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0 pointswongarsu2y ago0 comments

Assuming an efficient market, price strongly correlates to (some measure of) value. Now if I over you something that's worth $5, or alternatively something that's worth $10 but that for a short you can purchase for just $5, which item do you choose?

Of course ideally you would properly evaluate how much the item is worth, in utility, quality, longevity, social status, resale value, ethical production, etc. But that's difficult (often on purpose). The seller knows what the item is worth, you have to guess, or just use price as a weak proxy.

So in a sense, people preferring discounted items is an effect of asymmetric information

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lotsofpulp2y ago

>Now if I over you something that's worth $5, or alternatively something that's worth $10 but that for a short you can purchase for just $5, which item do you choose?

I have no reason to assume that simply because you tell me something may have sold for $10 in the past, that it has any bearing on the relative utility per dollar of that item in the present.

I only look at the price I would be able to buy at, and search a few other retailers on my phone, and determine if it is an acceptable price.

People prefer discounted items because of ego. They like to feel like THEY got a deal.

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