3 ms·
"E.g., a new farmer with no track-record might have to promise me twice as many potatoes in exchange for a deer haunch, due to the risk that I might never see a
by tubbo 14y ago
"E.g., a new farmer with no track-record might have to promise me twice as many potatoes in exchange for a deer haunch, due to the risk that I might never see any potatoes at all."
This part of our system doesn't make any sense to me. What makes you think someone's gonna have more incentive to "pay up" if they now have to work twice as hard?
- Tycho 14y agoIt's set by supply and demand, not by logical inference. Low risk investments are more in demand, driving their price up and thus lessening their return. High risk investments are in less demand, so their price falls, making the return higher.