The economic word for today is arbitrage.
In economics, arbitrage is the practice of taking advantage of a state of imbalance between two (or possibly more) markets: a combination of matching deals are struck that exploit the imbalance, the profit being the difference between the market prices. A person who engages in arbitrage is called an arbitrageur.Basically, arbitrage is taking advantage of the common economic advice to "buy low and sell high". You find two markets trading in the same thing (stock, commodity, currency, whatever) and buy from the market with the low price and sell to the market with a high price. The trick is often in identifying the item to trade and the markets in which to do the trading so that the trades are profitable.Arbitrage is possible when one of three conditions is not met:
1. The same asset must trade at the same price on all markets ("the law of one price").
2. Two assets with identical cash flows must trade at the same price.
3. An asset with a known price in the future, must today trade at its future price discounted at the risk free rate.
Due to human psychology, some markets are in permanent disequilibrium. Consider, for example, the endless spending on weight-loss.
Also of interest: bookmaking.
My dad is a finance PhD guy and would explain a lot of concepts like arbitrage to us kids when we were younger. I had never heard the official name for it, though. I don't see how the weight loss craze is an example, though.
I know it may seem too brief and simple for it, but to me this is a good post to enter into Carnival of the Capitalists.
JG: There's an endless demand for weight-loss schemes. It's essentially free to think up a new scheme, and people will pay for it if you can make them think it'll work, thereby creating a price differential between markets.
JS: Good idea!
This is not accurate, unless I misunderstand:
"Due to human psychology, some markets are in permanent disequilibrium. Consider, for example, the endless spending on weight-loss."
AM: That is to say, the demand can never be satisfied because it is largely based on contentment and perception -- and after a while, the "grass will be greener" on the other side and the user will change products.