4 ms·
> I’d assume most people, particularly landlords and local government would want to avoid that. This seems like a “prisoner’s dilemma” situation. It’s rational
by pbourke 7y ago
> I’d assume most people, particularly landlords and local government would want to avoid that.
This seems like a “prisoner’s dilemma” situation. It’s rational for an individual landlord to evict a delinquent tenant and seek a new one. However, if everyone does this the entire market collapses. It’s better for everyone if the landlord takes a short term haircut to preserve the market.
Since cooperation is expected to break down between individuals, the government must step in to prevent collapse.
- kofejnik 7y ago... or maybe this "landlord" is a parent who just rents out their old small house, and is now unable to make the rent or car payments
- meheleventyone 7y agoAt least they have an asset they can use to survive and make those payments.
- pbourke 7y agoHow does that change things? I think small landlords are especially exposed to the dilemma because they have fewer resources at their disposal.
- daxorid 7y agoThen they do what everyone else does. Sell the asset and cut back on expenses. Capital owners are not a special class of citizen. If you have assets and need cash, there is a way to convert one to the other. It's called a "market". You may have heard of it. It seems that during recessions, asset-rich/cash-poor people, nominally Capitalists, turn into overnight socialists because making cuts to the ol' lifestyle is for the little people, not them.