Basically, to have a more realistic economy, you need two things most games don't; realistic human carrying capacity, and realistic supply/demand models governing prices.
In D&D, someone with the maximum base Strength stat of 18 could carry up to 100 pounds without it affecting his mobility and running speed. In reality, even the most physically fit humans are more like a 13-14 on the D&D scale; able to carry up to about 50-60 extra pounds strapped to their body or back before real mobility is a problem, and a real upper limit of about their own body weight (150-180 lbs), and only for short trips.
So, in your world, you need that more realistic carry limit, to avoid the hero walking into town carrying 5 full suits of armor on their back in a single trip. More likely, he might be able to carry one extra suit of armor he got as a battle trophy off his dead opponent, if that's all he was carrying beyond his own weapon/armor, food, a few potions etc.
Secondly, the fifth time your hero comes back into the armorer with a spare suit of full plate taken off of some undead knight, the armorer's not going to accept it. He has nobody to buy the other four suits the hero dragged in. Practically every computer fantasy game ignores this in the interest of simplicity and fairness in pricing. In a "real" medieval magical fantasy world, if an entire adventuring party walked into the armorer's with a spare suit of full plate each to sell, either the first guy to walk in would get the fair price and everyone else would be turned away, or everyone would get shafted for a fifth or less of the armor's true value.
Not fun. But, that's supply and demand. The armorer might make better use of a few helmets and mail or breastplates from each of the characters, that he could mend, shine up and sell to some of the more well-off townsfolk, to use if they're called to arms by the local noble. Demand for a 75-pound suit of full plate, on the other hand, is limited to the two or three knights that have sworn service to the noble. Best-case, it's good raw material, but that's all the value you'll get for it; it's too rare to be worth anything (kind of like trying to fence the Hope Diamond).
This will also apply to buying supplies with gold. If a hero uses a single town as his base of operations long enough, soon the town will be awash in gold and silver but starving to death because the hero's buying all the bread and ale. The armorer will also be out of arrows and crossbow bolts (realistically those are only semi-disposable items; the average wandering hero would be ripping his arrows back out of their targets where he could instead of the more fire-and-forget nature of most games). There won't really be anyone the town could trust to take a wagonload of gold to the next town to buy food, and that would be a dream target for bandits anyway, so the town might pay the hero some of his own gold back just to escort the wagonload and come back with things the town can actually use.
Over time, as implemented in a game, these economic shifts will encourage the hero to do two things they would normally do in a realistic setting: be less of a pack-rat, picking up only what's truly valuable either because he can use it himself or because it's useful to the town, and leaving the run-of-the-mill drops alone; and roaming more, going from town to town doing what needs doing, and spreading out the wealth he finds in his adventures across several towns without draining their resources.
EDIT: I still think the above answer holds in general, however I wanted to add that I finally joined the 21st Century of video games this Christmas with a PS4, and I've found The Elder Scrolls V: Skyrim to address many of the above points as they relate to the player's experience. The game's role-playing engine has a limited carrying capacity as you might expect, which your equipped weapons/armor and other "field gear" like potions count towards, thus requiring a balance between what you carry out into the field and what you expect to bring back. D&D does this, but many older video-game RPGs like much of the Final Fantasy universe do not, imposing only fairly artificial limitations typically based on hardware limits.
More interestingly, the engine also has a limitation on merchant goods and gold supplies as well as their selection; the merchant's objective is, of course, to sell things, not to buy, so they don't keep a practically limitless "till" for the player to drain by offloading goods. They also tend to specialize in the type of goods they deal in (can't sell armor to a food cart vendor), and they can't make things instantly; at the very least they need the raw materials and some time and effort to craft the item you want, which they can't do while they're dealing with you over the counter.
This requires the player to "spread" both purchases and sales across an entire town's merchant class. It also often requires going to other towns to find merchants with more coin (or stocks of needed items). The alternative is waiting several in-game days for a merchant's stocks and gold to replenish, a simplification of the basic fact that the economy of the world does not revolve around only you.
Of course, the more you interact with various characters including buying and selling from merchants, the higher your "Speech" skill attribute grows, and coupled with level-based "perks" that you can spend on the Speech skill tree, it's possible to increase merchant wallets and sell almost anything to almost anyone. But, because these things theoretically require you to play the game to build them up, you tend to get these benefits late in the story, and so the skills are largely a way for the designers to impose meaningful limits on trade without them becoming overly burdensome late in the game, when the player's trying to sell equipment and weapons worth thousands of gold pieces while merchants only keep some hundreds around to trade.
You can, theoretically, "break" Skyrim as a game by grinding very early in the story (and exploiting a few bugs in the save engine) to attain an extremely high level and well-developed skills trees before even completing the first few quests, making the challenge of the early game that's tailored to limited player ability practically nonexistent.
As a minor additional point, in Skyrim you can in fact rip some of your spent arrows back out of your victims (or nearby trees or off the ground where they landed), on top of looting your enemies' quivers. However, this quickly makes ammunition a non-issue; I have thousands of arrows of various serviceable qualities (they are technically weightless), and while I conserve the best ones I have, I'm in absolutely zero danger of not having any arrows at all (I'd just be forced to use the crappy ones that don't fly as straight).