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Arbitrage and equilibrium in the Team Fortress 2 economy (2012)

f every trader. The dream of buying low and selling high (for this is what arbitrage is all about) is the driver of all commerce but also its own worst enemy: for as everyone is trying to pursue it, the potential for arbitrage disappears.

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. Indeed, the matrix above can be reduced to a simple menu list which gives us the price of laser guns, hats and earmuffs in terms of number of keys necessary to purchase one unit of each: In this post I tried to show you how these opportunities and dangers come and go; how they expand when new items or sales are released and then wane as the community learns to price things more consistently (i.e. as arbitrage gives way to equilibrium).

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