For buying milk you have multiple samples as to good price. Even if any is contrived, the bulk still capture something real
No, the bulk don’t, because I buy milk a lot more often than I go on Wall Street and try to get cute with limit orders or manufacturing options or straddles on speculative merger/takeover targets or sign up to MoviePass or park while ignorant in NYC. The bulk of my life is buying milk, not speculating on Widgets Inc. And if I did those enough times to come anywhere near the number of times I’ve bought milk, so that ‘the bulk’ could potentially be any of those things, I would also not be doing it nearly as badly as OP postulates I would. (Because I would be, say, a market-maker like Jane Street, which makes a lot of money off doing that sort of thing.)
… I would also not be doing it nearly as badly as OP postulates I would. (Because I would be, say, a market-maker like Jane Street, which makes a lot of money off doing that sort of thing.)
I’m not sure I follow. Is the argument here that Jane Street is good enough at market-making that they are not vulnerable to adverse selection? i.e. that the dynamic in example #11 (Widgets stock) wouldn’t apply to them?
No, the bulk don’t, because I buy milk a lot more often than I go on Wall Street and try to get cute with limit orders or manufacturing options or straddles on speculative merger/takeover targets or sign up to MoviePass or park while ignorant in NYC. The bulk of my life is buying milk, not speculating on Widgets Inc. And if I did those enough times to come anywhere near the number of times I’ve bought milk, so that ‘the bulk’ could potentially be any of those things, I would also not be doing it nearly as badly as OP postulates I would. (Because I would be, say, a market-maker like Jane Street, which makes a lot of money off doing that sort of thing.)
I’m not sure I follow. Is the argument here that Jane Street is good enough at market-making that they are not vulnerable to adverse selection? i.e. that the dynamic in example #11 (Widgets stock) wouldn’t apply to them?