Player-Generated Economy

In multiplayer games, especially MMORPGs, players have the ability to trade items with other players. In a very popular game of this sort, trading is integral part of communication between players. There is a limit on goods' supplies and demands generated, so players evolve a 'standard' for the price of goods. Over time, trading becomes a full section of the game with an economy to it.

In one common system for this, there's an in-game currency as well as a second currency that costs real money, which are allowed to float relative to each other; thus the economy serves as a mechanism for Bribing Your Way to Victory (not Real Money Trade).

If the game itself is based on managing money, see An Entrepreneur Is You. Is not related to An Economy Is You.

Examples of Player-Generated Economy include:

First Person Shooters

Team Fortress 2 is odd in that it's a first-person shooter with a Random Drops system. Hats are infamously the most popular commodity traded between people, as well as metal, since it's used to make weapons and hats.

MMORPGs

RuneScape's economy developed since traders asking what they were buying and selling in banks; the game developers created the Grand Exchange that acts as a marketplace for more automated buying and selling. Item prices used to be set to a certain percent above or below the average price, with the average fluctuating depending on buying rates.
- Now, with the return of Free Trade, prices can be set freely, with the Grand Exchange automatically imputting the average price as "market price". Runescape is fairly unique in being a "real life" economy with inflation and deflation having a great effect on trading; many fan sites even watch the market with charts for estimations of profit.
For a while in Diablo II, multiplayer servers were frequent to item duplication, making in-game gold worthless and duplicated rare items (especially the Stone of Jordan) forming the main unit of currency. In closed servers, item duplication is illegal, so trade is better-regulated, though open servers are not.
In Ragnarok Online, there is a specific Merchant Class that can set up shops, though non-merchants also do trades and exchange goods for money. If you want any drops that an NPC doesn't sell (which is most of them) without having to kill the monsters yourself, it's a good way to go, trolling through merchant's shops to see if it's available and who has the best price. You can buy cards, armor, weapons, headgear, ingredients, rare drops and player crafted items, and usually, most goods develop a general price that most merchants stick to, though if you shop, around you can sometimes get it cheap.
Second Life. The game revolves around making, buying and selling objects with real money.
eRepublik. It's Serious Business.
Kingdom of Loathing has a complex economy, involving an item that can be purchased for real money (a "Mr. Accessory") and a number of constantly-changing items that it can be traded for, as well as currency and items that Randomly Drops in the game itself.
Puzzle Pirates has pieces of eight, which are generated by plundering in-game, as well as dubloons, which are purchasable for real money and required to perform certain tasks, but also can be bought in-game on an open market. Not to mention countless other commodities which are also generatable by in-game play and tradable for pieces of eight.
- Three Rings' other casual MMO, Spiral Knights, does much the same: all Crystal Energy must be purchased with real money, but can later be sold for crowns. Of course, they added the second level of turning "Energy" into their Anti-Poopsocking mechanic. Accessing a dungeon, reviving yourself, crafting items, all cost some form of Energy... and you only get 100 points of "Mist Energy" naturally every day. If you need more, shell out some of that Crystal Energy...
EVE Online. Every ship in the game is player-built.
World of Warcraft is an odd case. For the most part, you can level from 1 to max level without even touching the Auction House. However at max level, unless you have an alt or friend who can make it for you, you will be scanning the AH for a lot, including glyphs, weapon and armor enchantments, the ever rare (and expensive) Bind on Equip items, materials and recipes for you own professions, and vanity pets and mounts.

Web Original

Neopets has a surprisingly deep market for a virtual pet site. Players set up shops, and the Shop Wizard can search what shops in the world have the lowest prices. There are also in-game shops, which house most of the items that people want most, which random events cannot provide. In addition, it has a trading system which allows people to trade one or more items for one or more items. Then there's also an auction system, which is the only place with no price limits, but at 20 Million between bidders (shops can only sell for prices below 100k neopoints, and 800k neopoints is the maximum you can attach to a trade, without adding items).