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Taste arbitrage: Difference between revisions
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The foundation of [[credibility derivatives]], used principally in the fashion industry, wherein end users can actually swap cashflows on underlying [[reference garment]]s based on their relative evaluations between areas afflicted with contrasting aesthetics ([[cross-credibility swaps]]), or buy outright protection on ostensibly idiotic fashions which common sense tells you no one will be seen dead in, but fashion scribes assure you will be the rage for the next five summers, in the form of [[credibility default swaps]]. | The foundation of [[credibility derivatives]], used principally in the fashion industry, wherein end users can actually swap cashflows on underlying [[reference garment]]s based on their relative evaluations between areas afflicted with contrasting aesthetics ([[cross-credibility swaps]]), or buy outright protection on ostensibly idiotic fashions which common sense tells you no one will be seen dead in, but fashion scribes assure you will be the rage for the next five summers, in the form of [[credibility default swaps]]. | ||
===International sports betting arbitrage=== | |||
There is a variation of taste arbitrage to be played on international sports betting markets, particularly if one contestant represents Britain. The British public is famously, absurdly, delusionally optimistic about its national team’s prospects in any given sport. Thus it follows that the odds ''against'' Britain available from bookmakers ''in'' Britain should be disproportionately favourable to local pessimists. | |||
Generally speaking, the converse should be equally true, in that the general public of nations competing ''against'' Britain will also be overly optimistic about their own team’s real prospects of success, given Britain's signally disappointing history in international sporting contests, regardless of code. | |||
There is therefore — well, ''should be''— an arbitrage to be had by placing offsetting bets ''against'' Britain ''in'' Britain and ''for'' Britain offshore. That is the theory. | |||
Alas, bookmakers are wise to it: they lay off their local exposure in international markets and, in any case, the bid-ask spread drowns out the theoretical arbitrage. | |||
Back to work Monday, I’m afraid. | |||
{{sa}} | {{sa}} | ||
*Normal [[Arbitrage]] | *Normal [[Arbitrage]] | ||
*[[Credibility derivatives]] | *[[Credibility derivatives]] | ||