Creating a balanced virtual economy

This is an interesting experiment I thought would be fun to try out as a game. Essentially it would be a virtual stock market with values of stock being controlled by supply and demand. I was thinking it would be best as a Smart Phone app.

You start with say $200 with which to spend on whatever you want. None of the items are real. They are all fake virtual items that you buy with fake virtual money. The value of the items would change daily depending on how many people owned them versus how many where available to purchase. So to start everything would be very cheap, like $1. As the popular items get bought, the value (and the price) of the item would go up. The owners of the items would be able to sell their items back to the “bank” at any time allowing them to make a profit if the value of the item has gone up.

The algorithm for calculating value would be something like:

For each item A
Let x be the total number of unique people that own at least one of A, but not less than $0.01
Let y be the total number of items in the bank (eg. not currently owned by anyone)
Let z be the total number of items (both owned and available)
If y is less than $0.01 then let y be equal to z
Let the value of the item be (y / z) * x

As you may notice the value of the item increases most dramatically the more people own it. If a single person buys all of a specific item the value drops back to $1.00. So no one person will want to own all of anything. Also if there are no more of an item available to buy the value basically becomes the amount of people who own said item.

Then what would really make this interesting is to allow users to add their own items for valuation. My first thought was art and music (maybe wallpaper and ring tones for phones). Very simple digital goods that people could share and see how people like them.

There is a serious question of who would actually play a game like this and the obvious chicken and egg issue of needing players to make the game interesting. I think a secondary motivator would need to be in place. Like rewards for being the richest after a week. Or other hidden surprises like certain items come with special bonuses, sales, or I don’t know spinning wheels.

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