Devastating price crash in the Diablo III hamburger-dagger market

The market for a virtual hamburger which can be used in as a dagger in a popular video-game plummeted over the last week

Keeping on the hamburger theme, here's a sentence which will make sense to about two of you: the economy of Diablo III has fallen through the floor after a glut of Horadric Hamburgers (a burger which is also a dagger) for sale on the game's real-money auction house pushed the average price from around £90 to just £7.50.

The Horadric Hamburger is a "legendary" item in Diablo III. It's hard to get, and can only be found in a secret level, "Whimsyshire". And yes, it's a Hamburger which is also a dagger. The game provides only the cryptic description:

The Horadrim wandered far and wide to gather the finest ingredients for their feast. Only the lone traveler sent to the Moo Moo farm failed to return. Diablo had laid a trap for the Horadrim, the Hell Bovine, who struck the traveler down before he could gather the final ingredient: cheese.

The problem with the Horadric Hamburger is that although it's classified as an extremely rare item by the game, it's actually a bit rubbish. The game models stabbing someone with a hamburger relatively faithfully. That is to say, it doesn't hurt very much. As a result, no player who is practiced enough to find the damn thing is actually going to use it. It's a bit like a solid gold tennis-racket.

So the natural reaction of all the players was to take this immensely rare, precious, thing which they didn't actually want and use a new feature of the game which debuted last Friday: the real money auction house. There, they could sell their valuable trinket for cash money, and use it to buy real hamburgers which they can eat, rather than stab NPCs with.

Unfortunately, it seems everyone else had the same idea. As PC Games Network reported, three hours after the auction house opened, the burgers were listed at an average price of £87.91, with 12 chancers going for the maximum price of £200. By Tuesday, it appeared that they had realised their folly. Although it's impossible to tell how many sold, the average price had plummeted to just £7.50.

Virtual economies are increasingly interesting to economists, because of the sheer wealth of data they can produce. Valve, the makers of the Half Life and Portal series, recently hired Yanis Varoufakis, who rose to fame analysing the eurocrisis, as their "economist-in-residence". The President of Valve, Gabe Newell, laid out his pitch to Varoufakis:

I have been following your blog for a while… Here at my company we were discussing 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, when it occurred to me "this is Germany and Greece", a thought that wouldn’t have occurred to me without having followed your blog. Rather than continuing to run an emulator of you in my head, I thought I’d check to see if we couldn’t get the real you interested in what we are doing.

The Diablo economy is far simpler than the one that Valve appears to be setting up, but there's still no shortage of teachable lessons. The key one from this story is the fallacy of the idea that goods have some "intrinsic" value. Produce - even a legendary hamburger-dagger - is worth what people are prepared to pay for it. No more, no less. In this case, the labeling of the item gave faulty signals, which convinced sellers that there would be more demand than their actually was. As time went on and none sold, they were forced to cut prices to a more realistic level.

The auction house has now settled down a bit. If it goes the same direction as the auction house in Blizzard's previous game, World of Warcraft, expect to see some very interesting case studies indeed.

A hamburger. Not a virtual hamburger. Certainly not a virtual hamburger-dagger. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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David Blunkett compares Labour membership to failed revolution “from Ukraine to Egypt”

The Labour peer and former home secretary says new members need a “meaningful political education”, and accuses unions of neglecting their “historic balance”.

There are three sorts of opposition. There’s the civil society opposition, with people campaigning in their own specific areas, people who’ve got an interest group or are delivering social enterprise or a charity. I don’t think we should underestimate that because we're going to have to hang on to it as part of the renewal of civil society.

The second is the opposition formally, within the House of Commons: those who have agreed to serve as the formal shadow ministerial teams. Because of what I’d describe as the turmoil over the last two years, they’ve either not been able to be impressive – ie. they’re trying very hard but they don't have the coherent leadership or backing to do it – or they’ve got completely different interests to what it is they’re supposed to be doing, and therefore they’re not engaged with the main task.

Then there’s the third, which is the informal opposition – Labour linked sometimes to the Lib Dems and the SNP in Parliament on the opposition benches as a whole. They’re not doing a bad job with the informal opposition. People getting on with their work on select committees, the departmental committees beginning to shape policy that they can hopefully feed to the National Executive Committee, depending on the make-up of the National Executive Committee following this year’s conference. That embryo development of coherent policy thinking will be the seed-bed for the future.

I lived through, worked through, and was integrally involved with, what happened in the early Eighties, so I know it well. And people were in despair after the ‘83 election. Although it took us a long time to pull round, we did. It’s one reason why so many people, quite rightly in my view, don't want to repeat the split of 1931 or the split of 1981.

So they are endeavouring to stay in to argue to have some vision of a better tomorrow, and to persuade those of goodwill who have joined the party – who genuinely believe in a social movement and in extra-parliamentary non-violent activity, which I respect entirely – to persuade them that they’ll only be effective if they can link up with a functioning political process at national level, and at townhall and county level as well.

In other words, to learn the lessons of what’s happened across the world recently as well as in the past, from the Ukraine to Egypt, that if the groundswell doesn’t connect to a functioning party leadership, then, with the best will in the world, it’s not going to achieve its overall goals.

How do we engage with meaningful political education within the broader Labour party and trade union movement, with the substantially increased rank-and-file membership, without being patronising – and without setting up an alternative to Momentum, which would allow Momentum to justify its existence as a party within a party?

That's the challenge of the next two years. It's not just about someone with a vision, who’s charismatic, has leadership qualities, coming forward, that in itself won’t resolve the challenge because this isn't primarily, exclusively about Jeremy Corbyn. This is about the project being entirely on the wrong trajectory.

A lot depends on what the trade unions do. They command effectively the majority on the National Executive Committee. They command the key votes at party conference. And they command the message and resources that go out on the policy or programmes. It’s not just down to personality and who wins the General Secretary of Unite; it’s what the other unions are doing to actually provide their historic balance, because they always have – until now – provided a ballast, foundation, for the Labour party, through thick and thin. And over the last two years, that historic role has diminished considerably, and they seem to just be drifting.

I don’t think anybody should expect there to be a party leadership challenge any time soon. It may be that Jeremy Corbyn might be persuaded at some point to stand down. I was against the challenge against him last year anyway, purely because there wasn't a prepared candidate, there wasn't a policy platform, and there hadn’t been a recruitment drive to back it up.

People shouldn’t expect there to be some sort of white charger out there who will bring an immediate and quick end to the pain we’re going through. I think it’s going to be a readjustment, with people coming to conclusions in the next two years that might lead the party to be in a position to fight a credible general election in 2020. I’ve every intention of laying down some good red wine and still being alive to drink it when the Labour party is elected back to power.

David Blunkett is a Labour peer and former home secretary and education secretary.

As told to Anoosh Chakelian.

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition