Magic, Maths and Money

The no arbitrage rule is the basis of sandbox. The author uses jobbers, we use pit boss.  The sandbox is real and  mathematically sound. Everyone gets an opportunity to jump on the short queues, no more kanosian monopolies  handed out.

The no-arbitrage principle is justified through Ramsey’s ‘Dutch Book Argument’ that requires markets are mediated by jobbers (market-makers or dealers in the US) rather than brokers. When a jobber quotes a price, they do not know whether the counter-party is looking to buy or sell at the price. The jobber will quote a price at which they will buy and a higher price at which they will sell. They signify confidence in their quote by having a narrow difference between the prices. If a jobber quotes a price that another trader believes is wrong, the trader will take the quote, immediately moving the market. These jobber-mediated markets are, therefore, essentially discursive. Jobbers are engaged in making assertions as to prices, which are challenged when others take the quote; this is ‘market making’. If the market agrees that a jobber has correctly priced the asset, no trading will take place - silence is consent - and the market dissolves.
Jobbers do not hold assets and prefer trading in financial contracts rather than hold physical assets, they have no commitment to the assets they trade and identify themselves as taking long and short positions rather than buying or selling. While they lack commitment to assets, jobbers must be sincere in their statements, they must believe the quote is right. This means, that in the face of radical uncertainty, a jobber’s price quote is reliable, it can be trusted.