Re: Cost vs. Price or Flatland
In a message dated 11/15/02 4:15:41 PM, [EMAIL PROTECTED] writes: On Fri, 15 Nov 2002, john hull wrote: If someone is willing to make a bet with you, you should wonder if maybe she knows something you don't. If you really want to get paranoid about everything you do, read the lit on the Winner's Curse. In the limit, only the most overoptimistic of people bother getting out of bed in the morning : Eric Perhaps that explains why I don't get up until the afternoon. And I thought maybe I was bipolar...
Cost vs. Price or Flatland
I recently obtained my series 7 license, but during the six weeks of
studying, a great deal of my material involved economic impact of various
fiscal and monetary policy, and also of course the laws of compounding
interest.
I think I figured out the problem with society today. Business prays on
countless individuals who can not distinguish the difference between cost
and price. Of course there's no need to define those terms on here, but
it occurred to me that while I can spend $250 on a plane ticket now, I
will have paid $225,000 for that plane ticket by the time I am dead.
This has become a very big problem for me, because I don't want to spend
any money. Not one red cent. I don't enjoy anything because all I can
see any more is opportunity cost. I have gotten to the point in my life
where I can't enjoy anything--probably not even a weekend in Hawaii
because I see it as a missed investment opportunity.
I look at every single bargain or sale with the eyes of a skeptic,
knowing that the counter-party in the transaction must have a reason for
what they are doing. They must see this item as worth less than what they
are selling it for so why should I buy it for the sale price?
I feel much like the main character of Flatland who is suddenly bumped
into the third dimension by a strange object, gets catapulted above the
normal 2-dimensional plane, and can never look at his world the same way.
Does anyone else feel like this?
jonathan
--
Jonathan KalbfeldM2686]U('!L87D=AIR!M ThoughtWave Technologies LLC
(v) +1 415 386 UNIX 97-S86=E()A8VMW87)DRP: UNIX, Networking, Programming
Re: Cost vs. Price or Flatland
--- Jonathan Kalbfeld [EMAIL PROTECTED] wrote: ... Business prays on countless individuals who can not distinguish the difference between cost and price. You mean pray as in to implore and beseech, saying I pray you buy my product? Or do you mean prey as in predation? If the latter, this implies force, and only government and criminals use force, not business qua business. Fred Foldvary = [EMAIL PROTECTED]
Re: Cost vs. Price or Flatland
Suppose I can spend $10 on a widget that I want or
invest the $10 at the best possible rate. The
invested money will grow to, let's say, $100 in some
period of time. But that $10 isn't worth $100 today,
it's only worth $10 today. The widget and the
investment have the same** value today, right? Even
though I won't be able to resell the widget for $100
in the future, I do get the use of the widget, as
opposed to my invested $10 which doesn't do anything
for me until I cash it in. So the $225,000 you could
obtain on your death-bed is only worth $250 today, the
same as the plane ticket. And if you buy the ticket,
you get to go to Hawaii, to boot. That's not to say
that one shouldn't plan for the future, but one
shouldn't sell out the present for the benefit of the
future, either.
If someone is willing to make a bet with you, you
should wonder if maybe she knows something you don't.
I don't think the same is true with sales bargains.
Hal Varian briefly mentions his theory of sales in
this paper: www.sims.berkeley.edu/~hal/Papers/how.pdf
. I don't have the resources to locate the Theory of
Sales paper itself.
--jsh
**Okay, okay. They won't have the same value if I'm
not the marginal purchaser, or whatever.
--- Jonathan Kalbfeld [EMAIL PROTECTED]
wrote:
I recently obtained my series 7 license, but during
the six weeks of
studying, a great deal of my material involved
economic impact of various
fiscal and monetary policy, and also of course the
laws of compounding
interest.
I think I figured out the problem with society
today. Business prays on
countless individuals who can not distinguish the
difference between cost
and price. Of course there's no need to define
those terms on here, but
it occurred to me that while I can spend $250 on a
plane ticket now, I
will have paid $225,000 for that plane ticket by the
time I am dead.
This has become a very big problem for me, because I
don't want to spend
any money. Not one red cent. I don't enjoy
anything because all I can
see any more is opportunity cost. I have gotten to
the point in my life
where I can't enjoy anything--probably not even a
weekend in Hawaii
because I see it as a missed investment opportunity.
I look at every single bargain or sale with the
eyes of a skeptic,
knowing that the counter-party in the transaction
must have a reason for
what they are doing. They must see this item as
worth less than what they
are selling it for so why should I buy it for the
sale price?
I feel much like the main character of Flatland who
is suddenly bumped
into the third dimension by a strange object, gets
catapulted above the
normal 2-dimensional plane, and can never look at
his world the same way.
Does anyone else feel like this?
jonathan
--
Jonathan KalbfeldM268@6]U('!L87D@=AIR!M
ThoughtWave Technologies LLC
(v) +1 415 386 UNIX 97-S86=E()A8VMW87)DRP@:
UNIX, Networking, Programming
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Re: Cost vs. Price or Flatland
On Fri, 15 Nov 2002, john hull wrote: If someone is willing to make a bet with you, you should wonder if maybe she knows something you don't. If you really want to get paranoid about everything you do, read the lit on the Winner's Curse. In the limit, only the most overoptimistic of people bother getting out of bed in the morning : Eric
