
Arbitrage and Equilibrium in the Team Fortress 2 Economy (2012) - pizza
http://blogs.valvesoftware.com/economics/arbitrage-and-equilibrium-in-the-team-fortress-2-economy/
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gwern
I see the images are _still_ broken...

Use the Internet Archive version:
[https://web.archive.org/web/20121020031732/http://blogs.valv...](https://web.archive.org/web/20121020031732/http://blogs.valvesoftware.com/economics/arbitrage-
and-equilibrium-in-the-team-fortress-2-economy/) which I've also mirrored at
[https://www.gwern.net/docs/economics/2012-varoufakis-
teamfor...](https://www.gwern.net/docs/economics/2012-varoufakis-
teamfortress2arbitrage.html)

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Havoc
Was looking into this recently. It's (currently) a complete non-starter:

1) For each item there are thousands of bids.

2) The fluctuations aren't enough to easily cover Steam's fees

3) The price of almost all items is declining, meaning holding inventory is a
bad idea. See point 1

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gwern
So, way too much inflation of items?

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staplor
I would say a decrease in players. TF2 still had a strong playerbase but it
isn't what it was 5 years ago.

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im3w1l
Arb trading in games is fun. In the later part of my tf2 playing I was trading
more than shooting. Not because I particularly wanted anything just because it
was enjoyable.

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simonebrunozzi
I met with Yanis in 2013 and had the opportunity to briefly discuss the work
he did there. Truly fascinating.

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f00_
there is someone in the comments that brings up a good point: Varoufakis
hadn't recognized a currency developing and classified tf2 as a barter
economy. But scrap metal/earbuds is/was effectively working as a currency.

>in that every exchange necessitates a double coincidence of wants (i.e. when
Jack offers Jill some Team Fortress 2 hat in exchange for a couple of keys,
the trade will go ahead if, at the same time, Jill also prefers that
particular hat to her two keys).

>[...] throughout history, whenever the number of transactions (and ‘assets’)
grew in number, one of those assets soon emerged as a numéraire – a basic form
of money that is. Once the numéraire acquired currency, suddenly the
prerequisite of some double coincidence of wants vanished and people could
trade anything for the numéraire–asset which they could then use in order to
buy whatever else tickled their fancy. In short, as economies grew in
sophistication, they ‘monetised’ and ceased functioning on the basis of barter

>Initially, I had expected that a similar pattern would be replicated in
digital economies, like Valve’s. I was expecting to find that some item or
asset would emerge as currency in the context of games such as Team Fortress
2. However, a close study of our Team Fortress 2 economy revealed a more
complex picture; one in which barter still prevails even though the volume of
trading is skyrocketing and the sophistication of the participants’ economic
behavior is progressing in leaps and bounds.

from a comment-er (brandon):

> i know that the trading system in TF2 his been in place for roughly a year
> now but i don’t know if i would call it a bartering system. as a player i’ve
> seen scrap, reclaimed, and refined metal act more as our currency more than
> anything. when people talk, on servers about buy or selling item the price
> is usually is translated into an amount of metal. like keys having a selling
> price of 2.66 (2 refined and 2 reclaimed worth of metal), although keys can
> be bought with actual money, scrap metal and the likes is not something you
> cannot buy in the store.

I'd like to hear Varoufakis talk more about his time at valve. I played
1000hrs+ (mostly idling) and got lucky when trading first started and got a
few sam and max hats. Ended up accumulating ~3k$ for like 5 month's work lol.

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kyberias
The author is the former Greece Minister of Finance.

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sah2ed
Perhaps it’s not clear.

Article was written in 2012 while the author was an economist in residence at
Valve. He would later become Greece’s Finance minister in 2015.

