4 ms·

I never took a college-level economics course, but a book I read purporting to be an intro to economic thinking put it something like this (no warranty I'm reme

by vba616 4y ago

I never took a college-level economics course, but a book I read purporting to be an intro to economic thinking put it something like this (no warranty I'm remembering correctly): If people freely trade something, in an ideal, spherical cow way, then they should both be better off afterwards. Therefore the trade (including trading labor as well as goods) creates value. I think this was called "surplus" value. However, there is generally more than one price where both parties would benefit and should want to trade. Which price is agreed on in that range determines who gets what portion of the surplus value. Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%. A purely rational actor with no secrets is easily manipulated.

nordsieck 4y ago
> If people freely trade something, in an ideal, spherical cow way, then they should both be better off afterwards. Therefore the trade (including trading labor as well as goods) creates value. I think this was called "surplus" value. What you're describing is basically the "Subjective theory of value"[1]. > Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%. Interestingly people don't really act like that[2]. > A purely rational actor with no secrets is easily manipulated. Probably. Good thing that, in this case, the most important information like competing offers tends to be secret. Or at least strategically revealed. --- 1. https://en.wikipedia.org/wiki/Subjective_theory_of_value https://en.wikipedia.org/wiki/Subjective_theory_of_value 2. https://en.wikipedia.org/wiki/Ultimatum_game https://en.wikipedia.org/wiki/Ultimatum_game

by vba616 4y ago

nordsieck 4y ago

> If people freely trade something, in an ideal, spherical cow way, then they should both be better off afterwards. Therefore the trade (including trading labor as well as goods) creates value. I think this was called "surplus" value. What you're describing is basically the "Subjective theory of value"[1]. > Therefore if one side of the transaction has superior knowledge of what price the other side will accept, then in theory they could get up to 99.99...% of the surplus value, as long as the other party "rationally" will be motivated by the remaining 0.00...1%. Interestingly people don't really act like that[2]. > A purely rational actor with no secrets is easily manipulated. Probably. Good thing that, in this case, the most important information like competing offers tends to be secret. Or at least strategically revealed. --- 1. https://en.wikipedia.org/wiki/Subjective_theory_of_value https://en.wikipedia.org/wiki/Subjective_theory_of_value 2. https://en.wikipedia.org/wiki/Ultimatum_game https://en.wikipedia.org/wiki/Ultimatum_game