> Now, one may argue that a weaker form of market efficiency as per Fama (1991) and Jensen (1978) is that patterns are exploited until the marginal revenue of further discovery equals the marginal cost of further search. A counterargument to that would be graduate students and other hobbyists and day traders searching for an edge: to them, the marginal cost is zero and at times negative because the value of the search itself, regardless of the outcome, is a positive learning experience for them...
A hobbyist has to spend more computation time for every additional strategy they search, which costs real money. The hobbyist's cost is near-zero for small searches -- those that can be done by one person using the computers they already own. Once the size of the search increases beyond what they can manage with their immediately available resources, they have to hire assistants and/or buy computation time like anybody else.
> Now, one may argue that a weaker form of market efficiency as per Fama (1991) and Jensen (1978) is that patterns are exploited until the marginal revenue of further discovery equals the marginal cost of further search. A counterargument to that would be graduate students and other hobbyists and day traders searching for an edge: to them, the marginal cost is zero and at times negative because the value of the search itself, regardless of the outcome, is a positive learning experience for them...
A hobbyist has to spend more computation time for every additional strategy they search, which costs real money. The hobbyist's cost is near-zero for small searches -- those that can be done by one person using the computers they already own. Once the size of the search increases beyond what they can manage with their immediately available resources, they have to hire assistants and/or buy computation time like anybody else.