My definition of value is simple: something is valuable when it manages to raise people's utility functions (right now, that's about as rigorous as I can be). A trade that happens to be closed by a plain old investor is valuable. If it's another speculator, however, the value is zero. Only consequences ultimately matter.
But, if I got you right, the anonymity of it all mean we cannot separate the two… hmm… Then we've got to multiply the potential utility of the trade by the (quite low) probability of it being closed by a non-speculator. Still valuable, but much less. And I'm back wondering to what extent this is worth the (collective) effort. You did change my mind a little, though. I'll need to learn more.
> You still haven't disputed that by the way, the consumer wins don't they? How could they possibly have lost?
The consumer winning does count as creating value. However there are 2 parts in the retail store competition example: the part where they compete on quality, price, diversity… and the part where they pay fat fees to the advertiser. The first part benefits the consumer, the second just add inefficiency in the loop: if both stores could only agree to not use ads, everybody would win.
When Pareto Optimum and Nash Equilibrium are at odds, life sucks.
But, if I got you right, the anonymity of it all mean we cannot separate the two… hmm… Then we've got to multiply the potential utility of the trade by the (quite low) probability of it being closed by a non-speculator. Still valuable, but much less. And I'm back wondering to what extent this is worth the (collective) effort. You did change my mind a little, though. I'll need to learn more.
> You still haven't disputed that by the way, the consumer wins don't they? How could they possibly have lost?
The consumer winning does count as creating value. However there are 2 parts in the retail store competition example: the part where they compete on quality, price, diversity… and the part where they pay fat fees to the advertiser. The first part benefits the consumer, the second just add inefficiency in the loop: if both stores could only agree to not use ads, everybody would win.
When Pareto Optimum and Nash Equilibrium are at odds, life sucks.