Valve hires an economist

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Aristophanes Posted: Mon, Jun 18 2012 12:31 PM

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The video game developer Valve has hired an economist for the purpose of "linking virtual economies, creating a shared (virtual) currency, and developing a standard balance of payments" between worlds.

"We are running into a bunch of problems as we scale up our virtual economies, and as we link economies together," wrote Valve's Gabe Newell in his pitch email to Varoufakis.

Pointing to what's potentially on the horizon, Newell described how the company was trying to overcome "an issue of linking economies in two virtual environments (creating a shared currency), and wrestling with some of the thornier problems of balance of payments."

This intrigued Varoufakis and ultimately lead to him getting involved with the studio. "By studying Valve’s economy," he writes, "we would have an opportunity to enhance the experience of its customers, in addition to sharpening my own thinking about what makes real economies tick."

Anyone familiar with Valve and/or Steam knows what their business models look like. The hope to turn subjective value preferences into more money off of "more intense users."  A.K.A, the more you play the more you pay.

I have seen interviews where Gabe says that they will use money as a deterrent for cheating, trolling on microphones, and will charge more to users that use their services more often.  Using money to deter people from ruining an online game for others seems like a decent idea.  I used to like Valve's business model, but it seems that they will use subjective value to charge certain people more for the same service that others get.

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DanielMuff replied on Mon, Jun 18 2012 1:36 PM

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They chose G Pap's former economic advisor? (http://en.wikipedia.org/wiki/Yanis_Varoufakis)

"creating a shared (virtual) currency, and developing a standard balance of payments" between worlds"

Why not have an exchange market where people buy and sell the currencies? In other words, let the users determine the exchange rate.

"linking virtual economies"

What are they afraid of; that immediately some people will lose and others will gain when the economies become linked and then having the market process re-price everything? If anything the market is already re-pricing everything in anticipation of the linkage.

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DanielMuff replied on Mon, Jun 18 2012 1:41 PM

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Lol. The x and the y axis in the lower image are both "hats." You have to be an economics/business nerd to not only find that hilarious but to actually notice it.

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Aristophanes replied on Mon, Jun 18 2012 1:47 PM

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Lol. The x and the y axis in the lower image are both "hats." You have to be an economics/business nerd to not only find that hilarious but to actually notice it.

haha, right.  I busted out laughing when I looked at that.

Regarding the previous post, yes, they are probably afraid of some people immediately gaming the virtual market.  It happens in other games and the users get pissed.

Ther eis one game, called EVE Online where the users created a rebel army an attacked the cities where people buy things, and the devs said "let them.  It is part of the game now.  If people want the cities back, then they can get together and take them back."  Which I thought was pretty cool.  I don't have thhat kind of confidence in Valve.  I think they are going to give a bad name to "subjective pricing."

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Aristophanes replied on Mon, Jun 18 2012 6:08 PM

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No one else thinks this is cool?

They are going to create little economies for different games and have them trade actual money inbetween digital content.  I am not a fan of people spending hard earned money on hats for video game characters and whatnot, but this is a pretty ambitious plan of theirs.  Imagine an economy with its own time preferences and purchasing power distribution inside of Team Fortress 2 and DotA2, and any other games in the future.

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gotlucky replied on Mon, Jun 18 2012 6:14 PM

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If we admit it's cool, then we admit we are all a bunch of video game nerds.  This is, of course, not the same a libertarian forum nerd.

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Aristophanes replied on Mon, Jun 18 2012 6:26 PM

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Watch the video at this link, I cannot embed it - Why do people hate EA (vs. Why people love Valve).

Recently, IGN asked EA why people hate EA in an article that seemed designed to dismiss any actual reasons for people hating EA. Hardly surprising, since EA was the one being interviewed about the hate for EA. Looking to set things right and restore balance to the world, Jim Sterling asks Jim Sterling why people hate EA.

If we admit it's cool, then we admit we are all a bunch of video game nerds.  This is, of course, not the same a libertarian forum nerd.

You know, I remember reading somewhere when I read Neuromancer and Snow Crash that the first people to identify themselves as anarcho-libertarians were white suburban internet users.  Some even used "anarcho-capitalist."  Rothbard/Schumpeter liberty/innovation and the origins of hacking computers are along similar lines (cyberpunk).  Stephenson constantly satirizes the corporate government U.S. culture in Snow Crash (written in the late 80's). 

"You have the right to life, liberty, and your pizza in 30 minutes or less."  (or something to that effect)

The story begins and ends in Los Angeles, which is no longer part of what is left of the United States. The time is not clearly specified but internal references are consistent with a date in the early 21st century. In this hypothetical reality, the federal government of the United States has ceded most of its power to private organizations and entrepreneurs.  Franchising, individual sovereignty and private vehicles reign (along with drug trafficking, violent crime, and traffic congestion). Mercenary armies compete for national defense contracts while private security guards preserve the peace in gated, sovereign housing developments. Highway companies compete to attract drivers to their roads rather than the competitors', and all mail delivery is by hired courier. The remnants of government maintain authority only in isolated compounds where they transact tedious make-work that is, by and large, irrelevant to the dynamic society around them.

Much of the territory ceded by the government has been carved up into sovereign enclaves, each run by its own big business franchise (such as "Mr. Lee's Greater Hong Kong") or the various residential burbclaves (suburban enclaves). This arrangement resembles anarcho-capitalism, a theme Stephenson carries over to his next novel The Diamond Age. Hyperinflation has devalued the dollar to the extent that trillion dollar bills — Ed Meeses — are nearly disregarded and the quadrillion dollar note — the Gipper — is the standard 'small' bill. For physical transactions people resort to alternative, non-hyperinflated currencies such as yen or "Kongbucks" (the official currency of Mr. Lee's Greater Hong Kong).

The Metaverse, a phrase coined by Stephenson as a successor to the Internet, constitutes Stephenson's vision of how a virtual reality-based Internet might evolve in the near future. Resembling an MMO, the Metaverse is populated by user controlled avatars as well as system daemons. Although there are public-access Metaverse terminals in Reality, using them carries a social stigma among Metaverse denizens, in part because of the poor visual representations of themselves as low-quality avatars. Status in the Metaverse is a function of two things: access to restricted environments such as the Black Sun, an exclusive Metaverse club, and technical acumen, which is often demonstrated by the sophistication of one's avatar.

There might be an actual reason why Ron Paul has internest support.