Mudflation is an online RPG game term for game economy fluctuation from exploits or poorly designed patches.
BackgroundEdit
Mudflation is a term for the type of inflation found in MUDs (Multi User Dungeon) games. MMORPGs, these days. It's caused by fluctuations in the game economy, caused by player exploits or poorly designed patches. Mudflation almost always kicks in after a major patch or an expansion, when new, better quality items are added to the game economy. These generally have the effect of greatly lowering the value of all pre-existing items.
For example, previously precious rare gothic bows became worthless once D2X was released, with the new unique bows and cruel elite bows instantly doubling the previous best damage.
Highly profitable sources of items can cause mudflation as well; once players in the early days of D2 realized how valuable Mephisto "runs" were, everyone started doing them, injecting vast amounts of new, better items into the economy. This caused the value of those items to drop precipitously, even though their utility was unaffected.
ResourcesEdit
The Wikipedia page on Mudflation is useful, and goes into more detail on how game economies may be kept stable.