4 ms·
Methinks you just restated GP’s points with slightly less clarity
by tomcam 3y ago
Methinks you just restated GP’s points with slightly less clarity
- WalterBright 3y agoIt's just discounting one's bid by the amount of the perceived risk. For example, we discount the price of a used car by an estimate of how much of its useful life is used up. But that cannot be gauged precisely, hence risk. We discount the price even further if bought from an individual rather than a used car dealer, because the risk of hidden defects is higher. Risky investments are priced lower than more secure investments. Many people say that free markets require perfect information. They don't, not at all. The imperfect information is called "risk" and affects the price accordingly.
- tomcam 3y agoNot surprisingly, your explanation is the most coherent of all of them
- WalterBright 3y agoAnother way risk is reduced by paying more is purchasing warranties and insurance.
- hgsgm 3y agoNo, that poster's #3 added the key insight.