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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A hard Brexit is the best way to keep Scotland in the UK - here's why

Theresa May knows she has the upper hand. 

Conventional wisdom says soft Brexit is good for the union. If Theresa May steers the UK out of the EU but retains access to the single market, maybe a bit of freedom of movement it would make many Scots – the majority of whom voted to stay in Europe – think twice before voting Yes to independence.

After all, they’d be turning their back on some access to the EU for an uncertain future as an independent country who would still have to negotiate it’s way back into the club.

Conventional wisdom is wrong.

The reason Nicola Sturgeon is hell bent on keeping Scotland’s access to the single market is because a hard Brexit is bad news for the independence cause.

Never forget that while the SNP may claim to be Scotland’s party it is in fact a single issue movement focused on one goal only – independence.

If Sturgeon is opposed to the increasingly likely scenario that sees the whole of the UK crash out of Europe swapping single market access for full immigration controls, it’s because first and foremost it’s bad for her cause.

For if there is to be a hard Brexit, Sturgeon would have to sell the prospect of Scotland leaving the UK, joining the EU and being confronted with not just border posts for anyone wanting to travel south but tariffs for anyone wanting to trade with England.

She’d have her work cut out.The UK is a significantly more vital trading partner for Scotland than the remaining 27 countries of the EU. Scotland’s exports to the rest of the UK outstrip what it sell to Europe abour four to one, and it’s estimated that while 250,000 Scots jobs are tied to the EU, a million more rely on being in the UK.

It’s why Sturgeon for all her fighting talk is trapped. If there is to be a hard Brexit she needs to get Scotland out of the UK before the reality of that dawns. That’s looking like a two-and-a-half year window.

But the polls are stubbornly static.

She can’t have another referendum unless she knowns she’s going to win it. For to lose two votes on the same subject – and her draft legislation published last week suggests she’s going for the same question but banking on different arguments – would provide a definitive answer, closing the issue down for a generation for real this time and begging questions not just about what next for the SNP but what’s the point of the SNP.

With Yes still hovering around the 45 per cent mark in current polls Sturgeon needs to add a good 15 per cent before she can consider triggering indyref2.

Now, some of her supporters point to the last independence campaign when support for the proposition rose from a historic position of around 25 per cent to 45 per cent by polling day. They claim the same can be done again.

But that was a long campaign and Sturgeon does not have the time, never mind the fact that most of the soft Yes vote has been hoovered up now and convincing those that remain will prove much harder. 

And, according to my Number 10 source, Theresa May knows all this. 

That’s why she can dismiss Sturgeon’s bleating. Why she can sit around the Cabinet table with her as she did yesterday and, despite promising respect, actually give her short shrift.

May’s in the stronger position on this one. She’s newly installed, and confident that she can go to the country and win at will.

Sturgeon’s overseeing an increasingly tired SNP administration (albeit, like May, there is no credible opposition to speak of). If she doesn’t deliver independence it’s not just her political career but the future of her entire party that would be pitched into the balance.

Unlike David Cameron, May has no specifically Scottish special adviser and her dismissive tone towards Scotland has led some to speculate that she doesn’t get it or doesn’t care.

Quite the opposite. 

Whatever other drawbacks, hard Brexit brings it is the most sensible position to take if your number one priority is keeping Scotland in the UK.

In the absence of any evidence as to what else her strategy may consist of, perhaps that is May’s game.