Sublime

Caroline sensed, rightly, that her departure alerted Jane Street to an alarming new threat. Jane Street and the other high-frequency trading firms had been fishing for traders in the same ponds as Will MacAskill and the other Oxford philosophers fished for effective altruists. People able to calculate the expected value of complicated financial gam

Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler, “Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias,” Journal of Economic Perspective 5, no. 1 (1991): 193– 206, http://users.tricity.wsu.edu/~achaudh/kahnemanetal.pdf

For these reasons, prices may pass statistical tests for randomness, but they are not themselves random (although it is plausible that their randomness is random, and that randomness is random, and so on) but rather are unpredictable on the basis of market data alone. They are, however, predictable to the extent that the predictor accurately assess

The 2008 financial crisis wasn’t exactly responsible for what was going on, but it had played a role. Investment banks like Goldman Sachs and Morgan Stanley that had once taken the most interesting trading risks had become clunkier and more heavily regulated. They were being shoved into the boring Wall Street role once played by the big commercial

Our argument in this chapter will go through the following propositions, which serve as headings for their own sections of discussion: Value is subjective; uncertainty is not risk; economic complexity resists equilibria; markets aggregate prices, not information; and, markets tend to leverage efficiency.

Economics 101 teaches that trading is rational only when it makes both parties better off. A baseball team with two good shortstops but no pitching trades one of them to a team with plenty of good arms but a shortstop who’s batting .190. Or an investor who is getting ready to retire cashes out her stocks and trades them to another investor who is j

What matters for business is not the general behavior of prices, but the price differentials between selling prices and costs (the “natural rate of interest”).