A Brief Economic History of Montezuma's Revenge

Someone on Reddit ate a taco from a late-night cart in Mexico. You can probably guess what happened next[^1]. This is a story about information asymmetry, principal-agent problems, and the efficient market hypothesis of street food. In other words, a classic tale of risk and reward.

[^1]: The human body, much like the market, has a way of efficiently clearing bad positions.

The core problem here is a classic one: you are a tourist. Your information about local food safety standards is, to put it mildly, incomplete. The vendor has a short-term incentive to sell you a tasty product right now, not necessarily one that ensures your well-being 12 hours from now. This is a misalignment of incentives. You want a delicious, authentic experience. The vendor wants your pesos. The E. coli, if present, just wants to replicate. Everyone is pursuing their own rational self-interest, but the outcomes are not Pareto optimal for all parties involved.

As the commenters swiftly identified, the resulting biological short squeeze—where the body must urgently offload its toxic assets—is a brutal but efficient market correction. One advised against using Imodium, which is essentially the equivalent of halting trading during a flash crash; you’re just delaying the inevitable and potentially more painful reckoning. The correct play, as in any liquidity crisis, is to provide emergency fluids and let the market clear.

The top comment, of course, was the pithiest summary of the underlying financial instrument: “Vengeance is mine!” - Montezuma, probably. This gets to the heart of the systemic risk. You are not just eating a taco; you are trading a derivative whose underlying asset is a centuries-old grudge held by an Aztec emperor. The implied volatility is enormous.

So what’s the efficient solution? Another commenter suggested the ultimate in risk-off strategies: staying in “Amurrica” and eating Taco Bell. This is the food equivalent of holding your entire portfolio in cash. The returns are predictable and low, but so is the volatility. You won’t experience the thrilling, authentic 10x gain of a perfect street taco, but you also won’t experience the catastrophic 99% loss that follows. It’s a trade-off. And as in all markets, the potential for glorious reward is perfectly correlated with the potential for utter, system-flushing ruin.