Market Mechanic Lecture: Credit (Loans)

Board game designers have to decide when they provide credit in a board game if that credit is issued by a person (credit mechanic) or if credit is issued by an algorithm in the rules (credit theme).  Both techniques have different challenges to make them work within a board game.  To better build a board game mechanic or theme I am first going to see how both concepts fare in the real world.

Lenders in the Real World:

In the real world lenders gauge the riskiness of their investment in order to protect their money.  If a real world lender thinks a business plan has a higher probability of failing it will find compensating factors to either increase its reward if you succeed (higher interest rates) or provide compensation if you fail (higher collateral requirements).  While not always successful, lenders will take time to supervise their investments to make sure they did not get duped into some sort of ponzi scheme.  The incentive to protect their money from bad investments results in bankers vetting the people and businesses they extend credit to.

Real world lenders are always open to opportunities to make more money.  At first, this might sound like stating the obvious, but this statement has a big implication in lending behavior.  This means that if a lender discovers someone with a good business plan, even if the person asking for credit is not rich, does not have a long credit history, or is already holding some debt, the lenders is still willing to extend credit.  Credit in the real world is about seizing opportunities to make money and assessments are made based on the likelihood of the projects success.  

Challenge for Lenders in Board Game:

The advantage lenders have in the real world is that everyone benefits from making more money.  In a board game with a lending mechanic, game designers have to worry if any credit will be exchanged whatsoever because players may purposefully default to damage the lender in the game.  Even if players were not worried about a strategic default to take down the lender, lenders may not be willing to loan other players money because that might result in the borrower becoming stronger than the lender.

Michael R. Keller address this issue in his game Frozen Concentrated Orange Juice by having lenders and borrowers play two different games at the same time that interact with each other.  In one corner borrowers are competing with each other to be the best producers of goods.  In the other corner, lenders are competing with each other to be the best at extending credit.  By separating the borrowers and lenders into their own sub games, lenders and borrowers no longer have to worry they are engaging in a direct deal with their opponent that will undermine their chance to win the game. Borrowers do not reduce their chance of winning the game when the person who loaned them money does well and lenders are not hurt when the person who borrowed money from them does well.  

This separation allows Frozen Concentrated Orange Juice to enjoy the benefits of a loan mechanic.  Lenders will adjust their offers to borrowers in response to their credit risk.  They will monitor the investment decisions of borrowers and extend credit to borrowers who have good business plans.

Algorithms in Real World:

Real world credit, like board game themes, also use algorithms to issue credit.  Credit scores result in some lenders automatically offering individuals a credit line. Meanwhile, pawn and car title loan shops will happily issue anyone a loan using an algorithm based on the value of the collateral.  

Algorithms are a way real world lenders can reduce the cost and time to asses the risk of extending credit.  Credit scores allow lenders to look at a single number instead of talking to everyone who has information on the borrower.  The reliability of the scores let lenders get rid of costly employees and replace them with computer algorithms to automatically assigned credit lines to people with specific credit scores.

Pawn shops and title loans utilize an algorithm based on collateral to reduce the cost and time of assessing borrowers risk.   Instead of taking the time to track down the borrower's credit history, they take on the easier task of assessing the value of the items being pawned.  Imagine you walk into the pawn shop with 2 pounds of gold and you ask for a loan equal to 80% of the value of the gold.  The pawn shop owners can spend countless hours talking to your friends, your employer, and past creditors or, they can look up the current price of gold and say, if you do not pay back your loan the pawn shop keeps the gold.  Assessing the value of the collateral is an algorithmic approach to loans that takes much less work than assessing the worthiness of the borrower.  This enables the pawn shop to issue loans at a relatively fast pace and extend credit to a wider swath of people.   

Challenge of Algorithms in Board Games:

Algorithms (aka credit themes) in board games face two challenges that do not exist in the real world.  First, in the real world, if someone has a good business plan that does not fit into a pre-existing algorithm, they can pitch their plan to lender who has the discretion to offer them credit.  In the game of Monopoly, you cannot tell the bank that if it lent you the money to build the hotels on Park Avenue and Boardwalk that you would win the game.  Your credit opportunities are completely constrained by the algorithms followed by the bank.

Second, board games with a credit theme, unlike the real world, cannot alter its algorithms in response to new information.  If a player finds a loophole in a board game algorithm that lets them run a ponzi scheme then there is no adjustment to stop them.  If a person in the real world found a way to run a ponzi scheme due to a loophole in an algorithm then lenders would change the algorithm to protect themselves from future exploits.

That said, properly designed credit themes have one big advantage on credit mechanics.  Algorithms ensure credit will be extended to players playing the same game, even if credit gives one player an edge over another.  Algorithms are automatic, and potentially available to everyone.  As long as players meet the correct conditions they will have access to credit and be able to use credit gain an edge on other players.

Prototype Question: Should I include money with my board game prototype?

On twitter I posed the following question:

When sending a board game prototype that uses money to a publisher do I include the money or will they want to use their own play money?
— Dr. Wictz (@drwictz) August 7, 2014

I was curious because I am preparing to make prototype versions of Post Position to send to publishers. 

Why might I think that publishers would not want me to include play money with the game?  Well, I naively thought some publishers prefer to use poker chips over paper money and they would pull out their own poker chips to play the game.

Quickly, other game designers corrected me of this fallacy.

@drwictz Include everything, when possible. Less effort on their end. They can swap out what they want.
— Gil Hova (@gilhova) August 8, 2014

@drwictz include everything. Don't make them search for components.
— Michael R. Keller (@vhgames) August 8, 2014

They make a good point.  These folks are being inundated with submissions from other aspiring board game designers.  Time spent trying to setup my game with their own poker chips is time lost playtesting other games.  Even worse, missing an important game component starts the playtesting off on the wrong foot, reducing the chances of my game being picked up.

And if there was any question to doubt other game designers, Crash Games, Dice Hate Me, Stronghold Games, and Tasty Minstrel Games confirmed that they want play money included with the prototype.

To be honest, Tasty Minstrel liked The Cardboard Jungle's idea even more.

@dicehateme @Crash_Games @drwictz @StrongholdGames @jameystegmaier @TastyMinstrel send some actually money too... ;)
— The Cardboard Jungle (@CBJPodcast) August 8, 2014

Tasty Minstrel never said which currency I had to use, so I am going to see if I can get my hands on Zimbabwe dollars.  The currency is so worthless that Zimbabwe officially abandoned it, meaning it should fit nicely into my prototype budget.

Market Mechanic Lecture: Prices

On the onset prices appear to be a simple thing.  A price is what one has to pay to get something.  But what that misses is what prices can achieve as a mechanic and a tool.  A price mechanic is a way to communicate information between players.

Fixed Prices (price theme) vs. Negotiated Prices (price mechanic)

To distinguish a price mechanic from a price theme I am going to distinguish the difference between fixed prices and negotiated prices.  A fixed price is a price theme.  Fixed prices are created by an outside source, most likely by the rule book in the board game.  A fixed price states in no uncertain term something is worth X.  The price in this instance is being used to communicate the tradeoff of game actions by the game designer to the players by using a set of fixed ratios of one action versus another during game play.

Take The Game of Life, the price to change your degree is fixed on the board.  If you want to take a chance and stop being an accountant then you have to pay a fixed X amount of money to change jobs. The player has to decide if they want to use their money to change jobs or do they want to save it to pay for 2 future doctor visits.  The fixed price enables money to serve as a simplification of the tradeoff between one action versus another within the board game.  

A negotiated price, a price mechanic, is when two or more players have to agree on a value to make an exchange.  In Michael Keller’s Captains of Industry players require resources to build and operate factories.  They get these resources by negotiating prices with the other players who happen to have these resources.  

Negotiated Prices Communicate Information

When prices are negotiated, prices in the game communicate the value of the goods or actions amongst the players.  You do not need to know why a player wants a good or action to know that they desire it.  All you need to know is how high of a price a player is willing to pay to buy it or sell it to gauge their desire.

The economy uses communication from prices to coordinate production and supply.  Economist Leonard E. Read shows in his story I, Pencil that pencil makers can communicate to wood producers their desire for an increase in the wood supply to make pencils by offering to buy wood at a higher price.  Wood suppliers see the higher price and are willing to pay more money to entice people to be lumberjacks and to work longer hours to produce more wood.

The person who supplies the wood does not directly see that pencil makers need more wood.  For all the lumber supplier may know, paper makers and furniture makers might desire more wood.  The magic of a price mechanic and negotiated prices is that wood suppliers never have to spend time guessing if specific industries or the world needs more wood.  The price for wood communicates to the lumber suppliers people’s desire for wood and they respond by working to increase their output.  

If players need wood to expand their farm or stone quarry in Captain of Industry they communicate their desire for wood by the willingness to pay a high price for it.  Players producing wood may not know why other plays want wood so badly, but they will see from the price there is high demand by other players for it and will invest to expand their output of wood in response.

Relation of Price Mechanic, Price Theme, and Money Mechanic

A price themed only game does not have negotiated prices between players.  A price themed game may still have a money mechanic.  Speculation has fixed prices for stock decided by events on the game board, making the game a price theme.  Players exchange money with the bank to take risks in Speculation to possibly earn more money later in the game, meaning the game has a Money Mechanic.

Money mechanic games can also be a price mechanic game.  Michael Keller’s Captains of Industry players negotiate with each other to exchange goods for money.  The prices settled upon communicate what goods players desire, and hint at what moves players will make next since each good can only be used to complete so many actions.

But what about games based on batter, like Settler’s of Catan.  Can Settler’s of Catan’s barter economy be a price mechanic or price themed game even though there is no money Mechanic?

The answer is yes.  Because barter involves setting prices in terms of one good versus another.  My offer to trade 2 wood for 1 brick means that the price of 1 brick is 2 wood.  Some prices in Settler’s of Catan are price themed.  I can exchange for a fixed price four of any one good to acquire a different good.  This is a fixed price that is not an exchange of information between players.   

On the other hand, other prices in Settlers of Catan are a price mechanic.  Players can select to trade with each other.  When a player offers to trade with another player they are negotiating and in the process communicating information about the importance particular goods are to them to their opponents.

Why Differentiate Price Mechanic and Price Theme?

I differentiate between price mechanics and price themes because they create different experiences for players.  Price mechanics create a new dimension for board players to compete with each other.  Price mechanics are driven by supply, demand, and information.  It rewards players who can best track information to decipher current prices and anticipate future prices.

Take my horse racing game Post Position.  Players actively engage in a market where they trade bets on horses throughout a horse race.  The final value of a bet on a horse is settled by the order the horses cross the finish line.  Each player has inside information not held by others on how the horses are going to move in the race.

When players make bets, they are agreeing on a price for the bet.  That price communicates information to all the other players on who thinks a horse is going to move up and who thinks a horse is going to move down in the race.  The winner is the player who best uses their inside information and best reads other players trades to figure out the horses that are going to do well and the horses that are going to do poorly before everyone else.

Fixed prices are constraints imposed by the game designer.  Without a complementary price mechanic, fixed prices represent a set of actions a player needs to compete to acquire an action, resource, or victory point.  They are merely a tool used by the game designer to communicate the rules of the game to the player.

Market Mechanic Lecture: Introduction

I am an unabashed lover of market mechanics in board games.  Let me be clear, the emphasis in that last sentence is Market Mechanic.  Why the emphasis, well as Michael R. Keller of Visible Hand Games and I discussed at UNPUB 4, many people mistake market themes with market mechanics.  A few people avoid all market mechanics because they mistakenly associate them with bad market theme games that do not use any market mechanics. 

That is why I am starting a new lecture series examining different types of market mechanics and how to use them in board games.  But before I discuss specific market mechanics that can be used in board games, I need to clarify what is the difference between a market theme and a market mechanic.

Difference Between a Theme and a Mechanic

Themes are stories.  Stories can be spun so that a particular action represents something occurring within the story.  When I play Formula D my friends and I are telling a story about driving a race car.  Am I actually driving a race car, no, but I am taking a series of actions that lets me pretend I am driving a race car.  The grafting of a story to a set of actions is a theme.  

A mechanic is undertaking a particular set of actions to achieve something.  For example, in Monopoly I can roll a dice and move my pawn.  The mechanic is roll and move.  I am physically rolling dice and moving it along a board.

Because I use a roll and move mechanic does not mean I call it that within the game.  Theme lets me pretend the act of rolling and moving is achieving an imaginary outcome, be it go to work and collect my salary in Monopoly or advance my car in an auto race in Formula D.

Mechanics and themes do not have to be different things.  We can play the game 100 yard dash by physically running the 100 yard dash and seeing who can finish the race first.  The theme and mechanics is the 100 yard dash in the 100 yard dash game.  

Should Mechanics and Themes Always Be the Same?

Each mechanic needs to be assessed on how it will contribute to the enjoyment of the game.  Some mechanics are a great theme by themselves.  Charades is a game built on a mechanic of acting.  Acting is fun, acting is silly, acting makes a great game.  Others mechanics are events you never want to experience in real life.  For example,  I personally do not want to play a game of Werewolf were the sheriff eliminates a players by physically shooting and killing them.

To assess if a market mechanic contributes to game play we need to understand how different market mechanics work and how to separate the market mechanic from a market themed game.  This lecture on market mechanics will not only empower us to answer the question when market themed games work better with market mechanics, but also when do market mechanics contribute to non market themed games.

Conversation on Trade Mechanic in Board Games

Michael Keller of Visible Hand Games and 1/2 of Dr. Wictz got together to talk about the market mechanism in my game Post Position and his game Frozen Concentrated Orange Juice. 


We get into details on what you need to do to balance a board game centered on players trading.  You can listen to the interview on Michael Keller's Blog Game Designer Wannabe.

A Dr. Wictz List: 11 Dr. Wictz Highlights from UNPUB4

1. Friday night’s standing ovation for John Moller from designers in appreciation for founding UNPUB.

2. The moment everyone else in the room knew Nick Ferris won the raffle before he did, even though he was holding his own tickets.

3. Almost missing the turn off the highway to UNPUB 4 if not for spotting an UNPUB 3 sign pointing the way.

4. Realizing I was with a group of designers when the free Danish were offered and the roll of tape next to it is selected first for last minute board game prototype repairs.

 5. Bruce H. Voge and Mike Goldman from the Party Game Cast signing a contract stating they must attend the conference debut of an enlarged game of Post Position using My Little Pony plush as figures.

6. Alf Shadownsong becoming a hawker for horses in the back of the race. “I.S for a dollar, I.S. For a dollar. Look! I was selling P.C. for a dollar two turns ago and now it’s in first. the same thing will happen with I.S. It’s a guaranteed winner.”

7. In the same game, total cash held by all players at the end of the game $527, total debt Alf Shadowsong still owed other players at the end of the game, a record breaking $528.

8. “Hey, when did you do that?” --Dr. Wictz

 “Sorry if the game was being played when you weren't looking.” --Other Playtester

9. Meeting and playing Charlie Hoopes’ Firebreak at the most difficult setting with Jeff Watson who has playtested the game over 200 times.

10. Selling my entire orange crop in a future for $4 an orange when each orange was worth $20 while playing Michael R. Keller’s Frozen Concentrated Orange Juice.

11. Having a playtester ask to buy a prototype copy of Post Position to take to conventions.