That being said I don’t believe we will be seeing large dumps long term and that is because of basic principles in economic game theory.
If you are unfamiliar with game theory, it is a way that economists try to model and analyze how people or businesses strategize and act in a competitive market situation.
Game theory is also not strictly used for businesses in a competitive market, but can be used to analyze many situations from whether or not a country should go to war, to whether or not you should take a plea deal if you are facing prosecution.
However game theory has many main principles it follows to justify how people act and there is one in particular I want to focus on today, which is actors in a competitive market will sacrifice possible short term gains for longer small term gains if the short term gains come with possible systematic risk.
If the principle of is actors in a competitive market sacrificing possible short term gains for longer small term gains if the short term gains come with possible systematic risk, is confusing I will put it in simple terms for you to understand.
The idea is if you are a shepherd that owns one sheep, skinning it and butchering it and selling its byproducts may net you 50 dollars one time in the short term, but you no longer have a sheep or a business.
Big actors in a market understand these principles and act accordingly because in a competitive market, making the most profitable decision is key.
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