Talk:Economics
This is an old revision of this page, as edited by BenjaminS (talk | contribs) at 17:38, February 9, 2007. It may differ significantly from current revision.
Enter your questions about economics here
- 1) How does economic theory explain why anyone ever gives anything but money as a gift?
- If someone gives me (say) The New Annotated Sherlock Holmes: The Complete Short Stories I might be pleased, but if someone gave me $95 I could buy The New Annotated Sherlock Holmes: The Complete Short Stories, in which case I would be just as pleased. Or, I might use the money to buy something different which I liked better. Or, I might know of a place to buy it at a discount, in which case I could have my book and extra money, too.
- If someone gives me money, the worst case is that I do not know of anything that would please me more than the intended gift. In every other case, I can do better with the money than with the gift. Therefore, it would seem that the economist's "rational man" would always prefer to give and receive the money. Dpbsmith 15:51, 8 February 2007 (EST)
The "rational man" is not merely interesdted in money but in total utility (the economic term for overall satisfaction); he might get more utility by reciving a gift that he knows was specially chosen for him by the giver than from a cash gift that has no personal meaning. Likewise he would get utility from giving a meaningful gift. In fact, if it were simply about money the "rational man" probably would not be giving at all!
--BenjaminS 12:38, 9 February 2007 (EST)
- 2) Consider a company whose stock pays no dividends, and whose management's states that their intention is not to pay them in the future. The present value of a future stream of zero dividends is zero. How does economic theory explain why people are willing to buy such stock? Dpbsmith 16:39, 8 February 2007 (EST)