Popular vs Valuable

[Xerographica]

Horses are not indigenous to north america. There is certainly evidence that species of equidae once existed in north america, but we have no reason to believe that their extinction was a direct result of overexploitation, or that they were suitable for domestication. It's a bit of a long process, and we do not know how exactly Eurasian tribes were able to acheive such, while explanations are a bit more nuanced than some guy figuring he can get on a horse and ride it (you can't).

There's certainly some evidence that the species that used to be in America was virtually identical to the modern horse. This would mean that it was entirely suitable for domestication.

Regarding overexploitation... it might be a coincidence that the extinction of horses in America coincided with the arrival of humans.

Again, the instance of QIRE being broken that I mentioned was an economic boon for the US. Hell, if I lived in that time period and had a bit of cash to invest, I'd definitely throw some dollars their way, I'd make it back with interest in either system of decision making mentioned. You are, again, still dancing around the example. You refuse to engage it directly. I have been given no reason to suppose this unnatural breakage of QIRE would not have occurred under the systems you've mentioned.

When you spend your own money.... you are allowed to choose what Y is. It's entirely up to you to decide what Y is. Therefore... people spending their own money cannot result in QIRE being unnaturally broken.

Right now you're spending your own time on this thread... you are allowed to choose what Y is. It's entirely up to you to decide whether Y is spending time with your friends/family... or whether Y is reading a book or watching a movie... or whether Y is doing work... or whether Y is doing homework. Y is entirely up to you to decide. Therefore... people spending their own time cannot result in QIRE being unnaturally broken.

If these smaller wars that you're referring to were entirely privately funded... then they didn't unnaturally break QIRE. But if they were at all publicly funded... then they did unnaturally break QIRE. People were not allowed to decide for themselves what Y was.

Perhaps I ought to therefore make a point in general: you refuse to apply your system to the world, to actually existing events.

Thinking About The Holocaust Differently

[Maqo]

And in recognizing that people want to make a profit, that they want to gain value... you're recognizing that they are not revealing their true value of the product. They're 'lying' about their value. Which is ok, and necessary.

Free-riders lie about their valuation of products... but it's not ok because it results in products being undersupplied. So consumers can't be entirely dishonest or else they wouldn't profit at all because products wouldn't be supplied. Yet, consumers can't be entirely honest about their valuation or else they wouldn't profit at all (nobody trades $10 dollars for $10 dollars).

You're welcome to argue that prices... and competition... naturally/logically/magically/mysteriously result in consumers being optimally (dis)honest and products being optimally supplied... but then you don't seem to have a very big problem with our public sector. Our public sector doesn't have prices or competition. Have you ever started a thread where you've brought this glaring deficiency to other people's attention?

You aren't even attempting to come up with a coherent story. Which means that your story will always be incoherent. Which means that you'll always lose. I might never win but... at least I recognize the need for a coherent story. You don't even seem to recognize the need for a coherent story. For you it's just a "minor" detail that we use two incredibly different systems to allocate resources.

Well of course its a major detail for you that everyone else in the world uses a different method of resource allocation to you. It must shake you that everyone seems to get along so swimmingly doing exactly what you think should throw the world in to chaos.
Its not a concern to me that economics works generally how economists think it does. Its not concerning to me that we use different systems to allocate goods that can't be produced for profit.
There is a very consistent story in the rational, profit-seeking individual. Its a bit concerning that you don't understand it, considering that it's taught in 10th grade.

Just because she doesn't know if she'll win, doesn't mean her best bet is to bid her maximum. On the contrary, with the payout-if-you-lose mechanism, if she bids high and wins she gains less value than if she bids low and wins. This makes her more likely to bid low, as losing the bet is just as good (if not significantly better) than winning in many cases.

We are not talking about a payout-if-you-lose mechanism. With the example of Sue wanting me to go to bible study with her... if she loses then she gains absolutely nothing of value. If she input $5 dollars into the WTP app... and I input $20 dollars.... then she would definitely lose. And I would definitely not pay her $20 dollars in order to avoid going to the bible study class. And she definitely would not pay me $5 dollars. There's absolutely nothing wrong with this outcome... unless her actual valuation was greater than $20 dollars. Then a mutually beneficial trade that should have taken place didn't take place because she got too greedy.

Considering that this is the first time you've mentioned that this scenario is different to the rest of the topic, color me confused. The original topic was that the losers would be paid out the sum of the winner's valuation, divided proportionally according to their valuation. Now you're talking about what is essentially simple trade.

So your WTP app does NOT constitute a commitment to either pay or be paid?

In that case, why is your system constrained to a non-repeated game?
Sue asks you if you'll go to bible study. She offers to pay you $5. At the same time, you say you'll accept $20. Ok, your valuations don't meet, nothing happens
Now she can offer you $20, and you can accept, and a 'valuable trade' can occur.

In your situation, you seem to want to restrict to a single round, when there is no reason to do so. People can keep bidding against each other

In this case I would win. We would go to the orchid show rather than to bible study. But because she's doing something that she wouldn't prefer to do... I'm going to compensate her by giving her $30 dollars. Is this $30 dollars pure profit for her? It depends on her valuation of her first choice and her valuation of her second choice. If her valuation of her first choice was $0 dollars... and her valuation of her second choice was -$5 dollars... then her profit would be $25 dollars. But if her valuation of her first choice was $100 dollars...and her valuation of her second choice was $10 dollars... then she would actually be suffering a loss of $60 dollars. She gained $30 dollars... and engaged in an activity that she valued at $10 dollars... but she also sacrificed the opportunity to do something that she valued at $100 dollars.

Her WTP: $20 dollars
Her valuation of option A: $100 dollars
Her valuation of option B: $10 dollars
My WTP: $30 dollars
My valuation of option A: -$20 dollars
My valuation of option B: $35 dollars

My net = $35 dollars - $30 dollars = $5 dollars
Her net = $30 dollars + 10 dollars - $100 dollars = -$60 dollars

The loser always pays the opportunity cost.

That's not how opportunity cost works. She doesn't lose $100 of value. She just doesn't get it.

[Chessmistress]

I voted "never", because by definition, a very popular opinion can be just only a very average opinion and by so it's very unlikely/almost impossible that a very popular opinion would be the most valuable option.
However my perfect choice would be a definition in the middle between "never" and "rarely".

[Greed and Death]

unless your talking stocks, then popular= valuable.

[Xerographica]

I voted "never", because by definition, a very popular opinion can be just only a very average opinion and by so it's very unlikely/almost impossible that a very popular opinion would be the most valuable option.
However my perfect choice would be a definition in the middle between "never" and "rarely".

Your perspective reminded me of this...

We are biased toward the democratic/republican side of the spectrum. That’s what we’re used to from civics classes. But the truth is that startups and founders lean toward the dictatorial side because that structure works better for startups. It is more tyrant than mob because it should be. In some sense, startups can’t be democracies because none are. None are because it doesn’t work. If you try to submit everything to voting processes when you’re trying to do something new, you end up with bad, lowest common denominator type results. — Peter Thiel, Girard in Silicon Valley

Companies aren't a democracy... they are dictatorships. The dictators decide which option is the most valuable option. Except the dictators really don't have the final say...

...if a private company gets its forecasts wrong, the worst that happens is that it goes out of business and is replaced by competitors who made the right calls. Markets are superb at marshaling vast quantities of information, and they amply reward foresight and good guesses. - Ronald Bailey, A U.S. Department of the Future Is a Really Bad Idea

I understand why companies can't be democracies. And it makes sense why companies can be dictatorships. The market punishes the bad dictators and rewards the good dictators. Which begs the question of what would happen if companies were markets. Rather than everything being submitted to the voting process... or to the dictator process... everything would be submitted to the spending process.

Would companies that are markets be less likely to fail? Would they be more likely to succeed?

Nation States clearly isn't a democracy. It's definitely a dictatorship. Max Barry is the dictator. If he makes the wrong call then the worst that happens is that Nation States disappears and is replaced by competitors who made the right calls.

But would NS be less likely to fail if it was a market? None of us, that I know of, are employees of NS. So even if NS was a market... it's not like we would get to participate in the spending-decision-making process. Would it be better if we could though?

Here's the link that I have in my signature... Should this forum facilitate micropayments? Out of 90 members... 67 (74%) oppose micropayments for NS while 23 (26%) support micropayments for NS. We can clearly see that micropayments for NS is not the popular option for consumers. But what we can't see is which option is the most valuable.

What are the chances that the most popular option is also the most valuable option? According to your post... the popular option is rarely/never the most valuable option.

[Chessmistress]

I voted "never", because by definition, a very popular opinion can be just only a very average opinion and by so it's very unlikely/almost impossible that a very popular opinion would be the most valuable option.
However my perfect choice would be a definition in the middle between "never" and "rarely".

Your perspective reminded me of this...

We are biased toward the democratic/republican side of the spectrum. That’s what we’re used to from civics classes. But the truth is that startups and founders lean toward the dictatorial side because that structure works better for startups. It is more tyrant than mob because it should be. In some sense, startups can’t be democracies because none are. None are because it doesn’t work. If you try to submit everything to voting processes when you’re trying to do something new, you end up with bad, lowest common denominator type results. — Peter Thiel, Girard in Silicon Valley

Companies aren't a democracy... they are dictatorships. The dictators decide which option is the most valuable option. Except the dictators really don't have the final say...

...if a private company gets its forecasts wrong, the worst that happens is that it goes out of business and is replaced by competitors who made the right calls. Markets are superb at marshaling vast quantities of information, and they amply reward foresight and good guesses. - Ronald Bailey, A U.S. Department of the Future Is a Really Bad Idea

I understand why companies can't be democracies. And it makes sense why companies can be dictatorships. The market punishes the bad dictators and rewards the good dictators. Which begs the question of what would happen if companies were markets. Rather than everything being submitted to the voting process... or to the dictator process... everything would be submitted to the spending process.

Would companies that are markets be less likely to fail? Would they be more likely to succeed?

Nation States clearly isn't a democracy. It's definitely a dictatorship. Max Barry is the dictator. If he makes the wrong call then the worst that happens is that Nation States disappears and is replaced by competitors who made the right calls.

But would NS be less likely to fail if it was a market? None of us, that I know of, are employees of NS. So even if NS was a market... it's not like we would get to participate in the spending-decision-making process. Would it be better if we could though?

Here's the link that I have in my signature... Should this forum facilitate micropayments? Out of 90 members... 67 (74%) oppose micropayments for NS while 23 (26%) support micropayments for NS. We can clearly see that micropayments for NS is not the popular option for consumers. But what we can't see is which option is the most valuable.

What are the chances that the most popular option is also the most valuable option? According to your post... the popular option is rarely/never the most valuable option.

In my idea the people, through democracy, plays the same role of the market. Basically it's, in example:
Company : Market = Political Party : People
That doesn't mean Companies and Political Parties are (or, even, should be) real democracies in their internal functioning.

[Maqo]

The market punishes the bad dictators and rewards the good dictators. Which begs the question of what would happen if companies were markets. Rather than everything being submitted to the voting process... or to the dictator process... everything would be submitted to the spending process.

Would companies that are markets be less likely to fail? Would they be more likely to succeed?

The complete present and historical lack of any companies that are markets, successful or otherwise, seems to indicate that they are not likely to succeed. If they would succeed, we would know about them.

[Xerographica]

Its not a concern to me that economics works generally how economists think it does. Its not concerning to me that we use different systems to allocate goods that can't be produced for profit.

We don't need to determine people's WTP for goods that can't be produced for profit? Really? Can you cite any sources? Because I can cite plenty of sources that argue otherwise...

One aspect of public goods that prevents the government making efficient decisions is the government's lack of knowledge of households' preferences and willingness to pay for public goods. - Gareth D. Myles, Public Economics

Thus, the revised definition allows us to see that public goods do not only face the long recognized risk of under-provision; they may also suffer from mal-provision – providing positive utility only for some and for others nothing, or sometimes even, only costs. A way to reduce the risk of such mal-provision could be to grant all concerned population groups a more direct say in selecting and shaping public goods, i.e. to better match publicness in consumption with publicness in decision-making. More issue-specific policy dialogue among all concerned actors and stakeholders could help achieve that. - Inge Kaul, Public Goods: Taking the Concept to the 21st Century

One cause of inefficiency in the provision of collective goods is familiar from the theoretical writings in welfare economics and public finance, but rarely mentioned in the PPB or cost-benefit literature. That is the difficulty of getting consumers to reveal their preferences concerning a collective good or externality, and preferences must of course be known to determine how much it is optimal to provide. - Mancur Olson, Evaluating Performance in the Public Sector

There is a very consistent story in the rational, profit-seeking individual. Its a bit concerning that you don't understand it, considering that it's taught in 10th grade.

Well there you go. All you need to do is find any 10th grade economics book and cite it to support your belief that it's unnecessary to determine people's WTP for public goods.

Considering that this is the first time you've mentioned that this scenario is different to the rest of the topic, color me confused.

No, it's really not the first time...

Outcome A: She wins! At most she pays $5 dollars and gets something that's worth $10 dollars to her (good deal).
Outcome B: She loses! She pays $0 dollars and does not get something that's worth $10 dollars to her (bad deal).

So your WTP app does NOT constitute a commitment to either pay or be paid?

The scenario in the OP and the bible study scenario are two different types of situations. In the OP... there's going to be a winner and a loser. The winner gets what they want and the loser gets paid. In the bible study scenario... there's only a winner if the requester's WTP is greater than the other person's WTA. If "Sue's" WTP is less than my WTA... it would be entirely stupid for me to be required to pay Sue my WTA. Just like in my version of the movie Indecent Proposal... if the rich guy's WTP was $100,000 but the poor lady's WTA was $500,000... then it would be entirely stupid for the poor lady to be required to pay the rich guy $500,000 dollars.

In your situation, you seem to want to restrict to a single round, when there is no reason to do so. People can keep bidding against each other

The advantage of a single round is that it only involves a single round. There's absolutely no beating around the bush.

That's not how opportunity cost works. She doesn't lose $100 of value. She just doesn't get it.

As opposed to situations where people do get the value of their missed opportunity? Seriously?

[Maqo]

Its not a concern to me that economics works generally how economists think it does. Its not concerning to me that we use different systems to allocate goods that can't be produced for profit.

We don't need to determine people's WTP for goods that can't be produced for profit? Really? Can you cite any sources? Because I can cite plenty of sources that argue otherwise...

The rest of the economy doesn't run on the concept of people spending their maximum willingness to pay, nor does it require people revealing their maximum willingness to pay. In fact, it pretty much runs entirely on the opposite concept: the system runs on people maximizing profit. Therefore its unconcerning to me that we use a different method for goods which are not profitable.

There is a very consistent story in the rational, profit-seeking individual. Its a bit concerning that you don't understand it, considering that it's taught in 10th grade.

Well there you go. All you need to do is find any 10th grade economics book and cite it to support your belief that it's unnecessary to determine people's WTP for public goods.

As soon as you find me a textbook that says we don't assume profit-seeking individuals, sure.
In the meantime: so long as willingness to pay is above marginal cost, people's maximum willingness to pay is unimportant as the vast majority of producers can never hold buyers to that amount.
When producers *try* to do that, other producers make the same thing for a lesser price, stealing profit away.

So your WTP app does NOT constitute a commitment to either pay or be paid?

The scenario in the OP and the bible study scenario are two different types of situations. In the OP... there's going to be a winner and a loser. The winner gets what they want and the loser gets paid. In the bible study scenario... there's only a winner if the requester's WTP is greater than the other person's WTA. If "Sue's" WTP is less than my WTA... it would be entirely stupid for me to be required to pay Sue my WTA. Just like in my version of the movie Indecent Proposal... if the rich guy's WTP was $100,000 but the poor lady's WTA was $500,000... then it would be entirely stupid for the poor lady to be required to pay the rich guy $500,000 dollars. [/quote]
Yet that is the proposal in the OP. The highest bidder is required to pay their bid to the lower bidder. Why is it an entirely stupid situation for 2 players but a good idea for 3?

In your situation, you seem to want to restrict to a single round, when there is no reason to do so. People can keep bidding against each other

The advantage of a single round is that it only involves a single round. There's absolutely no beating around the bush.

And yet people purposefully come up with systems of trade that do involve multiple rounds (haggling, increasing-bid auctions), and these are shown to be much more resistant to strategic bids than single-round system.
I mean, what are you expecting people to do when their low bid is rejected?

Round 1:
ME: I'll give you $10 for that thing (that I value at $20)
YOU: I'll only sell it for $15.
No trade.
Round 2:
ME: Ok, I'll give you $15 then.
YOU: stop beating around the bush! there is no round 2! Go away and never come back! I can't sell to you ever again.
>Wat

If you want to facilitate increase in value, then making your system stop to arbitrarily conform to some old saying is a bit bonkers.

That's not how opportunity cost works. She doesn't lose $100 of value. She just doesn't get it.

As opposed to situations where people do get the value of their missed opportunity? Seriously?

No, but you don't subtract the value of missed opportunities either. Missed opportunities are just... missed. Nothing.
She would be $60 down from the most she could have made. It doesn't mean she's suffered a loss. She still makes $40. Just because she COULD have made $100 doesn't put her in a negative position.

She *would* be in the negative if she was going to do the $100 choice without your help - which is the situation where she's not forced to participate in the trade, and thus wouldn't bid less than $100.

[Xerographica]

As soon as you find me a textbook that says we don't assume profit-seeking individuals, sure.

Why would I try and find a textbook that says that we don't assume profit-seeking individuals? You're not arguing for this assumption and I'm not arguing against this assumption. You're arguing that economists don't care that we don't know people's WTP/preferences for public goods. I cited three sources that disprove your claim. Did you share even a single source that supports your claim? Nope.

Yet that is the proposal in the OP. The highest bidder is required to pay their bid to the lower bidder. Why is it an entirely stupid situation for 2 players but a good idea for 3?

It has absolutely nothing to do with the number of players. It has to do with whether there was an initial consensus. In the OP the coworkers all agreed to do something (go out and eat). But they disagreed over where to eat. So the WTP was used to determine the most valuable option.

With the bible study and Indecent Proposal scenarios... there was no initial consensus. Sue and I never agreed to do anything. The rich guy and the poor lady never agreed to do anything either.

The coworkers we're in the same boat trying to decide the most valuable direction. Sue and I were in different boats going different directions. She wanted me to exit my boat and board her boat. The rich guy and the poor lady were in different boats going different directions. He wanted her to exit her boat and board his boat.

It doesn't have anything to do with how many people are in the boats. It has everything to do with whether or not people are in the same boat or different boats.

The complete present and historical lack of any companies that are markets, successful or otherwise, seems to indicate that they are not likely to succeed. If they would succeed, we would know about them.

In the OP ten coworkers were in the same boat. They all wanted to go eat together but they disagreed over where to eat. But, rather than voting (democracy) to determine which option was the most popular... they used spending (market) to determine which option was the most valuable. Alternatively, they could have simply allowed one coworker (dictatorship) to decide which option was the most valuable.

A company is a group of people all in the same boat. For some reason you think that a dictatorship is the best way to steer the boat. But you sure haven't made this argument regarding the group of 10 coworkers in the same boat. Why is that? Oh yeah, it's because you don't see the need for a coherent story.

I mean, what are you expecting people to do when their low bid is rejected?

I expect Sue to regret not bidding her linvoid (the amount that would have provided her with the lowest acceptable amount of profit).

No, but you don't subtract the value of missed opportunities either. Missed opportunities are just... missed. Nothing.

If I wasn't writing this (X) then I would be doing Y. Do I benefit from really lying to myself about how much I value Y? Of course not. That would be the equivalent of shooting myself in the foot.

If Sue went to the orchid show (X) then she wouldn't be in bible study class (Y). Does she benefit from really lying to herself, or me, about how much she values Y? Of course not. That would be the equivalent of shooting herself in the foot.

With this mind, it would behoove her to bid her linvoid. Just like it would behoove me to bid my linvoid.

[Chestaan]

Xero I am slightly confused. Are you of the opinion that their is problem with consumers paying less than their willingness to pay for a good?

[Hladgos]

After all this debate and scuttle, their lunch break is over before they get a chance to eat and they return to work hungry.

[Xerographica]

Xero I am slightly confused. Are you of the opinion that their is problem with consumers paying less than their willingness to pay for a good?

In order to ask this question you spent...

X amount of time
Y amount of effort
Z amount of money

I don't know what X and Y are but I know that Z is $0 dollars.

X + Y + Z = your WTP for this question

Does your WTP for this question accurately communicate just how important this question is to you?

A = your WTP for your question
B = your valuation of your question

Now imagine me! How many different things can I do with my time? Quite a few! Answering your question is one of many different possible uses of my time. My time.... just like your time... is limited. I really don't have all the time in the world. I sure wish that I did! But I don't.

Because my time is limited... I don't want to waste it on less valuable uses. But in order to avoid wasting my time on less valuable uses... it's necessary for me to have an accurate assessment of the valuations of the different possible uses.

The greater the disparity between A and B... the more likely that I am to make a mistake.

Right now I have a treasure map. It's a very dynamic treasure map. When you asked your question it automatically appeared on my treasure map. But it's really not the only item on my treasure map. There are lots of different items on my treasure map. The less accurate my treasure map is... the more likely it is that I'll pursue the wrong treasure. Do you benefit when I pursue the wrong treasure? Nope. Just like I don't benefit when you pursue the wrong treasure.

This is why it's important that we should all pay our linvoid (the amount of money that provides the lowest acceptable amount of profit). If this forum facilitated micropayments.... then there would be less disparity between our linvoids and our WTPs. If it only took one click for you to spend one penny on your question... then you would be a lot more inclined to spend a penny on your question. Other people would also be a lot more inclined to spend a penny on your question. This would help make all our treasure maps more accurate.

If this forum facilitated micropayments then it would help minimize payment costs. Hmmm... not sure if "payment costs" is an official economic concept but it should be. A payment cost is the cost of making a payment. Imagine if Home Depot required shoppers to complete a rigorous obstacle course before they could pay for their items. This would greatly increase the payment cost. People would be a lot less inclined to shop at Home Depot. People are very inclined to shop at Amazon in large part because the payment costs are so low. All it takes is one click to pay for your items. You don't have to spend any time waiting in lines.

If this forum minimized payment costs by facilitating micropayments then it would certainly help decrease the disparity between our linvoids and our WTPs. This in turn would help make all our treasure maps more accurate. But our treasure maps would still be significantly inaccurate because of the free-rider problem. One way to tackle this problem would be to require every member of this forum to spend a minimum amount of pennies each year. For example... each year we would have to spend 1000 pennies. But, we would be able to choose which posts we spent our pennies on. It's entirely possible that this would help make all our treasure maps even more accurate.

Although... it's entirely possible that the free-rider problem only exists because people don't understand the importance of accurate treasure maps. For example, if you understood the importance of accurate treasure maps then you wouldn't have asked your question.

[Chestaan]

Xero I am slightly confused. Are you of the opinion that their is problem with consumers paying less than their willingness to pay for a good?

In order to ask this question you spent...

X amount of time
Y amount of effort
Z amount of money

I don't know what X and Y are but I know that Z is $0 dollars.

X + Y + Z = your WTP for this question

Does your WTP for this question accurately communicate just how important this question is to you?

A = your WTP for your question
B = your valuation of your question

Now imagine me! How many different things can I do with my time? Quite a few! Answering your question is one of many different possible uses of my time. My time.... just like your time... is limited. I really don't have all the time in the world. I sure wish that I did! But I don't.

Because my time is limited... I don't want to waste it on less valuable uses. But in order to avoid wasting my time on less valuable uses... it's necessary for me to have an accurate assessment of the valuations of the different possible uses.

The greater the disparity between A and B... the more likely that I am to make a mistake.

Right now I have a treasure map. It's a very dynamic treasure map. When you asked your question it automatically appeared on my treasure map. But it's really not the only item on my treasure map. There are lots of different items on my treasure map. The less accurate my treasure map is... the more likely it is that I'll pursue the wrong treasure. Do you benefit when I pursue the wrong treasure? Nope. Just like I don't benefit when you pursue the wrong treasure.

This is why it's important that we should all pay our linvoid (the amount of money that provides the lowest acceptable amount of profit). If this forum facilitated micropayments.... then there would be less disparity between our linvoids and our WTPs. If it only took one click for you to spend one penny on your question... then you would be a lot more inclined to spend a penny on your question. Other people would also be a lot more inclined to spend a penny on your question. This would help make all our treasure maps more accurate.

If this forum facilitated micropayments then it would help minimize payment costs. Hmmm... not sure if "payment costs" is an official economic concept but it should be. A payment cost is the cost of making a payment. Imagine if Home Depot required shoppers to complete a rigorous obstacle course before they could pay for their items. This would greatly increase the payment cost. People would be a lot less inclined to shop at Home Depot. People are very inclined to shop at Amazon in large part because the payment costs are so low. All it takes is one click to pay for your items. You don't have to spend any time waiting in lines.

If this forum minimized payment costs by facilitating micropayments then it would certainly help decrease the disparity between our linvoids and our WTPs. This in turn would help make all our treasure maps more accurate. But our treasure maps would still be significantly inaccurate because of the free-rider problem. One way to tackle this problem would be to require every member of this forum to spend a minimum amount of pennies each year. For example... each year we would have to spend 1000 pennies. But, we would be able to choose which posts we spent our pennies on. It's entirely possible that this would help make all our treasure maps even more accurate.

Although... it's entirely possible that the free-rider problem only exists because people don't understand the importance of accurate treasure maps. For example, if you understood the importance of accurate treasure maps then you wouldn't have asked your question.

I am no closer to understanding the answer. So, simple question, if my WTP to buy a car is €1000 and myself and the seller agree to a price of €800, is that a problem in your eyes? Should I have paid €1000 instead of €800?

[Xerographica]

I am no closer to understanding the answer. So, simple question, if my WTP to buy a car is €1000 and myself and the seller agree to a price of €800, is that a problem in your eyes? Should I have paid €1000 instead of €800?

What's your valuation of the car? What's your linvoid?

[Kubra]

Horses are not indigenous to north america. There is certainly evidence that species of equidae once existed in north america, but we have no reason to believe that their extinction was a direct result of overexploitation, or that they were suitable for domestication. It's a bit of a long process, and we do not know how exactly Eurasian tribes were able to acheive such, while explanations are a bit more nuanced than some guy figuring he can get on a horse and ride it (you can't).

There's certainly some evidence that the species that used to be in America was virtually identical to the modern horse. This would mean that it was entirely suitable for domestication.

Regarding overexploitation... it might be a coincidence that the extinction of horses in America coincided with the arrival of humans.

Again, the instance of QIRE being broken that I mentioned was an economic boon for the US. Hell, if I lived in that time period and had a bit of cash to invest, I'd definitely throw some dollars their way, I'd make it back with interest in either system of decision making mentioned. You are, again, still dancing around the example. You refuse to engage it directly. I have been given no reason to suppose this unnatural breakage of QIRE would not have occurred under the systems you've mentioned.

When you spend your own money.... you are allowed to choose what Y is. It's entirely up to you to decide what Y is. Therefore... people spending their own money cannot result in QIRE being unnaturally broken.

Right now you're spending your own time on this thread... you are allowed to choose what Y is. It's entirely up to you to decide whether Y is spending time with your friends/family... or whether Y is reading a book or watching a movie... or whether Y is doing work... or whether Y is doing homework. Y is entirely up to you to decide. Therefore... people spending their own time cannot result in QIRE being unnaturally broken.

If these smaller wars that you're referring to were entirely privately funded... then they didn't unnaturally break QIRE. But if they were at all publicly funded... then they did unnaturally break QIRE. People were not allowed to decide for themselves what Y was.

Perhaps I ought to therefore make a point in general: you refuse to apply your system to the world, to actually existing events.

Thinking About The Holocaust Differently

Alright, I'll cede that point as to the first post. But as to the hunting out as to the major factor of their extinction, your own source points out that indigenous horses were in dire straits beforehand and as a result of non-human factors. Man was a predator among predators hunting a species that had already sharply decline after the ice age drove them west, hunting them in a period that predates the use of agriculture in the region, where domesticated animals are most useful. As such, from the point of view of a native hunter-gatherer, there really isn't a reason, known or unknown, not to eat horses. Not eating them is in fact the bad choice, insofar as that is the most valuable option for us by humans in these particular conditions.

So wars that break QIRE are what we're most worried about, but wars that do not are valid enough? Rubbish, I say. We can say conclusively that the Napoleonic wars were of the former case, but it is thanks to those conquests and the systems that followed in its wake that dismantled feudal law in Europe and first introduced the metric system to the wider world, which I'd say is a far greater use of war than for port access and sugar cane, which we can use to generally represent colonial war. Now that's an allocation of resources that can only be made via centralized taxation, levee en masse, a good bit of organized slaughter (that is what war is, after all), and so on.

Alright, good, this is a concrete example. However, it is not a concrete example of the implementation of your system of decision making to the holocaust, which is what I desire. If you'd like, I'd appreciate if you could elaborate on this example in relation to the topic at hand. I will say that the average german policymaker or industrialist of the time would have probably put their vote and money in favour of gassing and slavery (which they did), insofar as there's no reason to suppose they'd think that a population of supposed saboteurs (that's what they thought of them, after all) would be useful in any role other than slavery or shallow graves. If that's ones thought process, the most efficient choice is holocaust, and the least efficient letting them go to the highest foreign bidders for them to infiltrate administrations and strengthen the bogeyman of "judeo-bolshevism". It's in ones interests to break all international agreements and invade the continent. If ones already on a war footing, which Germany was, it's very "optimistic" to say that the holocaust could have been prevented so simply.

[Chestaan]

I am no closer to understanding the answer. So, simple question, if my WTP to buy a car is €1000 and myself and the seller agree to a price of €800, is that a problem in your eyes? Should I have paid €1000 instead of €800?

What's your valuation of the car? What's your linvoid?

Well if the WTP is €1000 then the car's valuation is €1000 to me.

Edit: And really I can't see any point of this linvoid concept. The valuation is already captured by the maximum WTP.

[Xerographica]

Alright, I'll cede that point as to the first post. But as to the hunting out as to the major factor of their extinction, your own source points out that indigenous horses were in dire straits beforehand and as a result of non-human factors. Man was a predator among predators hunting a species that had already sharply decline after the ice age drove them west, hunting them in a period that predates the use of agriculture in the region, where domesticated animals are most useful. As such, from the point of view of a native hunter-gatherer, there really isn't a reason, known or unknown, not to eat horses. Not eating them is in fact the bad choice, insofar as that is the most valuable option for us by humans in these particular conditions.

I agree that, for the longest time, there wasn't a known reason to not eat horses... but I think it's pretty clear that there certainly was an unknown reason to not eat horses. This unknown reason became known to the first people who figured out that horses could also be used for transportation. When horses were reintroduced to the Americas... then I'm pretty sure that most Native Americans preferred using horses for transportation rather than for food.

So wars that break QIRE are what we're most worried about, but wars that do not are valid enough?

We should always worry about breaking QIRE... but the primary goal is to eliminate the unnatural breaking of QIRE. Again, the unnatural breaking of QIRE occurs when people can't choose what Y is.

Rubbish, I say. We can say conclusively that the Napoleonic wars were of the former case, but it is thanks to those conquests and the systems that followed in its wake that dismantled feudal law in Europe and first introduced the metric system to the wider world, which I'd say is a far greater use of war than for port access and sugar cane, which we can use to generally represent colonial war. Now that's an allocation of resources that can only be made via centralized taxation, levee en masse, a good bit of organized slaughter (that is what war is, after all), and so on.

I'm hardly going to argue against the idea that some wars are more justified than other wars. My argument is simply that nobody benefits when QIRE is naturally or unnaturally broken. Preventing QIRE from being unnaturally broken will result in QIRE being naturally broken a whole lot less.

Alright, good, this is a concrete example. However, it is not a concrete example of the implementation of your system of decision making to the holocaust, which is what I desire. If you'd like, I'd appreciate if you could elaborate on this example in relation to the topic at hand. I will say that the average german policymaker or industrialist of the time would have probably put their vote and money in favour of gassing and slavery (which they did), insofar as there's no reason to suppose they'd think that a population of supposed saboteurs (that's what they thought of them, after all) would be useful in any role other than slavery or shallow graves. If that's ones thought process, the most efficient choice is holocaust, and the least efficient letting them go to the highest foreign bidders for them to infiltrate administrations and strengthen the bogeyman of "judeo-bolshevism". It's in ones interests to break all international agreements and invade the continent. If ones already on a war footing, which Germany was, it's very "optimistic" to say that the holocaust could have been prevented so simply.

Here's what Hitler said in 1931...

The Third Reich will always retain the right to control property owners.

Prior to Hitler being "elected"... why would the property owners support him? What did they have to gain? The property owners had nothing to gain and everything to lose. There were certainly a few exceptions though.

It's important to note that the majority never officially voted for Hitler. In the second round of the 1932 elections (the only elections that truly counted) he received 36.8% of the votes. If voting had been replaced with spending... then the outcome would have been a lot less in his favor. Especially if people had been free to directly allocate their taxes. If there had been a market in the public sector then it would have been impossible to control property owners... which would have greatly decreased the incentive of voting for Hitler.

[Galloism]

<regarding hitler>

If voting had been replaced with spending... then the outcome would have been a lot less in his favor. Especially if people had been free to directly allocate their taxes. If there had been a market in the public sector then it would have been impossible to control property owners... which would have greatly decreased the incentive of voting for Hitler.

I want to see your absolute proof of this backing this immense assertion.

Don't just assert - show your work.

[Xerographica]

What's your valuation of the car? What's your linvoid?

Well if the WTP is €1000 then the car's valuation is €1000 to me.

Edit: And really I can't see any point of this linvoid concept. The valuation is already captured by the maximum WTP.

Earlier in this thread I acknowledged the necessity of differentiating between WTP and valuation.

What's your valuation of $10 dollars? It's probably $10 dollars. What's your WTP for $10 dollars? $10 dollars? What would be the point of paying $10 dollars for $10 dollars? You would gain absolutely nothing in the exchange. It would be a waste of your time. Therefore... your WTP for $10 dollars has to be less than $10 dollars. I'm guessing that you'd be happy to trade my $10 dollars for your $1 dollar. Would you be happy to trade my $10 dollars for your $5 dollars? What about for your $7 dollars? This would provide you with $3 dollars of profit. Is this an acceptable amount of profit? What's the lowest acceptable amount of profit? If the lowest acceptable amount of profit for you is $2 dollars... then your linvoid is $8 dollars.

If your valuation of the car is €1000... then maybe your linvoid is €900 and your WTP is €800. Is it a problem if you and the seller agree on €800? It's not a problem as long as everybody else pays their linvoids.

Imagine that taxation was entirely voluntary. Let's say that your valuation of public healthcare was €5000 and your linvoid was €4500. Would it be a problem if you only spent €100 on public healthcare? Nope... as long as everybody else spends their linvoids on public healthcare.

If everybody cheats then the supply is going to be extremely suboptimal. But if only one person cheats then the supply will be extremely close to optimal.

If everybody cheats then all our treasure maps are going to be extremely inaccurate. But if only one person cheats then it's hardly going to make a dent in the accuracy of all our treasure maps.

[Maqo]

As soon as you find me a textbook that says we don't assume profit-seeking individuals, sure.

Why would I try and find a textbook that says that we don't assume profit-seeking individuals? You're not arguing for this assumption and I'm not arguing against this assumption. You're arguing that economists don't care that we don't know people's WTP/preferences for public goods. I cited three sources that disprove your claim. Did you share even a single source that supports your claim? Nope.

You said I don't have a coherent story. I do: people try to make as much profit for themselves as possible. From that we can determine that the idea of determining peoples willingness to pay for something is irrelevant so long as it is above the marginal cost of production of that thing. I doubt that anyone ever says anything directly relating to your idea because it can be trivially dismissed.
In this thread I'm not trying to say anything about public goods, because I'm trying to stay to a single topic in a vain attempt to not bring in your entire misinterpretation of economics again. Its possible that we don't know that peoples willingness to pay is above the marginal cost of production for public goods; in which case that information would be useful. But beyond that point, knowing more is pretty irrelevant.

Yet that is the proposal in the OP. The highest bidder is required to pay their bid to the lower bidder. Why is it an entirely stupid situation for 2 players but a good idea for 3?

It has absolutely nothing to do with the number of players. It has to do with whether there was an initial consensus. In the OP the coworkers all agreed to do something (go out and eat). But they disagreed over where to eat. So the WTP was used to determine the most valuable option.

With the bible study and Indecent Proposal scenarios... there was no initial consensus. Sue and I never agreed to do anything. The rich guy and the poor lady never agreed to do anything either.

The coworkers we're in the same boat trying to decide the most valuable direction. Sue and I were in different boats going different directions. She wanted me to exit my boat and board her boat. The rich guy and the poor lady were in different boats going different directions. He wanted her to exit her boat and board his boat.

It doesn't have anything to do with how many people are in the boats. It has everything to do with whether or not people are in the same boat or different boats.

OK, so lets abandon the discussion about people just buying stuff off each other (because its trivial and boring), and talk about the voting situation.

The complete present and historical lack of any companies that are markets, successful or otherwise, seems to indicate that they are not likely to succeed. If they would succeed, we would know about them.

In the OP ten coworkers were in the same boat. They all wanted to go eat together but they disagreed over where to eat. But, rather than voting (democracy) to determine which option was the most popular... they used spending (market) to determine which option was the most valuable. Alternatively, they could have simply allowed one coworker (dictatorship) to decide which option was the most valuable.

A company is a group of people all in the same boat. For some reason you think that a dictatorship is the best way to steer the boat. But you sure haven't made this argument regarding the group of 10 coworkers in the same boat. Why is that? Oh yeah, it's because you don't see the need for a coherent story.

Coherent story: People want to make profit. They want to make as much profit as possible. They'll do things that make them as much profit as possible.
If a company run by democracy, or market, could make them more profit than one run by dictatorship, people would do that.
So this means that either:
a) people have never considered your idea. If this is the case, you could possibly publish a paper about it and people might try it.
b) people have considered or tried your idea, and it doesn't generate as much profit as other ways of management.

I mean, what are you expecting people to do when their low bid is rejected?

I expect Sue to regret not bidding her linvoid (the amount that would have provided her with the lowest acceptable amount of profit).

And after she got over that soul crushing regret, she could bid again. Unless she was prevented so that you could make a point.
You know what she would also regret? bidding her 'linvoid' when you would have accepted her 'linvoid' -1. or -2, or -10. Because if she bets her maximum (or 1c below that maximum to get the 'minimum amount of profit) she would be, again, effectively engaging in trade for nothing, or for the minimum possible benefit. But that doesn't fit the story of the profit-seeker. She should be chasing the MAXIMUM possible benefit. Ie, betting as low as is required to secure the product she wants.
Commerce has worked very well based on this idea of initially bidding low and gradually increasing for a very long time.

No, but you don't subtract the value of missed opportunities either. Missed opportunities are just... missed. Nothing.

If I wasn't writing this (X) then I would be doing Y. Do I benefit from really lying to myself about how much I value Y? Of course not. That would be the equivalent of shooting myself in the foot.

If there is only a single player in the game, yourself, then of course you shouldn't lie to yourself.
If you want to get something from someone else, of course you should lie to them by pretending your value is only just above their price (maximising your profit). And they'll try to lie to you by saying their price is just below your value (maximising their profit). Sellers are kept honest on their prices by other people willing to sell the same thing for less (but still positive) profit.

If Sue went to the orchid show (X) then she wouldn't be in bible study class (Y). Does she benefit from really lying to herself, or me, about how much she values Y? Of course not. That would be the equivalent of shooting herself in the foot.

I offer to give you either $0, or $50, no conditions. You decide to take nothing. Do you now have $50 debt?
No.
You're down $50 from where you could be, but that doesn't mean your decision actually puts you into the negative.
You can't subtract the value of missed opportunities. You take them in to consideration when comparing situations, but it doesn't affect the actual situation.

With this mind, it would behoove her to bid her linvoid. Just like it would behoove me to bid my linvoid.

I still don't understand exactly what situation Sue is in here, so lets set it up again:

Person A and B want to do an activity, but they can't decide on which on.
Person A values activity X at $10 and activity Y at $100
Person B values activity X at $40 and activity Y at $5

The maximum value is gained when they do activity Y - a total of $105 of value. The decision is then how to split the value between them.
They'll both only agree to do activity Y if person A pays person B $35. But beyond that, they're both happy. So they want to maximize their personal happiness.

They decide to do a first price single blind bid auction.
Person A will bid anywhere between $0 and $90. Both net the same amount of value.
What about a bid of $89 then? Well, she'd net $1 of value if she wins. But a bid of $1 that loses gains her >$1 of value, and a bid of $1 that wins gains her $89 of value. If she actually has no idea at all what B's bid is, she would be personally better off bidding $1 than bidding $89. And so it is for $2 vs $88, $3 vs $87...and so on until her actual equilibrium bid of $45. If she wins, she gets $45 of value (far better than if she bids her maximum of $90 and wins $0). If she loses, she gets whatever B's bid is, >$45. She can't do any better.

So her final bid that maximizes her profit, regardless of what you bid, is $45. Is it a 'lie'? Maybe. But its not 'shooting herself in the foot'.

[Xerographica]

<regarding hitler>

If voting had been replaced with spending... then the outcome would have been a lot less in his favor. Especially if people had been free to directly allocate their taxes. If there had been a market in the public sector then it would have been impossible to control property owners... which would have greatly decreased the incentive of voting for Hitler.

I want to see your absolute proof of this backing this immense assertion.

Don't just assert - show your work.

My proof is simple. In my OP... I gave an example of 10 coworkers trying to decide which restaurant to eat at. Not a single member of this forum has argued that the best solution would be for the coworkers to choose a leader to make the decision for the entire group.

[Xerographica]

In this thread I'm not trying to say anything about public goods, because I'm trying to stay to a single topic in a vain attempt to not bring in your entire misinterpretation of economics again. Its possible that we don't know that peoples willingness to pay is above the marginal cost of production for public goods; in which case that information would be useful. But beyond that point, knowing more is pretty irrelevant.

The issue is whether you think that we need less than, more than or the same amount of information for public goods as we need for private goods.

OK, so lets abandon the discussion about people just buying stuff off each other (because its trivial and boring), and talk about the voting situation.

What voting situation? Ever situation in this thread has been a spending situation.

Coherent story: People want to make profit. They want to make as much profit as possible. They'll do things that make them as much profit as possible.
If a company run by democracy, or market, could make them more profit than one run by dictatorship, people would do that.
So this means that either:
a) people have never considered your idea. If this is the case, you could possibly publish a paper about it and people might try it.
b) people have considered or tried your idea, and it doesn't generate as much profit as other ways of management.

If you don't know whether it's a good idea to transform companies into markets... then you can't know the benefit of spending.... which means that you can't know whether it's a good idea to replace voting with spending.

Commerce has worked very well based on this idea of initially bidding low and gradually increasing for a very long time.

We haven't yet replaced voting with spending. Clearly there's a shortage of clear and coherent thinking as far as commerce is concerned.

I offer to give you either $0, or $50, no conditions. You decide to take nothing. Do you now have $50 debt?
No.
You're down $50 from where you could be, but that doesn't mean your decision actually puts you into the negative.
You can't subtract the value of missed opportunities. You take them in to consideration when comparing situations, but it doesn't affect the actual situation.

Could've Had A V8

I still don't understand exactly what situation Sue is in here, so lets set it up again:

Person A and B want to do an activity, but they can't decide on which on.
Person A values activity X at $10 and activity Y at $100
Person B values activity X at $40 and activity Y at $5

Person A = Sue
Person B = Xero
Activity X = going to orchid show
Activity Y = going to bible study

Xero: Next Saturday is the orchid show!
Sue: Oh, it's also my bible study class!
Xero: Oh, you should go to orchid show instead!
Sue: You should go to the bible study class instead!
Xero: Let's arm wrestle?
Sue: Ha, very funny. Let's just use the WTP app.
Xero: Ok

Because Sue and I are both profit maximizers... neither of us wants to make a mistake. Neither one of us wants to *facepalm* ourselves. With this in mind... we both input our linvoids into the app...

Her linvoid: $80 dollars
My linvoid: $35 dollars

She wins...

Her net: $100 dollars - $80 dollars - $10 dollars = $10 dollars
My net: $80 dollars + $5 dollars - $40 dollars = $45 dollars

We both win. Nobody *facepalms*.

Sue spent money. On what? On her most valuable activity. And... on my time. What are these things? Private goods? Public goods? Club goods?

King Solomon said... "for thou, even thou only, knowest the hearts of all the children of men."

John Lennon said... "you've got to hide your love away."

Jesus said... "No man, when he hath lighted a candle, putteth it in a secret place, neither under a bushel, but on a candlestick, that they which come in may see the light."

When you fall in love with your best friend's new girlfriend... do you hide your love away? Yeah? Is this a situation when discretion is the greater part of valor? What if you fall in love with Ivy Rose? Do you hide your candle under a bushel?

Does it matter what you love? Yeah? No? Do you think your life is better when you hide your love away?

[Chestaan]

Well if the WTP is €1000 then the car's valuation is €1000 to me.

Edit: And really I can't see any point of this linvoid concept. The valuation is already captured by the maximum WTP.

Earlier in this thread I acknowledged the necessity of differentiating between WTP and valuation.

What's your valuation of $10 dollars? It's probably $10 dollars. What's your WTP for $10 dollars? $10 dollars? What would be the point of paying $10 dollars for $10 dollars? You would gain absolutely nothing in the exchange. It would be a waste of your time. Therefore... your WTP for $10 dollars has to be less than $10 dollars. I'm guessing that you'd be happy to trade my $10 dollars for your $1 dollar. Would you be happy to trade my $10 dollars for your $5 dollars? What about for your $7 dollars? This would provide you with $3 dollars of profit. Is this an acceptable amount of profit? What's the lowest acceptable amount of profit? If the lowest acceptable amount of profit for you is $2 dollars... then your linvoid is $8 dollars.

If your valuation of the car is €1000... then maybe your linvoid is €900 and your WTP is €800. Is it a problem if you and the seller agree on €800? It's not a problem as long as everybody else pays their linvoids.

Imagine that taxation was entirely voluntary. Let's say that your valuation of public healthcare was €5000 and your linvoid was €4500. Would it be a problem if you only spent €100 on public healthcare? Nope... as long as everybody else spends their linvoids on public healthcare.

If everybody cheats then the supply is going to be extremely suboptimal. But if only one person cheats then the supply will be extremely close to optimal.

If everybody cheats then all our treasure maps are going to be extremely inaccurate. But if only one person cheats then it's hardly going to make a dent in the accuracy of all our treasure maps.

I would pay $9.99 for your ten dollars, as would any rational individual. I would be indifferent if I had to be $10, as my valuation of $10 is obviously $10.

If my valuation of the car is €1000 then my WTP is necessarily €1000. What this means is that the car is worth exactly €1000 to me, or put another way I am indifferent between paying buying the car or not buying the car at a price of €1000. However, if I can pay less than €1000 I will do so, as this will increase my consumer surplus.

If the seller of the car has a minimum WTA less than €1000, say €700, then any selling price between €700 and €1000 is optimal, as a trade will take place and will maximise the sum of our surpluses.

[Galloism]

I want to see your absolute proof of this backing this immense assertion.

Don't just assert - show your work.

My proof is simple. In my OP... I gave an example of 10 coworkers trying to decide which restaurant to eat at. Not a single member of this forum has argued that the best solution would be for the coworkers to choose a leader to make the decision for the entire group.

So?

That's no more proof of the assertion I quoted than if I had asked you to prove the assertion that Mickey Mouse was actually an alien given a voice through popular media.