Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: libstripper
John does a good job here of poking a hole in another piece of Soros funded idiocy.

From an economics standpoint, I'd agree. The problem with economics is that the base starting point is an assumption of rational actors. Unfortunately, this is a phenomenon that does not often occur in real world society.

For instance, look no further than the game show "Deal or No Deal." It should be a simple show: continue picking briefcases until the banker offers you more than the expected value of the remaining briefcases. But that never happens. People quit early or keep picking past that point. They are irrational. Lest you think this is a contrived situation, look at eBay, which is full of irrational actors. In realtime, an auction works because no one knows when it will end; there is thus an incentive to bid early and often. On eBay, however, everyone knows when the auction will end; thus, all bidders should have an incentive not to bid until the last possible minute, which will tend to ensure that they receive the lowest possible price for the item. Bidding early merely raises the price, but with no corresponding benefit. A more interesting system, perhaps, would be one in which the end time for the auction was hidden from the bidders, thus requiring any bidder who wanted the item to keep increasing his bid at all times, because he would never know when the auction would end.

But anyway, along those same lines, I don't think criminals behave rationally in considering whether or not to commit crimes; they simply do.

31 posted on 11/28/2007 6:19:27 AM PST by Publius Valerius
[ Post Reply | Private Reply | To 1 | View Replies ]


To: Publius Valerius
Not of your examples are irrational behavior. Look up the following: “Rational Ignorance”,”Risk Aversion/Risk Lover”.

Rational means a person weighs the benefits and costs in their own mind and acts accordingly.

Being bad at math, committing mass murder, giving your life to save another, giving to charity, gambling with the odds against you, assaulting a spouse: none of these things are inconsistent with ‘rationality’ as defined in economics.

52 posted on 11/28/2007 10:04:46 AM PST by On the Road to Serfdom
[ Post Reply | Private Reply | To 31 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson