate demand in locations through funding advertising campaigns to also expand their markets, perhaps even to the level of promoting their own brand of a product so they can get a population to demand their version of automobiles instead of the other player's automobiles for example. Still trying to determine if I will be able to handle that level of complexity though.

That's the part of simulation programming that I find fun: creating mechanisms to model aspects of reality is an almost fractal exercise, because you can keep breaking it down at lower and lower levels.

For example you mentioned advertising, so you might model some notion of buying 'channels' leading to some level of 'exposure' (i.e. number of sims who receive the message). Then you need a factor for how many sims respond to the message, leading to some change in demand. The motivation part could be a random, or you could break that down further. In fact, that's almost a rule of simulation design: that all randoms represent values that ought to be derived from more complicated and granular models, if you had time, money, and resources to take it that far.

 

[sdifox]

OK, that makes sense, but how can I go about developing the formulas/algorithm for determining what a population would demand in the first place? IS that what you were referring to when you said arbitrary rules? I was hoping to come up with some dynamic, universal formulas for coming up with what goods people will buy, and what prices they would pay depending on their disposable income and other factors, and the elasticity of the product in question (life sustaining, basic needs vs. luxury type goods)

Make it up. Your game, your rules. Just model it through a spreadsheet with columns representing factors. Just remember that ultimately there are only 3 things that can happen, price goes up, price goes down or price stays the same.

 

[BladeVenom]

Look at the latest financial collapse. Even the experts seem to be clueless as to how the economy works.

 

[mpo]

I am planning to develop a game based around industrial revolution which is basically an economic simulator and the player can develop land to collect resources, or factories to produce goods from those resources and trade with other players and sell to world populations. I guess a game like kapilands (browser based game) is the closest game I can think of to what I am envisioning.

Trouble is, I have only taken basic economics studies which have long been fragmented and corrupted in my cerebral cortex. I need to determine how to model the general economy - the population's supply & demand. And how to simulate trends in popular demand, like why a product suddenly becomes popular and demand jumps and then why it drops (is all purely marketing or more to it?)

Any suggestions on what books or articles to read that is not difficult to understand?

Coursera's course 'Model Thinking' started this week.