Comment by perlgeek
3 days ago
> the top 1% of users capture 76.5% of profits
This seems to be similar to OnlyFans, and the economy at large...
3 days ago
> the top 1% of users capture 76.5% of profits
This seems to be similar to OnlyFans, and the economy at large...
Yes, power laws are everywhere. The exact shape of each distribution varies, however, and little is known empirically about the distribution of trading profits in financial markets.
Yeah if you look at the Boltzmann Wealth Model, where every actor gives away 1 dollar to a random person, and you repeat this, then if you start with an equal wealth distribution, you end up with an exponential wealth distribution. That shows how strong exponential curves are :) A few "lucky" individuals become very wealthy, while the vast majority of people end up with very little or nothing.
The effect is so strong that I'm starting to wonder if we should have laws against power laws, like we have in engineering when we try to make things stable.
I believe a power law acts differently from an exponential distribution. I think wealth distribution is commonly approximated by a Pareto distribution.
In your model, the exponential distribution is caused by the fact that you cannot go below zero; otherwise, it would be a normal distribution.
I don't agree with your opinion about laws against power laws, but that is another matter.
That sounds semantically equivalent to legislating the value of the traditional gravitational constant.
Seems like a good argument against flat taxes
>The effect is so strong that I'm starting to wonder if we should have laws against power laws
This is literally and unironically communism.
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Sigmoid wealth tax maybe?
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I mean, do we want the economy to be stable?
Not in a 'oh the rich don't so they control the media and so we don't' sorta way. But like in a 'lets educate people on the pluses and minuses, debate a while, and then come to an informed conclusion' sorta way.
Like, deep down, does the average person actually want a stable economy? Because it seems to me that there is an even split historically between the folks that want stability and a little patch of land and weekly rhythms, and the folks that just want to drunkenly burn couches in the street every full moon, or some such thing.
Not to be glib here at all. I like, would actually like to know the answer. Sorry if this comes off the cuff seeming.
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these apps should load with this pie chart showing your likelihood of ever making a profit based on what they know about you. "YOU WILL LOSE MONEY ON THIS APP". Like the cigarette packs.
Just look at lotteries.
I don't believe in them because when you consider operational costs, less money comes out of the lottery than goes in, so if everyone simply didn't bet on the lottery, they would have more money than if they bet on it.
But everyone who bets thinks "but what if I win?"
That ”but what if I win” is realistically what you’re paying for if you buy a ticket.
Maybe the sum of enjoyment lottery participants get from daydreaming about winning is >= the cost of running the lottery?
at least the lotteries and las vegas publish their odds. Losing to the terrible math is probably better than playing against someone with inside information.
This is (possibly what you’re thinking of) a requirement in the EU for CFD trading providers. Providers have to (somewhat prominently) state in all of their ads what percentage of traders loses money using the product.
>99% CHANCE OF LOSS
Yeah but I'm not a sucker like those other 99 guys!
Interesting, would love to see that applied here. Every third ad is about how I can make money on the weather.
MLMs were forced to do this but it doesn't seem to change their recruitment ability.