Talk:1499: Arbitrage

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I've never been into an "explain" page so early... is everyone on March Break today? Jarod997 (talk) 12:56, 16 March 2015 (UTC)

The comic seemed to be very late, today, for reasons unknown (but perhaps Randall's been on a weekend Pratchett-bender, in memoriam). All the usual "early-birds" may have had nothing to work with, and perhaps even given up for the day/morning/whatever. 14:20, 16 March 2015 (UTC)
That's the case with me. I'm still waiting on Friday's What-If, but thinking it'll get skipped. Mikemk (talk) 22:45, 17 March 2015 (UTC)

Is that a facepalm by Cueball? 14:04, 16 March 2015 (UTC)

It looks more like a "My God, what are you DOING?" reaction from Cueball. (talk) (please sign your comments with ~~~~)

I think this might be a reference to Ultra-Low-Latency trading, where arbitreurs with Direct Market Access build faster parallel networks between two market and use the difference in latency to arbitrage before the two markets can communicate. This practice, along with many others, use the financial markets to generate revenue without any real contribution to the economy. (talk) (please sign your comments with ~~~~)

It is true that must current arbitrageurs are computer programs doing ultra-high-frequency trading, but arbitrage as a concept is far from limited to that regime. Arbitrage is pretty much the sole way that markets communicate to maintain consistent prices. Vyzen (talk) 19:29, 16 March 2015 (UTC)

In a nutshell, arbitrage is when you see a price disparity between two markets and you buy from one at a low price, and immediatly sell to the other at a profit. The distinct factor between this and normal trade is that the agent does not maintain an inventory, and the profit is not through interest or maket scarcity. In the case of the comic, the purchase of the chips is at no cost, and presumably he's bagging the chips to resell to the restaurant. 21:19, 16 March 2015 (UTC)

Interestingly, if we assume he's bagging the chips to resell to the restaurant, we could also assume this has already happened. So let's imagine he sold the chips to the restaurant, and now he's "taking" them back. The chips are not "at not cost" -- they are indirectly paid by the restaurant customers as a non-itemized portion of their bill. Presumably the restaurant would not give away the chips at a loss, so essentially he would be paying more for them from his meal's bill than he would get when selling them back to the restaurant. The only way to make a profit here is by being invited and not paying for the meal, or sell them to another restaurant at a higher price (thus the arbitrage.) Ralfoide (talk) 15:18, 19 March 2015 (UTC)

The title text could be in reference to "There Ain’t Such A Thing As a Free Lunch" (economic concept of arbitrage-freeness). 00:15, 17 March 2015 (UTC)