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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The UK must reflect on its own role in stoking tension over North Korea

World powers should follow the conciliatory approach of South Korea, not its tempestuous neighbour. 

South Korea’s president Moon Jae-in has done something which took enormous bravery. As US and North Korean leaders rattle their respective nuclear sabres at one another, Jae-in called for negotiations and a peaceful resolution, rejecting the kind of nationalist and populist response preferred by Trump and Kim Jong-un.

In making this call, Jae-in has chosen the path of most resistance. It is always much easier to call for one party in a conflict to do X or Y than to sit round a table and thrash through the issues at hand. So far the British response has sided largely with the former approach: Theresa May has called on China to clean up the mess while the foreign secretary Boris Johnson has slammed North Korea as “reckless”.

China undoubtedly has a crucial role to play in any solution to the North and South Korean conflict, and addressing the mounting tensions between Pyongyang and Washington but China cannot do it alone. And whilst North Korea’s actions throughout this crisis have indeed been reckless and hugely provocative, the fact that the US has flown nuclear capable bombers close to the North Korean border must also be condemned. We should also acknowledge and reflect on the UK’s own role in stoking the fires of tension: last year the British government sent four Typhoon fighter jets to take part in joint military exercises in the East and South China seas with Japan. On the scale of provocation, that has to rate pretty highly too.

Without being prepared to roll up our sleeves and get involved in complex multilateral negotiations there will never be an end to these international crises. No longer can the US, Britain, France, and Russia attempt to play world police, carving up nations and creating deals behind closed doors as they please. That might have worked in the Cold War era but it’s anachronistic and ineffective now. Any 21st century foreign policy has to take account of all the actors and interests involved.

Our first priority must be to defuse tension. I urge PM May to pledge that she will not send British armed forces to the region, a move that will only inflame relations. We also need to see her use her influence to press both Trump and Jong-un to stop throwing insults at one another across the Pacific Ocean, heightening tensions on both sides.

For this to happen they will both need to see that serious action - as opposed to just words - is being taken by the international community to reach a peaceful solution. Britain can play a major role in achieving this. As a member of the UN Security Council, it can use its position to push for the recommencing of the six party nuclear disarmament talks involving North and South Korea, the US, China, Russia, and Japan. We must also show moral and practical leadership by signing up to and working to enforce the new UN ban on nuclear weapons, ratified on 7 July this year and voted for by 122 nations, and that has to involve putting our own house in order by committing to the decommissioning of Trident whilst making plans now for a post-Trident defence policy. It’s impossible to argue for world peace sat on top of a pile of nuclear weapons. And we need to talk to activists in North and South Korea and the US who are trying to find a peaceful solution to the current conflict and work with them to achieve that goal.

Just as those who lived through the second half of the 20th century grew accustomed to the threat of a nuclear war between the US and Russia, so those of us living in the 21st know that a nuclear strike from the US, North Korea, Iran, or Russia can never be ruled out. If we want to move away from these cyclical crises we have to think and act differently. President Jae-in’s leadership needs to be now be followed by others in the international community. Failure to do so will leave us trapped, subject to repeating crises that leave us vulnerable to all-out nuclear war: a future that is possible and frightening in equal measure.

Caroline Lucas is the MP for Brighton Pavilion.