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Game Mechanics: How to Design an Internal Economy for Your Game

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Internal economy is one kind of mechanic you might find in a game. Designing a game's economy is the core of the game designer’s trade: You craft mechanics to create a game system that is fun and challenging to interact with. Ernest Adams and Joris Dormans, authors of Game Mechanics: Advanced Game Design, explain how to do it.
This chapter is from the book

In Chapter 1, we listed five types of mechanics that you might find in a game: physics, internal economy, progression mechanisms, tactical maneuvering, and social interaction. In this chapter, we’ll focus on the internal economy.

In real life, an economy is a system in which resources are produced, consumed, and exchanged in quantifiable amounts. Many games also include an economy, consisting of the resources the game manipulates and the rules about how they are produced and consumed. However, in games, the internal economy can include all sorts of resources that are not part of a real-life economy. In games, things like health, experience, and skill can be part of the economy just as easily as money, goods, and services. You might not have money in Doom, but you do have weapons, ammunition, health, and armor points. In the board game Risk, your armies are a vital resource that you must use and risk in a gambit to conquer countries. In Mario Galaxy, you collect stars and power-ups to gain extra lives and to get ahead in the game. Almost all genres of games have an internal economy (see Table 1.1 in Chapter 1 for some more examples), even if it does not resemble a real-world economy.

To understand a game’s gameplay, it is essential to understand its economy. The economies of some games are small and simple, but no matter how big or small the economy is, creating it is an important design task. It is also one of the few tasks that belongs exclusively to the designer and no one else. To get game physics right, you need to work closely with the programmers; to get a level right, you need to work closely with the story writers and level designers; but you must design the economy on your own. This is the core of the game designer’s trade: You craft mechanics to create a game system that is fun and challenging to interact with.

In Fundamentals of Game Design, Ernest Adams discussed the internal economy of games. The discussion in this book repeats some of those points and expands the notion of internal economy.

Elements of Internal Economies

In this section, we briefly introduce the basic elements of game economies: resources, entities, and the four mechanics that allow the resources to be produced, exchanged, and consumed. This is only a summary; if you need a more in-depth introduction, please see Chapter 10, “Core Mechanics,” in Fundamentals of Game Design.


All economies revolve around the flow of resources. Resources refer to any concept that can be measured numerically. Almost anything in a game can function as a resource: money, energy, time, or units under the player’s control all are examples of resources, as are items, power-ups, and enemies that oppose the player. Anything the player can produce, gather, collect, or destroy is probably a resource of some sort, but not all resources are under the player’s control. Time is a resource that normally disappears by itself, and the player usually cannot change that. Speed is also a resource, although it is generally used as part of a physics engine rather than part of an internal economy. However, not everything in a game is a resource: platforms, walls, and any other type of inactive or fixed-level features are not resources.

Resources can be tangible or intangible. Tangible resources have physical properties in the game world. They exist in a particular location and often have to be moved somewhere else. Examples include items the avatar carries around in an inventory or trees that can be harvested in Warcraft. In a strategy game, the player’s units are also tangible resources that must be directed through the world.

Intangible resources have no physical properties in the game world—they do not occupy space or exist in a particular location. For example, once the trees in Warcraft have been harvested, they are changed into lumber, which is intangible. Lumber is just a number—it doesn’t exist in a location. The player doesn’t need to physically direct lumber to a site to build a new building. Simply having the right amount of lumber is enough to start building, even if the building is constructed far away from the location where the lumber was harvested. Warcraft’s handling of trees and lumber is a good example of how games can switch between tangible and intangible treatments of resources. Medical kits (tangible) and health points (intangible) in shooter games are another example.

Sometimes it is useful to identify resources as either abstract or concrete. Abstract resources do not really exist in the game but are computed from the current state of the game. For example, in chess you might sacrifice a piece to gain a strategic advantage over your opponent. In this case, “strategic advantage” can be treated as an abstract resource. (Abstract resources are intangible too—obviously, “strategic advantage” is not a thing stored in a location.) Similarly, the altitude of your avatar or units can be advantageous in a platform or strategy game; in this case, it might make sense to treat altitude as a resource, if only as a way of factoring it into the equation for the strategic value of capturing particular positions. The game normally does not explicitly tell the player about abstract resources; they are used only for internal computation.

Note that in video games some resources that might appear to be abstract are in fact quite concrete. For example, experience points are not an abstract resource in a role-playing game. Instead, they are an intangible, but real, commodity that must be earned and (sometimes) spent like money. Happiness and reputation are two more resources used by many games that, although they are intangible, are nevertheless concrete parts of the game.

To design a game’s internal economy or to study the internal economy of an existing game, it is most useful to start identifying the main resources and only then describe the mechanisms that govern the relationships between them and how they are produced or consumed.


Specific quantities of a resource are stored in entities. (If you are a programmer, an entity is essentially a variable.) A resource is a general concept, but an entity stores a specific amount of a resource. An entity named “Timer,” for example, stores the resource time—probably the number of seconds remaining before the end of the game. In Monopoly, each player has an entity that stores available cash resources. As the player buys and sells, pays rent and fines, and so on, the amount of cash in the entity changes. When a player pays rent to another player, cash flows from the first player’s entity to the second player’s entity.

Entities that store one value are called simple entities. Compound entities are groups of related simple entities, so a compound entity can contain more than one value. For example, a unit in a strategy game normally includes many simple entities that describe its health, damage capability, maximum speed, and so on. Collectively, these make up a compound entity, and the simple entities that make it up are known as its attributes. Thus, a unit’s health is an attribute of the unit.

Four Economic Functions

Economies commonly include four functions that affect resources and move them around. These are mechanics called sources, drains, converters, and traders. We describe them here. Again, this is a summary; for further details, see Chapter 10 of Fundamentals of Game Design.

  • Sources are mechanics that create new resources out of nothing. At a certain time, or upon certain conditions, a source will generate a new resource and store it in an entity somewhere. Sources may be triggered by events in the game, or they may operate continuously, producing resources at a certain production rate. They may also be switched on and off. In simulation games, money is often generated by a source at intervals, with the amount of money created proportional to the population. As another example, some games that involve combat automatically regenerate health over time.
  • Drains are the opposite of sources: They take resources out of the game, reducing the amount stored in an entity and removing them permanently. In simulation games in which it is necessary to feed a population, the food is drained at a rate proportional to the population. It does not go anywhere or turn into anything else; it simply disappears. In shooter games, ammunition is drained by firing weapons.
  • Converters turn resources of one kind into another. As we mentioned, in Warcraft, trees (a tangible resource) turn into lumber (an intangible one) when the trees are harvested. The act of harvesting is a converter mechanic that converts trees into lumber at a specific rate: A given number of trees will produce a given amount of lumber. Many simulation games include technology upgrades that enable players to improve the efficiency of the converter mechanics in the game, causing them to produce more of the new resource from the old one.
  • Traders are mechanics that move a resource from one entity to another, and another resource back in the opposite direction, according to an exchange rule. If a player buys a shield from a blacksmith for three gold pieces, the trader mechanic transfers the gold from the player’s cash entity to the blacksmith’s and transfers the shield from the blacksmith’s inventory to the player’s. Traders are not the same as converters. Nothing is created or destroyed; things are just exchanged.
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