Friday, February 7, 2020

How does the invisible hand work?

The market has a known uncertainty and all traders seek to remove arbitrage until there is o observable gain relative to uncertainty. At that point the value added nets are quantized to a stable basket size. This is the Nash equilibrium.

Markets always operate from the best estimate of basket sizes and always tend toward stabilizing basket sizes. In doing sdo it will obey the Euler conditions up to a bounded error, the market uncertainty.

Been through this a million times. Sandbox is the new economic theory.

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