Arbitrage, Entrepreneurship and the Ticket Arcade.

When you go to an arcade that exchanges tickets for prizes, you are engaging in arbitrage. For any of the prizes on offer, if you really wanted them, you could go out and buy them at the store for a specified amount and for lower cost than the equivalent tickets probably cost you. So why engage in the market for those same goods at the ticket arcade?

The arbitrage that is happening is an interesting one, that in exchange for stimulation, interaction and fun, you are willing to spend more money for risk and uncertainty of what you will be able to get back from it. This is interesting because it seems highly similar to entrepreneurs I’ve met, yet far more people seem to spend money in these arcades than there are chasing entrepreneurship.

Some conclusions that can be drawn from this:

  1. When someone makes a decision to pursue entrepreneurship, instead of being forced to pursue it, they are probably caught up in the fun of it.
  2. When you add valuable experience, stimulation and interaction, the price always becomes less of a factor.
  3. Like many of the things at the ticket arcade, when taking the route of first selling an experience of fun, plenty of people will then buy things they didn’t actually think they needed.
  4. The reason you probably see more ticket arcade participants than those chasing entrepreneurship is that the level of risk is perceived much differently.