# Gambling the World Away: Myopic Investors

## TL;DR

This paper explores how myopic investors, who optimize locally but not globally, create market disparities and profit opportunities through constrained optimization and information asymmetries.

## Contribution

It introduces four novel examples illustrating the impact of local versus global optimization, investor types, and information asymmetries on market dynamics.

## Key findings

- Myopic investors' portfolios lag the market, creating profit opportunities.
- Differences between local and global optimization affect investment outcomes.
- Information asymmetries lead to market disparities.

## Abstract

Myopic investors are locally rational decision-makers but globally irrational. Their suboptimal portfolios lag the market. As a consequence, other market participants are provided with profit opportunities. Not subterfuge but constrained optimisation leads to disparities. Four overlapping examples are given. The first case centres on the difference between local and global optimisers and their respective Kelly fractions, the second on isolated versus combined optimisation, the third on the distinction between qualitative and quantitative investor, the fourth on the non-commutative nature of information and the resulting asymmetries.