'A multiplayer game environment is actually a dream come true for an economist': the in-house economist for the company behind Half-Life and Portal explains what video games can teach us.

• Author: Suderman, Peter
• Position: Yanis Varoufakis - Interview

In October 2011, the Greek economist Yanis Varoufakis received an unusual email. "I'm the president of a videogame company," it began. The message was from the head of Valve Software, the influential video game design firm behind such industry-defining titles as the sci-fi shooter Half-Life and the first-person puzzle adventure Portal.

Varoufakis, who teaches economic theory at the University of Athens, had spent years working on game theory --the strategic and decision making processes that economists study, not the theory behind computer games. He also examined the complexities of linking multiple distinct economies. During the height of the Euro crisis in Greece, Varoufakis was often seen in the media explaining the meltdown and describing what might happen next in the currency-integrated Eurozone. Now Valve Software chief Gabe Newell was asking him to apply the same insights to the interlinked virtual economies of Valve Software's games.

After meeting Newell and other Valve staffers in Seattle, Varoufakis agreed to become the company's first official in-house economist. From early 2012 through the middle of 2013, he studied Valve's games, occasionally sharing his insights on the company blog in lengthy posts with wonky titles. (Sample: "Arbitrage and Equilibrium in the Team Fortress 2 Economy.") His work for Valve led to more media attention, including articles and interviews in The Washington Post, The Financial Times, and National Public Radio.

In February, Varoufakis spoke with Senior Editor Peter Suderman about what he learned as a video game economist, the failings of his chosen academic profession, and how computer games and virtual online worlds might be the future of macroeconomics.

reason: What does a video game company want with an economist?

Yanis Varoufakis: The moment that video game companies shifted from single-player to multiplayer games, without realizing it, they created a social economy. People interacting through the game have the opportunity not only to kill one another, but also to exchange stuff. Stuff that was valuable--or scarce, as an economist would say--within the virtual world.

In almost no time that sort of economy started creating, within the game, a lot of value, and also distributing it. If you have a kind of community involving millions of people who trade with one another, who engage with one another, and who can even create value through production processes--for instance, designing some shield or some garden and sending it through the store of the community to other players--all of a sudden, these video game companies...