I think there’s an implicit element of scale or one offness. For buying milk you have multiple samples as to good price. Even if any is contrived, the bulk still capture something real
For buying milk you have multiple samples as to good price. Even if any is contrived, the bulk still capture something real
No, the bulk don’t, because I buy milk a lot more often than I go on Wall Street and try to get cute with limit orders or manufacturing options or straddles on speculative merger/takeover targets or sign up to MoviePass or park while ignorant in NYC. The bulk of my life is buying milk, not speculating on Widgets Inc. And if I did those enough times to come anywhere near the number of times I’ve bought milk, so that ‘the bulk’ could potentially be any of those things, I would also not be doing it nearly as badly as OP postulates I would. (Because I would be, say, a market-maker like Jane Street, which makes a lot of money off doing that sort of thing.)
… I would also not be doing it nearly as badly as OP postulates I would. (Because I would be, say, a market-maker like Jane Street, which makes a lot of money off doing that sort of thing.)
I’m not sure I follow. Is the argument here that Jane Street is good enough at market-making that they are not vulnerable to adverse selection? i.e. that the dynamic in example #11 (Widgets stock) wouldn’t apply to them?
I think there’s an implicit element of scale or one offness. For buying milk you have multiple samples as to good price. Even if any is contrived, the bulk still capture something real
No, the bulk don’t, because I buy milk a lot more often than I go on Wall Street and try to get cute with limit orders or manufacturing options or straddles on speculative merger/takeover targets or sign up to MoviePass or park while ignorant in NYC. The bulk of my life is buying milk, not speculating on Widgets Inc. And if I did those enough times to come anywhere near the number of times I’ve bought milk, so that ‘the bulk’ could potentially be any of those things, I would also not be doing it nearly as badly as OP postulates I would. (Because I would be, say, a market-maker like Jane Street, which makes a lot of money off doing that sort of thing.)
I’m not sure I follow. Is the argument here that Jane Street is good enough at market-making that they are not vulnerable to adverse selection? i.e. that the dynamic in example #11 (Widgets stock) wouldn’t apply to them?