Earlier this fall, an article came out on Geekwire’s website featuring an interview with Gabe Newell, the man in charge of one of the most successful PC game developers and distributors – Valve Corporation. This interview highlights a lot of strange, interesting, and puzzling phenomena found in the online PC market that puts a lot of economic principles to test.
Valve is in a unique position to collect data and analyze economic theories, being the largest distributor of online PC games through their Steam distribution service. Through Steam, Valve can observe consumer behavior, purchases, and game activity in real time and base policies on data trends.
I want to highlight three interesting insights that emerge from the interview, and provide some brief commentary on what makes them so strange, and how we might go about exploring their consequences. Some of the language of the interview is a bit unclear, so below is my attempt to glean the basic results of it. Continue reading →
Perhaps my colleagues and friends can help me out, since I neither play Minecraft nor have a deep understanding of computer science, but this astonished me nonetheless. It seems players in Minecraft have accomplished a great feat and made computing recursive by building simple computers within the game world.
Carl Menger explained the origin of money as a market phenomenon, the unintended consequence of people pursuing their own ends in the market. Money is the result of human action, but not of human design. Here’s how it works: Continue reading →
Back in 2008 mineral prices in EVE online reached an artificial bottleneck that the developers had not foreseen. The problem was fixed soon after it was recognized, but the story itself highlights how interconnected artificial economies can become.
There are some basic gameplay aspects that need to be explained before I can proceed. First of all most of the goods in EVE online that players use are produced by other players. These goods are constructed using 8 basic mineral types. The minerals can be sold on markets just like any other good, and their prices tend to dictate the costs of all player made goods in EVE. The most common mineral type is named Tritanium. It is required for the construction of just about all goods, and it is traded in large quantities everywhere in the EVE universe. Continue reading →