The Daily Omnivore

Mudflation, from MUD (multi-user dungeon) and inflation, is an economic issue that exists only in massively multiplayer online games. Mudflation occurs when future additions to (or even just continued operation of) a game causes previously acquired resources to decline in value. This can take many forms and have many causes, including new items introduced by an expansion pack, fundamental imbalances in the in-game economy, or even spread of information that allows a previously rare resource to be acquired more easily.

The term mudflation became popular during the height of the MMORPG EverQuest’s dominance, coming into common usage after the release of the ‘Ruins of Kunark’ (2000) expansion. The term originated many years prior with MUDs, the text based forerunner of MMORPGs, that also suffered from the same currency supply problems.

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A virtual economy (or sometimes synthetic economy) is an emergent economy existing in a virtual persistent world, usually exchanging virtual goods in the context of an Internet game. People enter these virtual economies for recreation rather than necessity, which means that virtual economies lack the aspects of a real economy that are not considered to be ‘fun’ (for instance, players in a virtual economy often do not need to buy food in order to survive, and usually do not have any biological needs at all). However, some people do interact with virtual economies for ‘real’ economic benefit.

Virtual economies arise in numerous platforms. Multi-User Dungeons (MUDs) are text-based games that predate the World Wide Web. The largest virtual economies are in massively multi-player online role-playing games (MMORPGs). Virtual economies also exist in life simulation games which may have taken the most radical steps toward linking a virtual economy with the real world. For example, in ‘Second Life’ there is recognition of intellectual property rights for assets created ‘in-world’ by subscribers, and a laissez-faire policy on the buying and selling of ‘Linden Dollars’ (the world’s official currency) for real money on third party websites.

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Virtual goods are non-physical objects purchased for use in online communities or online games. ‘Digital goods,’ on the other hand, may be a broader category including digital books, music, and movies.

Virtual goods have no intrinsic value and are intangible by definition. Including digital gifts and digital clothing for avatars, virtual goods may be classified as services instead of goods and are usually sold by companies that operate social networks, community sites, or online games. Sales of virtual goods are sometimes referred to as microtransactions, and the games that utilize this model are usually referred to as ‘freemium’ (free + premium) games. 

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