4 ms·

I would say the assumption of correctness is a "if you are so smart why aren't you rich" sort of heuristic. Essentially if you knew that and that it was wrong

I would say the assumption of correctness is a "if you are so smart why aren't you rich" sort of heuristic. Essentially if you knew that and that it was wrong then it would lead to massive arbitrage opportunities. Personally I believe that treating value in terms of "should" is asking the wrong question. The actual questions are chains. * What is the current production cost? Can we do better? * What does it cost to produce production if we can? How long does it take to get it producing? * Can anything substitute for it acceptably?

skybrian 7y ago
Having the idea of doing arbitrage doesn't matter if you can't build a canal or railroad or pipeline to make it happen. It's only in financial markets where it might be realistic to pretend this is only a matter of being smart enough to come up with an idea. (Because they assume you have the money and that's the only thing you need.) Also, focusing on cost ignores markets where the marginal cost is nearly zero and price is set in other ways.