Monday, March 02, 2015

Redit AMA planned for this Wednesday

2 P.M. PST.

For the reason see.


At 10:26 AM, March 03, 2015, Anonymous potatoeWoW said...

Not sure if this is your area of knowledge, but would be great to see some thoughts about the market efficiency available to Blizzard with their new game time token.

They can see supply and demand in real time and they will be setting the prices accordingly with some mysterious formula. Is this ideal?

Not sure if you are familiar, but some other games already have ways to pay for game time using in-game currency, such as EVE Online (Plex) by CCP, Wildstar, etc.

At 1:19 PM, March 04, 2015, Anonymous Anonymous said...

I created a Reddit just for this!

At 12:34 AM, March 06, 2015, Anonymous Anonymous said...

Here's the link for anyone interested:

Thanks for doing this David, as someone who's broadly familiar with your views it's nice to get your opinion on some miscellaneous issues

At 5:11 PM, March 10, 2015, Blogger Benjamin. said...

Wait a minute, have you seriously thought about freezing yourself?

At 11:15 PM, March 10, 2015, Blogger David Friedman said...


At 4:01 PM, March 11, 2015, Blogger Paul Brinkley said...

Aww, I missed it. :-( I would've loved to have asked you if you had any thoughts on the economics posed in Neal Stephenson's Reamde.

I did notice you already had an interest in economics in virtual worlds. And the topic came up several times in the AMA (which I'm still working through). But nothing on Reamde specifically that I saw.

One thing that strikes me about WoW economy is that there's no real ability to use force to coerce AH behavior (or wasn't at the time I was playing and trading - I stopped around the end of WotLK). Not sure how I feel about the effect of WoW's particular method of producing goods, meanwhile. There's a sort of tier system in the commodities that simply doesn't appear in the real world - you can't craft a high-demand item or capability by using alternative materials. And the highest-demand items tended to be non-transferrable. Lots of other differences, too.

At 5:28 PM, March 17, 2015, Blogger StatelessLiberty said...

I unfortunately missed the AMA and had a question I'd like to ask you. I am self-taught in economics and greatly I enjoyed reading your Price Theory textbook. I have found your arguments for the plausibility of the "rationality" assumption useful in defending the economic approach. However it seems to me such arguments alone aren't sufficient to justify the models you present, such models have to be subject to potential falsification by field data. What empirical support do you see for the basic models presented in price theory textbooks? Thank you.

At 11:41 PM, March 22, 2015, Anonymous Anonymous said...

Dr. Friedman, I likewise missed your AMA (very inconvenient timezone), and would have liked to have asked you some things:

I’d like to start off by saying I am a total novice in the field of legal philosophy and am only superficially acquainted with the arguments for a private market in law. That being said, I am currently reading Law, Legislation and Liberty and I have a few questions (that I guess we could put under the header “Why didn’t Hayek go full Anarcho-Capitalist?”). I hope to read The Machinery of Freedom soon, but I must get through a pet project of mine which I am calling Nomos Studies (covering Hayek, Schmitt, and Oakeshott).

First of all, it strikes me that a privatized legal system would correspond most with Hayek’s conceptualization of “Nomos.” In the Nomos category we have rules being generated via cultural evolution, being articulated, and eventually manifesting themselves in the form of the Common Law. Some things get lost, added, or even inferred during this process of articulation (Nomoi A and Nomoi B might imply Nomoi C to be effective). Now, you often start off speeches by reminding us that we wouldn’t trust government with producing a car or our food, and inquiring as to why we trust it to produce law. To which, I think Hayek would say that common law judges are not “making” the law, so much as they are just the instruments of the spontaneous order (finders of the law). Why would Hayek have needed to go full-blown Anarcho-Capitalist when the common law accomplishes the same thing a private market in law could do?

Hayek claims that Nomos and thesis need one another. The spontaneous order of Nomos can break down and lead to inconsistencies. Legislation can, via immanent critique, identify and repair such breakdowns in the Nomos. Nomos can also be too slow to deal with a sudden need or change in society, legislation can likewise address matters with expediency. How could one persuade Hayek that…. we really don’t need Thesis at all?

I think Hayek felt that a spontaneous order like the private law needed certain “regularities” in order to persist in its function. Legislation provides a mechanism to repair the breakdowns in private law and to sort out a bad judge’s articulations of the nomos. Though, I must say, the Anarchist position carries the merit of allowing for the geographical diversity of nomoi to be fully expressed (as opposed to being ironed out by one-size-fits-all legislation). However, I’m not sure how we could have sold him on your system. I’m sure that once I finish LLL and move on to The Machinery of Freedom the answers to these questions will become quite clear. However, I just thought I might throw a few of my concerns out there.

At 11:53 PM, March 22, 2015, Anonymous Anonymous said...

And just to add on to the above (sorry)....

What do you think about Hayek's proposal to further separate the powers of lawmaking (a senate for "rules of just conduct" and a house for directing the ends of government)? Would this separation do anything to address your concerns with a minarchist system?

At 9:50 AM, March 23, 2015, Blogger David Friedman said...


Some obvious support is the observed effect of price control—shortage if below the market price, surplus if above.

But economic theory as a whole is hard to test, because pure theory doesn't give you much in the way of predictions. You have to combine it with likely but not certain real world facts about utility functions, production functions and the like. So for any particular application of the theory, what you do is create a model, use it to make predictions, and test those predictions.

For a fairly unconventional example, take a look at my first published economics article, on the size and shape of nations.

At 9:54 AM, March 23, 2015, Blogger David Friedman said...


I think the short answer to your question is that you have to think about the incentives of the judges. If, for example, as was for a considerable while the case in England, a judge gets paid per case rather than on salary, he has an incentive to make decisions that will bring him business. If the decision of what court a case goes to is made by the plaintiff, that's an incentive for pro-plaintiff decisions. More generally, what is the incentive for a common law judge to make good law?

In the system I sketch, the law is being made by firms that are selling it, via an intermediary (rights enforcement agency), to the people who will be under it. That gives them an incentive to create something close to economically efficient legal rules—I discuss why it is only "close to" in Machinery.


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