The following are my thoughts and findings.
Yes it is long. But I wonder your thoughts. I believe I have found the solution and I hope you agree.
So first. No economy is broken, ever. They are designed with a certain output in mind. That said, once that output had been achieved the player is left with a surplus in something. This is the point where the game feels exploited, useless or broken.
After looting at many variables including quest styles, loot values, the type of equipment found in dungeons, on enemies, in merchant lists and a whole lot of complicated details that change so dramatically in between the three games that I realized they didn't matter.
Only 3 things matter.
Things made to sell
Things made to survive
Things made to keep
Things to sell are items that have no value beside their "weight in gold". This is something players would typically associate with "loot". Gems, collectables, items that are redundant (like armor when your player has armor), ... etc.
Things to survive are items used for player maintenance and are 1x use and then the resource is gone (or has to be repurchased). Repair hammers, potions/ poisons, scrolls, shrines (morrowind), training, tempering items, soul gems, arrows, ingredients, mercenaries, food items, ... etc.
Things to keep are items that pose either practical or sentimental value. Armor you use, weapons you use, unique items, art, homes, spells, powers, shouts, skill books ... etc.
The following are the thoughts use to come to the conclusion that the presence of "things to survive" in all aspects of the game represent the main reason for the inbalance in the economy, and that the players should train whenever they have the chance (or training should be manditory).
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Now obviously, certain items can be in any combination of these categories based on individual player interpretation. Contrary to popular belief, my search has found that TES games have become too smart for their own good and Morrowind had the simplest iteration of the economy cycle.
In the last 3 games items of any of the 3 categories could be found in 3 forms. Merchants, found as Loot or given to the player as a Reward
These 3 sources have seen some serious variation over the decade and this is where I believe we can see the economy issue.
MORROWIND:
Spoiler
Morrowind easily had the simplest system and the player had very little in terms of extra money until late game (or the Tribunal expansion's museum).
The player obtaining things to sell as loot (weak/cheap equipment, dwemer oddities to sell, plates and silverware).
The player uses these items to barter with merchant for things to survive. These things to survive were used to gain loot, but the damage dealt was enough to require more items to survive. These things to survive would be used in quests to obtain durable unique equipment or free things to survive as Rewards. This in turn leads to more loot and a surplus in gold. The gold is a credit used to accelerate the player's progress and survivability (training, better gear, more potions...etc).
This is a very simple triangle. Loot, Merchants and Rewards. The arrows cycle between Loot and Merchants. You need merchants to be able to survive quests and get Rewards. These Rewards get more loot. This makes the players have a slim profit that can be used to give the player an advantage.
The Rewards are how the player would advance in the world. It is difficult, if not impossible to survive without the advantage of Rewards which pushes players towards completing quests.
Morrowind easily had the simplest system and the player had very little in terms of extra money until late game (or the Tribunal expansion's museum).
The player obtaining things to sell as loot (weak/cheap equipment, dwemer oddities to sell, plates and silverware).
The player uses these items to barter with merchant for things to survive. These things to survive were used to gain loot, but the damage dealt was enough to require more items to survive. These things to survive would be used in quests to obtain durable unique equipment or free things to survive as Rewards. This in turn leads to more loot and a surplus in gold. The gold is a credit used to accelerate the player's progress and survivability (training, better gear, more potions...etc).
This is a very simple triangle. Loot, Merchants and Rewards. The arrows cycle between Loot and Merchants. You need merchants to be able to survive quests and get Rewards. These Rewards get more loot. This makes the players have a slim profit that can be used to give the player an advantage.
The Rewards are how the player would advance in the world. It is difficult, if not impossible to survive without the advantage of Rewards which pushes players towards completing quests.
OBLIVION:
Spoiler
Oblivion had the first example of self-cycling. This is where acquiring a source of items increases the player's ability to obtain more items of the same source type.
In Oblivion loot took on a different form. Instead of being things without value that the player would sell, loot became just as useful as (if not more than) things the player would buy at Merchants. Rewards instead became mostly objects and items to sell (there are few sentimental/ useful items)
Merchants were used to catch the player up to speed with the enemies should the player spend time doing quests where the rewards are inferior to the equipment of enemies. In Oblivion's economy a player would best serve themselves by traveling dungeon to dungeon looting the bodies for equipment. The loot in quests often outweighs the rewards and excess gets sold to merchants to make a large gold profit. This gold can be sunk into houses and horses and collectable items, but players who own all of these or have no want for these accumulate a large amount of gold that breaks the cycle for the economy.
This may be why Oblivion was frustrating to many individuals. But I think BGS wanted the players to have more balanced competition in the world, and fast fix was to give them items equal to the player. That would have been fine, except that it was immersion breaking, unrealistic and it made good equipment seem gilded in nature.
Oblivion had the first example of self-cycling. This is where acquiring a source of items increases the player's ability to obtain more items of the same source type.
In Oblivion loot took on a different form. Instead of being things without value that the player would sell, loot became just as useful as (if not more than) things the player would buy at Merchants. Rewards instead became mostly objects and items to sell (there are few sentimental/ useful items)
Merchants were used to catch the player up to speed with the enemies should the player spend time doing quests where the rewards are inferior to the equipment of enemies. In Oblivion's economy a player would best serve themselves by traveling dungeon to dungeon looting the bodies for equipment. The loot in quests often outweighs the rewards and excess gets sold to merchants to make a large gold profit. This gold can be sunk into houses and horses and collectable items, but players who own all of these or have no want for these accumulate a large amount of gold that breaks the cycle for the economy.
This may be why Oblivion was frustrating to many individuals. But I think BGS wanted the players to have more balanced competition in the world, and fast fix was to give them items equal to the player. That would have been fine, except that it was immersion breaking, unrealistic and it made good equipment seem gilded in nature.
SKYRIM:
Spoiler
The most recent game in the series takes the Oblivion cycling problem and applies it to all three aspects of obtaining items and essentially makes merchants only a hurdle in the crafting loop. All 3 item types are found in all 3 categories.
Loot found in dungeons will gradually increase (leveling) and instead of being only things the player can sell, Rewards and Survivability items too can be found within. This means the player can stop in on the next dungeon up the road unhindered.
Rewards cycle upon themselves too. Since rewards are leveled, they increase allowing the player to undergo any other quest unhindered.
Merchants are isolated to crafting. You often need merchants for crafting equipment, and then you sell your crafted items back to the merchants to obtain more materials. You dont buy restore health or magic potions, items in merchant lists are equal to what would be found in dungeons since they too are leveled. A player never needs to leave town and they can dawn the same gear as a questgoer or a dungeondiver. The difference comes from the excess. Excess loot, rewards and eventual profit from the merchant cycle all produce money. TES couples loot, rewards and merchants into the housing system which is the only sink for money in Skyrim (besides horses). If the player never buys a house they will easily hit 100,000 gold before they reach level 50.
Now this isnt necessarily a "bad" thing. The TES idea I am sure was "to take nothing from the player". If you want to dungeon dive into everyplace on the road... fine. If you feel like RPing a city merchant, fine. If you want to be a local hero, more power to you. The point being that the player has no need to go between the 3 item sources. Doing so extremely accelerates gameplay by allowing the player to purchase the few sinks for money in the game. Training, houses, followers, horses and pets.
The most recent game in the series takes the Oblivion cycling problem and applies it to all three aspects of obtaining items and essentially makes merchants only a hurdle in the crafting loop. All 3 item types are found in all 3 categories.
Loot found in dungeons will gradually increase (leveling) and instead of being only things the player can sell, Rewards and Survivability items too can be found within. This means the player can stop in on the next dungeon up the road unhindered.
Rewards cycle upon themselves too. Since rewards are leveled, they increase allowing the player to undergo any other quest unhindered.
Merchants are isolated to crafting. You often need merchants for crafting equipment, and then you sell your crafted items back to the merchants to obtain more materials. You dont buy restore health or magic potions, items in merchant lists are equal to what would be found in dungeons since they too are leveled. A player never needs to leave town and they can dawn the same gear as a questgoer or a dungeondiver. The difference comes from the excess. Excess loot, rewards and eventual profit from the merchant cycle all produce money. TES couples loot, rewards and merchants into the housing system which is the only sink for money in Skyrim (besides horses). If the player never buys a house they will easily hit 100,000 gold before they reach level 50.
Now this isnt necessarily a "bad" thing. The TES idea I am sure was "to take nothing from the player". If you want to dungeon dive into everyplace on the road... fine. If you feel like RPing a city merchant, fine. If you want to be a local hero, more power to you. The point being that the player has no need to go between the 3 item sources. Doing so extremely accelerates gameplay by allowing the player to purchase the few sinks for money in the game. Training, houses, followers, horses and pets.
Now, I am not typically a person to propose a solution to things, because no solution appeals to everyone. But I have provided a probable solution.
Spoiler
Skyrim's tricycle (no metaphor intended) encourages a player to go about their exploration of the world in any way they please. The worst case is that they have excessive amounts of gold to spend (my character just hit 81 and has accumulated ~780,000 septims and had a max of ~200,000 at one time. )
Oblivion had a single cycle that made players acquire the best of the best only through adventure and exploration. Once you settled down from your life of grandeur your riches would accompany you. If on the other-hand you chose to follow questlines only, you would find yourself facing difficult opponents that are outequipping you in things you cannot use, and often your rewards would be unessential and sentimental free to be sold or stored.
Morrowind's simplistic back and forth between loot and merchants enabling the player to survive in the world made the world a tactical challenge beyond the fact that it wasnt leveled. Rewards were essential to advancing oneself to higher levels of competition. Gold that could be garnered was almost certainly put into skill advancement or equipment enhancement. Making all 3 item sources valuable.
Skyrim's tricycle (no metaphor intended) encourages a player to go about their exploration of the world in any way they please. The worst case is that they have excessive amounts of gold to spend (my character just hit 81 and has accumulated ~780,000 septims and had a max of ~200,000 at one time. )
Oblivion had a single cycle that made players acquire the best of the best only through adventure and exploration. Once you settled down from your life of grandeur your riches would accompany you. If on the other-hand you chose to follow questlines only, you would find yourself facing difficult opponents that are outequipping you in things you cannot use, and often your rewards would be unessential and sentimental free to be sold or stored.
Morrowind's simplistic back and forth between loot and merchants enabling the player to survive in the world made the world a tactical challenge beyond the fact that it wasnt leveled. Rewards were essential to advancing oneself to higher levels of competition. Gold that could be garnered was almost certainly put into skill advancement or equipment enhancement. Making all 3 item sources valuable.
In my opinion, the ideal economy is the simplest form. That means assigning 1 location to 1 item type. Likely that would look like this:
Loot= things to sell
Merchants = things to survive
Rewards = things to keep
So a player gets good equipment only as a reward. The player uses this reward to obtain loot. Loot is used to pay merchants for items needed to survive or maintain your rewards.
Now of course this cycle can go the opposite direction. Things that are useless to the player (loot) can be given to questgivers to obtain equipment (Reward) that can be sold to Merchants to acquire things the player needs to survive.
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This doesnt devolve into the Morrowind system when players ignore a faucet of items. Unlike Morrowind, a balanced version will maintain the cycle no matter how the player approaches the game.
A questgoer will obtain so many rewards some will be useless to him/her and these rewards will be "loot" which can be sold to buy things the player needs to survive.
A dungeondiver will need to keep the best stuff that they find (making it a Reward) and sell the rest of the items (loot) to get items they need (merchants)
A bountyhunter (dungeongoer with quest reward) that refuses to deal with merchants will be hard pressed but perhaps capable by always having optimal equipment, however; they wont have things to maintain their survival/ existing equipment. (this assumes total lack of survival gear like soul gems, potions...etc.). These players will constantly have new things so they wont have to maintain any of it, and since they will be returning to the questgivers their jaunt expeditions wont require too much in the way of potions. By "trading" one piece of equipment for another you are bartering with yourself.
Gold still exists as an item that is useless to the player, but has few things to go into. Gold, whether given to the player, or acquired is loot and therefore should be traded for survivability equipment. As mentioned before, Oblivion and Skyrim had cyclic functionality making gold useless and accumulative. Morrowind had gold as a reward (a second source for useless items) which over time accumulated.
Accumulation isnt a bad thing if players actually train, and accelerate their progression in the game. If they dont, then they choose to ignore the merchants of the game making themselves their own merchants (meaning that the reason you have all that gold, is because you pay yourself for training)