Simulated Economy Tutorial

Summary

ConceptMotivationImagine an open world RPG where your actions affect the price of goods, the markets reacting to anything the player may do (burn down wheat fields, cost of food increases; kill the merchants, prices differentiate between cities; sell the many swords you’ve collected on your adventures, tank the sword market). What would it take to have such an adaptive simulated economy? You could take a very simple approach and define a rule like The cost of a good is inversely proportional to the amount of that good in the game. But this will inevitable fail to capture the complex behavior we know economies to have. In order to create the desired emergent behavior, we must think at the level of the individual. By the end of this project we’ll have markets that converge to optimal prices, multiple coupled markets, inflation, geographically distinct economies, and merchants connecting cities, all of which adapts to any possible change in the environment. This work is in part inspired by Simulating Supply and Demand and Emergent Economies for Role Playing Games, both great resources if you want to explore more.We want a complex economy to emerge from simple actions taken by individuals, so how do people make economic decisions? This is an unimaginably deep question, so we need to start somewhere simple. Below is the motivating example to start off our economic model, but keep in mind there are many other approaches.You’re checking out a new super market in the neighborhood and see your favorite cereal, but then you see that it costs \$10. “This is madness!” you think. You know that just down the road your usual super market sells the same cereal for \$5, so you don’t buy the cereal. But the next day, at your usual super market, you find the price of cereal is now \$10 as well. “This is unfortunate, but it seems the price of cereal has gone up, darn.” You still decide to buy the cereal since you really like it.This story outlines a very simple decision making algorith...