Tuesday 11 September 2012

What can you do with a B.A. in Econ?

Make awesome video games even more awesome, that's what. Valve's hiring another economist:

Valve’s multi-player games, as well as Steam (Valve’s successful trading platform), have allowed for the spontaneous emergence of complex virtual, yet quite real, economies. These economies are replete with rich trading patterns, fascinating ‘institutions’ (which have also sprung up organically), socio-economic conventions, and, generally, a host of economic phenomena that partly reflect what we observe in the analogue world and partly constitute new and unexplored behavioural patterns.
The task of a Valve economist is to make good use of the incredible wealth of data concerning these social economies, to pose fresh questions about their workings, and to generate methods for converting new knowledge about these economic vistas into tangible ideas that help improve our customers’ experiences.
  • Research, design, develop, and validate economic models to explain user behavior for all of Valve’s products.
  • Design experiments to validate experimental hypotheses for in-game economies.
  • Provide insight into short- and long-term behavioral patterns of participants in virtual economies.
  • Inform decision-making at Valve by providing quantitative and economic rationale for various lines of inquiry.
  • Create new avenues of analysis based on existing economic metrics, as well as generating new domains of data to collect and investigate.
  • Collaborate with our business development team to improve the performance of existing pricing strategies and incentives for our customers and partners.
  • Graduate degree in Economics or related field
  • Advanced knowledge of statistics
  • Four years experience with:
    • Econometrics/data-mining or related field
    • Relevant analysis techniques that inform the creation of economic models
  • Proficiency in one or more of the following programming languages: C++, SQL, PHP, or equivalent
Now, what do I mean another economist?  Yanis Varoufakis has been working at Valve and blogged on his experience. I'm not sure if he's still there, but the blog doesn't say that he isn't. Here's Varoufakis on his first visit to Valve:
Within hours, an agreement was reached: I would become, in some capacity (that was to be hammered out later), Valve’s economist-in-residence. Valve is not the first video game company to have brought an academic economist on board (e.g. EVE Online were the first to do so, recruiting Eyjólfur Guðmundsson – whom I would like to thank for making my name sound almost easy-going…). My intention at Valve, beyond performing a great deal of data mining, experimentation, and calibration of services provided to customers on the basis of such empirical findings, is to to go one step beyond; to forge narratives and empirical knowledge that (a) transcend the border separating the ‘real’ from the digital economies, and (b) bring together lessons from the political economy of our gamers’ economies and from studying Valve’s very special (and fascinating) internal management structure.
Academia's a pretty good place. When it's working properly, it doesn't sound all that different from work at Valve, at least according to Varoufakis:
If I were asked my opinion of what Valve’s symbol should be, I would recommend a depiction of a wheel, like those which every desk at Valve comes equipped with so as to enable us to move about the company at will, to join whichever working group we want, to form new ones spontaneously and without seeking anyone’s permission. The said wheel, at least in my eyes, symbolises Valve’s attempt to create, within the company, a successful ‘spontaneous order’ based not on price signals but, rather, on decentralised, individuated, time allocations.

Many enlightened corporations do a song and dance about their readiness to let employees allocate 10% or even 20% of their working time on projects of their choosing. Valve differs in that it insists that its employees allocate 100% of their time on projects of their choosing. 100% is a radical number! It means that Valve operates without a system of command. In other words, it seeks to achieve order not via fiat, command or hierarchy but, instead, spontaneously.
I wonder what Paul Walker would make of this form of organization for the knowledge-based firm. As the New York Times writes:
Mr. Newell said that there was a better chance that Valve would “disintegrate,” its independent-minded workers scattering, than that it would ever be sold.
If the firm is just a bundle of contracts....


  1. "Mr. Newell said that there was a better chance that Valve would “disintegrate,” its independent-minded workers scattering, than that it would ever be sold."

    Mr Newell may have a point. You have to ask what is keeping the "firm" together? What is the glue that keeps the human capital in place? Without some glue I think Newell is right, the workers could just scatter. My work would suggest that scattering is more likely the larger the firm and the more heterogeneous the human capital.

  2. A read through Valve's employee handbook helps explain how Valve works.

  3. The glue is in hiring people who are likely to really love working together and who love doing awesome things. Community matters.

  4. Wow. Jaw-dropping wow. I hope there's serious work going on tracking what makes it tick.

  5. Yes but why don't some or all of them just get up and leave to form their own firm? The community would still be in the new firm. There must be something keeping them where they are.

  6. Why bother if they're happy where they are?

  7. The other reason is the open nature of Valve. If you have a good idea which attracts the talented people in the company, your idea will become a reality. And you will hopefully receive due recognition.
    I guess you'd only leave if you're unhappy enough to shift. Restarting the community, even with the same people, takes time and resources away from developing the idea.

  8. Much of Valve's value lies in its community. That's not just the staff but its customers and the relationships between them. There are Valve fans who won't use competing platforms on principle, despite the cost of entry being zero. You can't just set up a competing firm and develop something similar, it takes many years of organic development.

  9. Valve does release a lot of statistics about itself and its digital distribution platform, Steam. Everything from the computer hardware its customers are using to the price elasticities of demand for video games. There's certainly enough information out there to draw some conclusions about their operation.

  10. Because they could be happy elsewhere as well. There has to be something holding them where they are. It doesn't have to be physical capital, it could just be reputation, for example. If the firm has a good reputation for doing what they do then leaving could mean losing that reputation. But there had to be something.