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bgrah449 comments on Arbitrage of prediction markets - Less Wrong
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What you're doing is purposefully diluting the word. "Arbitrage" as a word exists to talk about riskless profit. You're trying to introduce risk to it, to what end?
You know, the first definition in the OED doesn't even have anything to do with finance - it's simply the decision of an arbitrator. The second is 'exercise of individual judgement'. Only the third includes the commercial definition, and that (and its quotes from the 1800s on) speaks only of buying and selling in geographically disparate areas. Nothing about risk. Indeed, the 1882 quote goes 'He cannot tell what the outcome will be... of this unfathomable arbitrage business.'
'Arbitrage' did not begin as the strong definition. It did not exist as finance at all. The strong definition is a 19th and 20th century technical addition to a word imported from the French. I am purposefully diluting it? How can I dilute something which was never pure to begin with?
Again, explain whether you are speaking descriptively or prescriptively when you say 'arbitrage exists to talk about riskless profit'. If the former, you are manifestly wrong and have been wrong for the last 600 years according to the OED. If the latter, then why should we abandon all the other meanings?
You're right - arbitrage as a word doesn't exist to talk about riskless profit. Arbitrage as a financial term, however, exists to talk about riskless profit.