Re: Here Is How We Vote for $800 Trillion Because the mind thinks of large number increases in percentages and small number increases in dollars and cents. Optimal decision-making should be the other way around. It allows the person setting the pricing of items to maximize their profit exploiting the way consumers think.
Re: Here Is How We Vote for $800 Trillion Right, my question is why is it optimal to think about small numbers in percentages? Why would we not be better off thinking in both small and large numbers in dollars and cents? I can understand why we can make mistakes thinking of large numbers in percentages, but the reverse isn't clear to me.
Re: Here Is How We Vote for $800 Trillion The idea has to do with how you price to maximize revenue. You're a perfect example. You may not mind paying $0.50 extra for a widget, but it may be $1.50 at this store and $1.00 at another. If I can charge 50% more with no loss in volume then I'm a happy guy.
Re: Here Is How We Vote for $800 Trillion Heh, how am I a perfect example? I'd buy the $1.00 one. Not because it is 50% less but because it is 50 cents less (and this example assumes no outside costs, even time). My point was simply that IF there are outside costs (I understand that your example doesn't include them), it's easier to account for them, when making a decision, putting everything in dollars and cents. Whether we're talking about small costs or large costs.
Re: Here Is How We Vote for $800 Trillion You are a happy guy cause you are in the widget business, though. Minstrel, on the other hand, just needs to buy one widget every twenty years, so he really doesn't give a damn if it costs an extra 50 cents. 50 cents is like pocket change to Minstrel. barfo
Re: Here Is How We Vote for $800 Trillion Okay, I hadn't seen Minstrel's response just before mine. I take it back, he does care about the 50 cents. I, on the other hand, would buy the first widget I see and wouldn't care about the price. I'm your customer. barfo
Re: Here Is How We Vote for $800 Trillion I can see inefficiencies to be exploited with customers who will pay any price for the first widget they see.
Re: Here Is How We Vote for $800 Trillion Well, not any price, but $1.50. For a buck fifty, I am not going to comparison shop. barfo
Re: Here Is How We Vote for $800 Trillion Well, me either, if time is involved. maxiep's example assumed no time cost...buying either widget was equally easy. If equally easy, I'll take the cheaper. I just wasn't sure why that cost savings should be thought of in percentage terms as opposed to absolute value terms.
Re: Here Is How We Vote for $800 Trillion I suppose the model is that you buy a widget every day (they sell these widgets at Starbucks, probably), and you don't know how to multiply by 365. 50% sounds like a big number, 50 cents sounds like a small number. So you'll scare yourself more if you think of 50%, and maybe you'll buy that widget at 7-11 instead. Then you'll take the money you saved over the course of your lifetime and put it down as a deposit on a pending transfer of $10 million from The Honorable Mr. Obondo of Nigeria. barfo
He said you hadn't contacted him, but that he loves you very much, and he'll have one of his countrymen send you an email real soon. barfo
This is my lucky week. Between the Nigerians and those in Djibouti, I'm about to be super-rich! Who'd have thunk that so many distant relatives in Africa could have been so wealthy.
