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We started playing Small World in a 2-player setup and the race which we found very difficult to play was Dwarves. The con of dwarves is their low number of troops (3), which means that it is hard to exploit their special ability (doubled income from mines, even in decline) as they quickly become short in numbers.

One of interesting setups we tried was flying dwarves which made it easy to catch a few of mines, although on the small map it was also easy for the opponent to conquer the mines rendering the dwarf special power not so useful. After a few tries we ended up avoiding dwarves in 2-player games.

Are there any potentially successful dwarf strategies on the small map, or are dwarves a kind of niche play that is only reasonable in bigger games?

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Note that at least one person suggests that they are not reasonable even in bigger games. –  Dave DuPlantis Aug 22 '11 at 20:28
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Dwarves just aren't a great race, you're never going to want to pick them highly. However, once there is a little stack of Victory coins on top of them, who knows? If you reckon you are in a position to conquer a couple of Mine regions (perhaps, as you say, by Flying) and then hold them over a fair number of turns, defended by your Active race, then they may be cost effective.

In general though, it's not advisable to look at Small World and say "all races and powers must be balanced - if this one seems excessively weak, I must be missing something". The races and powers are not created equal: players must use their skill and judgment to decide how much they're willing to pay to grab a good combo, or willing to be paid to take a less-than-attractive one. That's one of the major factors in being a great Small World player!

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From what you write there's very little place for dwarfs in 2-person game as in this case you generally don't have big stakes on race cards because only two players contribute in building these stakes (I think 6-7 coins is maximum in the most favorable conditions). –  pawelbrodzinski Aug 23 '11 at 7:52
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That's one of the beauties of Small World - the self-balancing mechanism of skipping a combo. It makes overpowered combos more expensive on average (except if such a combo lands on top at the beginning of the game), and it makes underpowered combos more interesting because of additional victory points. –  Hackworth Aug 23 '11 at 12:02
    
@Hackworth, completely agreed. Though actually the scenario you cite, where an amazing combo is on top at the beginning of the game, is one of my big peeves about Small World. It feels like there should be a mechanism for bidding for turn order, at the very least... –  thesunneversets Aug 23 '11 at 12:09
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@Myself Maybe some kind of negative bidding - Everyone keeps upping the bid, the highest bid gets to draw first, and everyone else gets VPs according to the highest bid. Repeat for every place in the queue until all players have won a bid or declined to bid. –  Hackworth Aug 23 '11 at 13:35
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@Hackworth: You stated that turn order bidding wouldn't work because everyone starts with only one victory point, but you actually start with five. This could work. I like the idea. –  Gundabad Sep 6 '11 at 12:38
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i only experienced one game scenario that worked for dwarves. I was first player and stout dwarves was the first option. I picked the dwarves and immedietly went for the closest mines to the edge of the board. I only conquered three territories with 2 mines. I threw them into decline right away. It allowed me to watch what the other players did and I switched my strategy according to them next turn. It gave me an in decline race and a another power race (commando orcs) right off. Still lost to a newbie with late game merchant ogres. We dismissed her too readily, three way fight on one side of the board, and she ran rampant for three turns (18-20-20) until we could to respond to her growth. She had already launched so far ahead in gold we lost. I ended up not far behind in gold though.

To make a long ramble short, dwarves are of very limited value. This was the only instance where they helped a little.

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If you can capture the mountain mines, then it might be worth it to keep dwarves (along with victory points stacked on the race) - remember that the mines will give you bonus even in decline!

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