diff --git a/docs/training/corpus/Layer_1--Worked_Examples/CORPUS-0005-rumor-before-confirmed-price.md b/docs/training/corpus/Layer_1--Worked_Examples/CORPUS-0005-rumor-before-confirmed-price.md new file mode 100644 index 0000000..d13f152 --- /dev/null +++ b/docs/training/corpus/Layer_1--Worked_Examples/CORPUS-0005-rumor-before-confirmed-price.md @@ -0,0 +1,185 @@ +# CORPUS-0005 +## Rumor Before Confirmed Price +### Status: Training Corpus Seed +### Layer: Layer_1--Worked_Examples +### Purpose: Teach that a trader may act before a destination price is confirmed, but the final arithmetic still depends on the actual settled price +### Repository Path: docs/training/corpus/Layer_1--Worked_Examples/CORPUS-0005-rumor-before-confirmed-price.md + +--- + +## 0. Scenario + +A trader in Ostia hears a report that oil is selling high in Capua. + +The report is not confirmed. + +The trader must decide whether to act before certainty arrives. + +The rumor may create opportunity because other traders have not yet reacted. + +The rumor may also create loss if the report is stale, exaggerated, or wrong. + +--- + +## 1. Known Facts + +| Fact | Value | +|---|---:| +| Origin | Ostia | +| Destination | Capua | +| Good | oil | +| Purchase price in Ostia | 10 asses | +| Total expected movement and handling cost | 6 asses | +| Rumored sale price in Capua | 22 asses | +| Confirmed sale price in Capua | unknown | + +Expected total cost: + +```text +10 + 6 = 16 asses +``` + +If the rumor is true: + +```text +22 - 16 = 6 asses expected profit +``` + +But this is not yet actual profit. + +--- + +## 2. Source Of The Rumor + +The trader hears the report from a muleteer who arrived from the Capua road. + +The muleteer says: + +> Buyers in Capua are paying 22 asses for oil. + +The trader must evaluate: + +- when the muleteer left Capua +- whether he saw a sale or repeated talk +- whether the price was for ordinary oil or better quality oil +- whether one urgent buyer caused an unusual price +- whether another shipment has arrived since then +- whether the muleteer benefits if the trader hires his cart + +The report may be useful without being certain. + +--- + +## 3. Possible Outcomes + +### Outcome A — Rumor True + +The oil sells for 22 asses. + +```text +sale value = 22 asses +total cost = 16 asses +result = 6 asses profit +``` + +The trader benefited from acting early. + +### Outcome B — Rumor Stale + +A rival shipment reached Capua first. + +The oil sells for 17 asses. + +```text +sale value = 17 asses +total cost = 16 asses +result = 1 as profit +``` + +The venture barely succeeds. + +### Outcome C — Rumor Wrong + +The price was exaggerated or misunderstood. + +The oil sells for 14 asses. + +```text +sale value = 14 asses +total cost = 16 asses +result = 2 asses loss +``` + +The trader acted on bad information. + +--- + +## 4. Correct Model Behavior + +The model should separate: + +| Category | Meaning | +|---|---| +| rumored price | price reported before confirmation | +| expected profit | result if the rumor is accurate | +| actual sale price | price received at settlement | +| final arithmetic result | sale value minus total cost | +| information quality | reliability of the source and report | + +Rumor can justify action. + +Rumor cannot replace settlement. + +--- + +## 5. Incorrect Model Behavior + +The model should not: + +- treat rumored price as confirmed price +- ignore the age of the report +- ignore source credibility +- assume all Capua oil sells for the same price +- ignore quality differences +- calculate final profit from rumor alone +- treat a good rumor outcome as proof the rumor was certain + +--- + +## 6. Why Acting On Rumor Can Be Rational + +Waiting for confirmation reduces uncertainty. + +But waiting can also reduce opportunity. + +If the trader waits: + +- rivals may buy available oil first +- cart space may be reserved +- Capua prices may change +- the buyer may satisfy demand elsewhere +- the margin may close + +Acting on rumor is not irrational. + +It is a choice to accept information risk in exchange for timing advantage. + +--- + +## 7. Layer-0 Concepts Used + +This example uses: + +- `CORPUS-0002-goods-have-local-prices` +- `CORPUS-0005-profit-is-sale-minus-total-cost` +- `CORPUS-0006-delay-is-economic-cost` +- `CORPUS-0007-information-arrives-unevenly` +- `CORPUS-0008-rumor-is-uncertain-information` +- `CORPUS-0012-every-venture-risks-loss` +- `CORPUS-0018-rivalry-changes-conditions` + +--- + +## 8. Success Condition + +If the model can act on rumor as uncertain information while still calculating final profit only from confirmed settlement values, this file is functioning correctly.