5 ms·
Transactions are pos sum only if you look at subjective value, right?
by amatic 7y ago
Transactions are pos sum only if you look at subjective value, right?
- npongratz 7y agoAll value is subjective.
- garmaine 7y agoBut there are objective measures of value, such as the price you paid in a transaction.
- amatic 7y agoThe price you paid says you value the thing you got more than the money you gave in exchange. At the same time, the person who received the money values it more than the thing he sold. That is what makes economic transactions positive sum games, according to some theories.
- philwelch 7y agoI would call market prices more “consensus” than “objective”, since they’re based on the aggregate subjective valuations of those involved in the market.
- garmaine 7y agoYou can objectively point to them. The prices are visible for all to see.
- amatic 7y agoAgreed. Have you seen any models or simulations of economies with subjective value? All I see are some 'objective' measures.
- wodenokoto 7y agoBehavioral economics is basically the study of economy with values assumed to be subjective.
- MR4D 7y agoI disagree. Let’s say I buy something from you and I pay you $7 for it. Then, I sell it for $10. In this case, my cost $7, my revenue is $10, and the value I got from your item is $3. It’s not always this clear cut, but sometimes it is.
- wodenokoto 7y agoNo, the value of 3 dollars varies from person to person. For Bill Gates, 3 dollars is near worthless. For a poor, 3rd world country citizen living on less than a dollar a day, 3 dollars is very valuable. Secondly, from your point of view it might be that 3 is 3. But if we look at the entire economy, things get extremely muddy. Maybe those ten dollars that the transaction is based on come from a loan based on a quantifier. So the bank lend out 10 dollars based on a 1 dollar holding. Now the money supply has increased, which all things equal will lower the value of each dollar. But all things are not equal. The economy is growing and if it is growing faster than the money supply is growing then the value of the dollar is still growing. The value of those 3 dollar profit is 3/[size of money supply] x [value of economy] And valuating the economy is extremely difficult. To the point where you could call it subjective.