Markets are Efficient if and Only if P = NP

Re:Markets are Efficient if and Only if P = NP by peteretep on Wednesday August 17, 2011 @11:36AM (#2895675)

I was coming here to write almost exactly this.

Markets are provably not 'instantly' efficient because arbitrage exists. Arbitrage is simply not possible in an efficient market, because it's an exploit of inefficiency.

However, exploitation of abitrage (and of knowledge generally) is what makes markets largely efficient.

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Re:Markets are Efficient if and Only if P = NP by Rickasaurus on Wednesday August 17, 2011 @09:13PM (#2897578)

The point though is that whoever has the most computational power has the most power to exploit arbitrage.

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Re:Markets are Efficient if and Only if P = NP by peteretep on Thursday August 18, 2011 @05:00AM (#2898514)

That's /a/ point. Whenever people start harping on about Market Efficiency, you need to find out "why do you care?". The answer to "Are markets efficient? I have this hot stock tip I read on Tech Crunch" then the answer is yes, because other people have more time, money, expertise and - as you point out - computational power - as well things like preferential data access and physical proximity to the exchange.

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