4 ms·
It doesn't matter if a vast majority of people are not rational economic actors. It only takes 1 rational actor with enough capital to take the other side of al
by cortesoft 6mo ago
It doesn't matter if a vast majority of people are not rational economic actors. It only takes 1 rational actor with enough capital to take the other side of all the bad bets, and the market will be priced correctly even if the other 99 people are irrational.
- Majromax 6mo ago'Enough' [capital] is doing a lot of work in that sentence. In the limit of a one-sided irrational market, the 'rational actor' would need to take the other side of every open transaction.
- cortesoft 6mo agoYeah, but in the limit of a one-sided irrational market, the rational actor is going to be given as much capital as he can take.
- eru 6mo agoIn the long run. In the short run, our rational actor will be constrained by the Kelly criterion, well and whatever outside funding she can raise.