[extropy-chat] Noisy future day (was: silent night)

[Robin Hanson]

On 12/22/2004, Olga Bourlin wrote:
>From: "Robin Hanson" <rhanson at gmu.edu>
> > For every winner there is a loser.  If I buy IBM and it goes up I win,
> > but only because the person I bought it from lost.
>
>... there could be several players profiting from a stock on the way up
>(in a long position).  Several players can profit, each one selling "too
>soon."  But a profit is a profit (so it does not always follow that the
>person from whom you may have bought IBM necessarily lost).

The correct standard to use is economic profit, not accounting 
profit.  Economic profit takes into account opportunity costs.  If the 
person who sold it to me had kept it they would have made more, so relative 
to what they would have made, they lost by selling it to me.



Robin Hanson  rhanson at gmu.edu  http://hanson.gmu.edu
Assistant Professor of Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-4444
703-993-2326  FAX: 703-993-2323