I had prehaps a bit unjustly tossed the market maker role into that "not real bid/off" bucket. I also agree they do serve to limit the worst case matches. But such a role would simply be unnecessary so I still wonder about the cost in terms of the profits captured by the market makers. Is that a necessary cost in today's world? Not sure.
And I do say that as someone who is fairly active in the markets and have taken advantage of thin markets in the off market hours sessions where speads can widen up a lot.
How efficient are equity markets? No, not in the EMH sense.
My take is that market efficiency viewed from economics/finance is about total surplus maximization -- the area between the supply and demand curves. Clearly when S and D are order schedules and P and Q correspond to the S&D intersection one maximizes the area of the triangle defined in the graph.
But existing equity markets don't work off an ordered schedule but largely match trades in a somewhat random order -- people place orders (bids and offers) throughout the day and as they come in during market hours trades occur.
Given these are pure pecuniary markets the total surplus represents something of a total profit in the market for the day's activities (clearly something different than the total profits to the actual share owners who sold so calling it profit might be a bit confusing). One might think markets should be structured to maximize that area but clearly that is not the case.
It would be a very unsual case for the daily order flow to perfectly match with the implied day demand and supply curves that would represent the bids and offers (lets call them the "real" bids and offers but I'm not entirely sure how to distinquish that from other bids and offers that will start evaporating as soon as they become the market bid or offer). So would a settlement structure line mutual funds produce a better outcome for equities?
Maybe. In other words, rather than putting a market order in and having it executed right then or putting a limit order in and if the market moves to that price it executes, all orders get put in the order book and then at market close the clearing price is determed and those trades that actually make sense occur. What is prevented is the case of either buyers above the clearlin price from getting paired with sellers that are also above the clearling price, or the reverse, buyers biding below the clearing price pairing with sellers who are also willing to sell below the clearin price. Elimination of both inframarginal and extramarginal trades that represend low value exchange pairings.
One thing I wonder about here is what information might be lost/masked and if the informational value might outweigh the reduction in suplus captured. But I'm also not sure that whatever information might be seen in the current structure is not also present in the end of day S&D schedules and so fully reflected in the price outcomes.
I appreciated the distinction you make between anxiety and depression and can see that in myself, but had not previously made the distinction. I'm wondering now if that might help with addressing problems of procrastination -- that seems to be something of a symptom. Perhaps looking into why I am procrastinating to see if it fits more with a depression mood or anxious mood might help overcome the inertia.
Equally obvious that it went right over my head.
Still, seems like the aobe reference to marxist views on market trades seems to illustrate another way information asymmetry/advers selection plays out. I was just wondering if that was the intent when the first name was placed in the footnote rather than in the attribute for the quote.
But I have been accused of being humor challenged before ;-) -- or perhaps I should say demonstrated my humor disability?
My sense, regarding the read the most active thread desire, is that the most active thread might well be amongst either the team working on some project under discussion or across teams that are envolved in or impacted by some project. In such a case I would think knowing where the real discussion is taking place regarding some "corporate discussions" might be helpful and wanted.
I suppose the big question there is what about all the other high volume exchanges, are they more personality driven rather than subject/substance driven. Does the comment count just be a really noisy signal to try keying off?
Probably worth including that the winner's curse will also tend to be a feature when the object to be bought is a one time, one customer type setting.
Or would you agree that under your view, the market clearing price of a Walrasian auctioneer the price is also too high in some way? After all, it's pretty clear from the simple S & D graph that most of the buyers could have, in theory at least and likely in reality if they could directly communicate, bough whatever they bough at a price lower than the market clearing price; S slopes upwards and includes the producers required rate of return.
I thought it an odd quote for Karl but didn't give much thought after that. However, with this information I have to wonder if the choice to obscure the actual person being quoted was not intnetional to make some type of point related to the post.
I don't think this crosses the line regarding poltics on the board but note that as a warning header.
I was just struck by a though related to the upcoming elections in the USA. Age of both party's candidate have been noted and create both some concern and even risks for the country.
No age limits exist and I suspect trying to get get legislative action on that would be slow to impossible as it undoubtedly would be a new ammendment to the Constitution.
BUT, I don't think there is any law or other restriction on any political party imposing their own age limit for any candidate they will nomimate to Federal or State positions. If not, and if anyone knows please speak up:
Perhaps but I think more likely that I'm not expressing the view correctly. I agree that some forms of punishment are both needed and appropriate for misbehvior/rule violations. But that was not the point. The story seems to be that of "beat them a little and if that doesn't work beat them more". The reference to the K-drama then pointed to carrying that view to the extreme of if more beatings don't "tame" the masses start killing some and that will both do the trick and is complete justified.
That type of mindset seems to be of the form "doing the same thing over and over but expecting different results".
I'm not entirely sure the thesis quite captured exactly what was going on. It's true balancing the factions was a big deal to the founders and there were number of ways one can cast the USA into some dichotomous buckets -- North/South (which is largely industrial/agrarian) or the Federalist/Anit Federalist and probably some others. But the other point of the separation of powers and the nature of the bicameral struture was about checks and balaces both within the population and within government itself. In that sense I agree one can cast the position as some type of veto for the large minority but it was probably more about just increasing the costs of passing legislation at the federal level.
An interesting compare/contrast here might be looking at the federal level and then looking at the States.
The idea probably also needs to be run through the lens of modern political economy (Public Choice/Social Choice) theory as many of the conclusion from that literature is that in general the majority is hardly ever really doing anything -- special interests and narrow factions are in more control.
I think it was Knut Wicksell that suggested the idea that Constitutions should have a rule whereby legislation didn't pass with just a simple majority but needed some higher level of approval, e.g., 60%. But he didn't stop there. The Constitution would then allow a smaller number of people repeal the law. So if once implemented and 15% of the legislature were getting ear fulls from their constituents they could force the repeal of the law with a vote and only need to meet that 15% theashold. I don't think that was ever implement and no idea just how seriously it was discussed but clearly is about providing that type of veto power to a minority that might be feeling abused.
The other thing to point at was the political and something of a constitutional crises that arose in the early 1830s in the Tarrifs of Abomination. The South hated that and I think it came close to Civil war. While true, this was after the addition of new states (I think there were 24 states during that period). So there may have been early warning signs of the imballance to any check on existing status quo powers for opposing change. Looking at some of the additions over time another interesting fact show up. More than a few new states were infact part of existing states rather than due to territorial expansion. Would looking into what might have been driving that result through the lens of significant minority lacking a veto help support the thesis?
The following is a bit tangetal to John's point. It's also not well presented, but since we're talking about forms of government I'll toss the thought out.
I've been mulling over the idea posing the question "What should a 21st Century Government look like?" The one's we have can all largely be called 18th Century forms (and likely earlier). In thinking about this I tent do contrast government and market -- two very significant social institutions. Unlike, say, David Friedman (_Machinery of Freedom_) I don't think they are interchangable. The exist to solve different social "problems". Both do involved exchanges and mediating diverse preference/interests. But a key difference is that government is nearly always seen as an "actor" while markets are an environment inwhich people act.
I wonder how much scope there might be for shifting things the government is actively doing into a government structure that is more like markets -- in that it provides an institutional setting that reduces organizational costs for collective action by various groups in the polity and even in some cases all people (in the 90% sense of "all" maybe). Two sources of discontent are not being able to get things done socially you are interested in seeing done and having things you don't want done done in your name -- i.e., you're footing the bill like it or not.
I'll kind of cherry-pick an example here: Social Welfare progams the government runs. I suspect there would still be a role here but not in the heavy handed way we currently have. Clearly with all the go-fundme and other crowd source funding that exists the technology is largely in place. I'm not 100% sure about this but trust the source of the comment (old professor of mine). Britain supposedly established government welfare programs because people of the time feared that too much money was being given away. It was difficult for any one person wanting to help to know just who else has been providing funding. If so, then perhaps government social programs were and are structued to reduce the total amount, not maximize or spend efficiently. Given the current state of things, in the US and probably elsewhere, the rally cry is that we need more spending. If government was not the active agent in delivering these social services would we perhaps see more (and possibly better) spending?
Clearly there are other areas where government is some type of informational and organizational cost reducing, passive strucure than the active agent in control won't work. Butit seems like the more we can collectively accomplish without having some central actor as opposed to some central insitutional environment within to act for ourselves. To the extent that can work it would seem to remove the need to have some veto mechanism other than the personal choice of each person. As there is no common pool of resources to desire, I suspect some of the factional fighting disappears and Peter never has to rob Paul to pay Patty as does happen in today's structure.