Harry Your premise sounds reasonable only because it is a convention. Oddly enough it is an accounting convention applied to a psychological variable. Both sides in the trade are assumed to accrue the entire utility resulting from the exchange (that is to say the "present value" of that utility) instantaneously, at the precise moment the transaction takes place.
Well, that just about takes all the uncertainty out of the transaction, doesn't it now? The fact that each of us every day accedes to some peculiar custom doesn't make the custom less peculiar. Commerce demands that we suppress awareness of what it is we are doing when we buy and sell, otherwise we would be overwhelmed by the uncertainty of whether any given trade will in fact make us better off or worse off. You are satisfied that the fact the trade took place is proof that both sides are better off. I say that a trade can only occur if both sides _suspend_ the question of whether or not it will make them better off. Rather than expelling the uncertainty from exchange -- as your model supposes -- exchange embraces uncertainty. Trade is a leap of faith. Tell me, Harry, would I be better off exchanging U.S. $50,000 for Canadian funds today or waiting until tomorrow? If you can't answer that question unambiguously (and in advance!), then you _can't say_ whether both sides in a trade are better off. Harry Pollard wrote, > Premise is that in a trade, both sides are better off - or they wouldn't > have traded. > > Agreed? Not at all. See above.
