Arbitrage

Arbitrage is the process of purchasing a product in one market and selling it in a different market for a higher value. Arbitrage opportunities typically arise from market inefficiencies, but creates a risk-free profit for traders who recognize the difference in value between the two markets. 

In the following video, Billy Beane is first introduce to the possibility that there are undervalued players. Peter Brand explains this arbitrage opportunity and how he believes they can profit from exploiting the inefficiencies of how scouts used to evaluate players. 

Teaching Economics with 

Moneyball