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Do you agree there is a difference in behavior between startups and big companies, though? In the way they are willing to invest into something? If you agree,

by js8 10y ago

Do you agree there is a difference in behavior between startups and big companies, though? In the way they are willing to invest into something? If you agree, then how can you say both act rationally? Why wouldn't rational people who have labor to offer, instead of joining a startup, go work for a big company? The pay is usually better I hear. Addendum: I am sure you can explain the difference in behavior by invoking "preferences" or "utility" (which is actually meaningless in humans, cf. https://news.ycombinator.com/item?id=13276760 https://news.ycombinator.com/item?id=13276760, but that aside) of monetary rewards; however, that doesn't explain why there is the difference in the first place. If some entities are rational, they should perceive the world the same way and thus have the same preferences.

nabla9 10y ago
You can explain it using prospect theory https://en.wikipedia.org/wiki/Prospect_theory https://en.wikipedia.org/wiki/Prospect_theory >If some entities are rational, they should perceive the world the same way and thus have the same preferences. This is incorrect. Rational economic behavior is sequence of choices that gives the optimal level utility for the actor. Utility function is given and outside rationality. Different people have different capabilities and resources available to them. Even if they had different utility functions they would behave differently for the reasons I described above.
ajuc 10y ago
> If you agree, then how can you say both act rationally? Why should there be only 1 optimal way to play this game? Example of a game with 2 optimal ways to play - tossing a coin and betting on head or tail.
- pbhjpbhj 10y ago
  Surely the optimal way to proceed when faced with betting on a coin toss is to keep your stake and guarantee you walk away with some money. Now it may be possible to evaluate the utility of engaging in a start-up and so act rationally in entering in to such an endeavour but I'd warrant that's not how it [ever] happens. Instead it's far more realistic to assume it follows the lottery model: that people's sense of hope, or wishful thinking, makes them choose to play [at lottery, or startups] despite the analysis indicating an alternate choice is most logical. We humans are not creatures of logic.

by js8 10y ago

nabla9 10y ago

You can explain it using prospect theory https://en.wikipedia.org/wiki/Prospect_theory https://en.wikipedia.org/wiki/Prospect_theory >If some entities are rational, they should perceive the world the same way and thus have the same preferences. This is incorrect. Rational economic behavior is sequence of choices that gives the optimal level utility for the actor. Utility function is given and outside rationality. Different people have different capabilities and resources available to them. Even if they had different utility functions they would behave differently for the reasons I described above.

ajuc 10y ago

> If you agree, then how can you say both act rationally? Why should there be only 1 optimal way to play this game? Example of a game with 2 optimal ways to play - tossing a coin and betting on head or tail.

pbhjpbhj 10y ago
Surely the optimal way to proceed when faced with betting on a coin toss is to keep your stake and guarantee you walk away with some money. Now it may be possible to evaluate the utility of engaging in a start-up and so act rationally in entering in to such an endeavour but I'd warrant that's not how it [ever] happens. Instead it's far more realistic to assume it follows the lottery model: that people's sense of hope, or wishful thinking, makes them choose to play [at lottery, or startups] despite the analysis indicating an alternate choice is most logical. We humans are not creatures of logic.