Arbitrage and Equilibrium in the Team Fortress 2 Economy (2012)

I see the images are still broken...

Use the Internet Archive version: https://web.archive.org/web/20121020031732/http://blogs.valv... which I've also mirrored at https://www.gwern.net/docs/economics/2012-varoufakis-teamfor...

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

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.

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

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.

The author is the former Greece Minister of Finance.