3 ms·
Prices communicate not just demand in the sense of "I want it" but also "I want it approximately this badly and not more than that". With no price signal to ind
by tvanantwerp 8y ago
Prices communicate not just demand in the sense of "I want it" but also "I want it approximately this badly and not more than that". With no price signal to indicate the extent of a demand, it's up to the whim of the planner to decide who needs good X the most. Pressing an "I want this" button in an app doesn't at all distinguish between "I'd like to have it if it's free, but it's not essential" and "if I don't get this right now, my life is over". Sure, you could try to engineer in levels of demand (nobody ever abused the "urgent" button in email systems, right?), but what you'd ultimately end up doing to get an accurate estimate of what trade-offs people prefer across different demands for goods is that you'd have reinvented prices.