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Mbodell, on 2014-April-06, 01:54, said:
Free markets don't really make sense in and of themselves completely abstracted from gov't. When you are talking about the specific rules of the market a vague notion of "free markets" isn't really enough. Adam Smith wealth of nations and all that still needs a government to enforce contracts and provide justice system, grant patents and copy rights, provide public goods such as infrastructure, provide national defense and regulate banking (emphasis added). Rightly or wrongly some sort of trading is also illegal (insider trading). There are also rules around price fixing and many, many others.
Unless of course by laissez-faire you mean something like "enforce all the rules on those other people that I like, need, and regularly benefit from - but have me be above the law/don't enforce any rules on me!".
Unless of course by laissez-faire you mean something like "enforce all the rules on those other people that I like, need, and regularly benefit from - but have me be above the law/don't enforce any rules on me!".
You have pretty much missed my point here - which is that stock trading - or selling merchandise online, auctioning off items on e-bay, etc. is a game. It is a multi-player game in which all participants know the rules, know what the penalties are for breaking them, etc. Whether the rules are set by a government, or by a private organization running the game is pretty much irrelevant.
A further point is that even if the optimal strategy is difficult to determine - as it may have been for some in my example - once the strategy is known, you don't have to understand why it works to use it.
Regardless of the mechanism of the game - it can be changed, by simply changing the rules - it must have players to be meaningful (successful), and those players must find it fair - or they won't play.
Think of Nash Equilibrium like a system of predators and prey - where the prey survive on grass. If the prey are excessively available, and predators are successful at eating and mating, they could reach a point where the prey are all eaten and the predators die. OTOH, if the predators are too rare, then the prey starves from lack of grass.
If you attempt to oversimplify the problem by looking at only the strategies of one side, you lose. If you fail to recognize that they are looking at your strategies, you lose.