Hearthstone: an illustration of the (lack) of the Invisible Hand

Hearthstone () is a card game made by Blizzard Entertainment ( http://us.battle.net/hearthstone/en/) that I’ve recently started playing (and addicted to, to some extent). While playing the two different modes of the game, I came to the epiphany that hearthstone is a reasonable model to study the economics!

One of the basic notions in economics is that of the Invisible Hand, a notion originating from Adam Smith’s “Wealth of Nations”. The basic idea is that markets ultimately adjust to “true” value; meaning people will eventually be forced to buy and sell at an “equilibrium” price. Any attempt to trade at a price different from this leads to an inefficiency, which will naturally be adjusted due to competition.

In Hearthstone, there are two modes of play: constructed and arena. In constructed you make your own deck of cards from the cards you have in your collection, while in arena the process is somewhat random. The deck consists of exactly thirty cards. In arena mode, you perform the following procedure thirty times: you are given three cards, and you pick the one you like the most. Obviously the smart player will not make these choices randomly; they will choose not only based on the strength of the card but the synergy with other cards already chosen. Some players may even try to gamble and pick a card that has the potential to synergize with a card that they don’t have yet (and perhaps will never have).

It is interesting that in constructed mode, the “meta game” is shifting constantly. A deck made today which has achieved significant success may be worthless the next day. The interesting thing is that these meta changes seem to be largely independent of any balancing changes done to the actual cards; players simply devise new deck builds, write about them, and gain a following. In this case good information and misinformation are difficult to differentiate, but it is clear that the value of individual cards as determined by players are independent of ‘true’ value, since the actual cards have not been changed. This means that the OPINION of pundits and the every expanding reservoir of plays and peculiar constructions exploiting the synergy of a specific set of cards are causing the values of individual cards to shift unpredictably.

So which situation better models true markets? My intuition is the latter. With the advance of technology and our increasing ability to not only trade at a large volume and a fast pace, but also analyze data in an increasingly effective and efficient manner, we are getting ever closer to having complete information at our fingertips at all times. Yet despite this advance, we are no closer to exhibiting the existence of ‘true value’.

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