Editing 1499: Arbitrage
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==Explanation== | ==Explanation== | ||
− | + | {{incomplete|Very long and tedious explanation. Can anyone with knowledge of Arbitrage make it more compact and easier to read for the lay man. For instance what does "even if reactionary server slow down, and a minimum paid order per unit time rule were ignored" even mean? At least some wiki links would be in order. I have added several. Also the part of the title text about not getting text back is not mentioned. Is it clear what he means?}} | |
− | + | In {{w|economics}} and {{w|finance}}, {{w|arbitrage}} is the practice of taking advantage of a price difference between two or more markets to make risk-free profit by buying in the market with a lower price and simultaneously selling in the market with the higher price. | |
− | + | In real-world {{w|Market liquidity|liquid financial markets}}, arbitrage ensures that there is only one price for a product. Arbitrageurs, by purchasing from a cheap market and selling in an expensive one, equalize the prices in those markets. | |
− | + | The place where [[Cueball]] and [[Hairy]] are eating is giving away unlimited free {{w|tortilla chip}}s, effectively a market selling chips for $0. Hairy is taking advantage of this fact to turn a profit for himself by collecting the chips and attempting to resell them elsewhere. Any price higher than $0 would make him a profit. This is obviously much to the consternation of Cueball, who is (depending on how you interpret the simple art-style) holding his hands up in front of his mouth in shock, covering the lower half of his face in shame, covering his eyes out of denial, cradling his forehead in his hands to soothe the oncoming headache, sliding his palms down the front of his face in disgust, or eating chips. Possibly all six in sequence. | |
− | + | In the real world an attempt to employ this strategy would fail for several reasons; one wouldn't be allowed to carry large bags full of chips out of the restaurant, not many people would buy chips taken from a restaurant in this manner, the servers would not continue to deliver arbitrarily large amounts of chips to the table, and the restaurant would require some minimum purchase to be allowed to sit at the table which would eat into any potential profits from chip-reselling. In financial terms, the extremely poor {{w|liquidity}} of chips is what allows the obvious arbitrage opportunity to persist indefinitely. | |
− | The title text mentions the ''{{w|invisible hand}}''. In economics this is a metaphor used by {{w|Adam Smith}} to describe unintended social benefits resulting from the individual actions of self-interested parties. In the context of arbitrage, the | + | Another related issue is the poor {{w|fungibility}} of chips. Chips that are factory-sealed in a bag or served in a restaurant are served in a context where cleanliness and {{w|food safety}} practices can be assumed to have been followed. Chips sold from an open bag by some random person do not have that expectation associated with them and would not command as high a price as they do in a restaurant transaction. |
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+ | On the other hand, Harry may be collecting chips for rebagging. Though ethically unsound, this is a cost-effective method of ensuring the perceived value of sanitary chips lasts long enough for them to be purchased. Rebagging also allows further profit by allowing Harry to charge a similar, albeit lower, price compared to store-bought potato chips. | ||
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+ | In the caption below the comic, [[Randall]] suggests that society only functions because we don't take people like Hairy "out to dinner", i.e., we generally have an aversion to dealing with people with such extreme self-interest, bordering on {{w|Psychopathy#Sociopathy|sociopathic}} behavior. Apart from the fact that he intends to sell the chips, we also see from Cueball's reaction, how appalled he is by what Hairy is doing right in front of the waiters in the restaurant. | ||
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+ | A distinguishing feature of {{w|social animals}}, rather than animals simply sharing a {{w|habitat}}, is that they perform tasks that benefit their group. All such societies rely on some situations where the individual is not working purely on short term self interest. The payoff for this is generally that co-operation makes things better for the group as a whole. Most people would find Hairy's behavior embarrassing and shameful, and thus would not socialize with people who behave like that. By rejecting such individuals, society protects itself from such people. | ||
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+ | The title text mentions the ''{{w|invisible hand}}''. In economics this is a metaphor used by {{w|Adam Smith}} to describe unintended social benefits resulting from the individual actions of self-interested parties. In the context of arbitrage, the "invisible hand" compels all of a given fungible substance to be sold for the same price, as a result of the actions of individuals like Hairy who are only seeking personal profit. | ||
==Transcript== | ==Transcript== | ||
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:Hairy: ''They're'' the ones giving chips away! | :Hairy: ''They're'' the ones giving chips away! | ||
:Hairy: If they don't see the arbitrage potential, sucks for them. | :Hairy: If they don't see the arbitrage potential, sucks for them. | ||
− | : | + | :On the bag is written: Chips |
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− | + | :[Below the main frame]: In a deep sense, society functions only because we generally avoid taking these people out to dinner. | |
{{comic discussion}} | {{comic discussion}} | ||
[[Category:Comics featuring Cueball]] | [[Category:Comics featuring Cueball]] | ||
[[Category:Comics featuring Hairy]] | [[Category:Comics featuring Hairy]] |