On Prisoner's Dilemma and Overpaying
[QUOTE=Just Seven; 1163257]As for the ever ongoing pricing debate.
If you can't compete, its not a prisoners dilemma, my spending habits won't affect you, they will just get me the girl I want with the attitude I want with the reaction I want. If you are worried about prices going up, get another job. Or monger less. You can always make more money, you can't get yesterday back. [/QUOTE]I admire your modesty. But what I really respect about you is your knowledge of economics. Not a 'prisoner's dilemma'? May be you should look up what this term really means. This is exactly prisoner's dilemma. Suppose we are after the same, beautiful girl. If we both are reasonable and pay less, we win. Even if we are equally likely to get the girl, our expected payoff is high because we got the bang for the little buck. But suppose each of us believes that we 'can't get the yesterday back' and hence should overpay. Then, if you pay high and I pay low, the girl goes to you, everything else being equal. Similarly, if I pay high and you pay low, the girl comes to me. Knowing this, we will both try to pay high and the girl will choose one of us. The girl gains. Our expected pay-off is less, because no matter who the girl went to, there was same bang for more buck (relatively speaking). This is Game Theory 101. Overpaying is bad, mainly because, contrary to your illusion, there are other punters in the market with equally deep pocket. This has the net effect of pushing the price up without any proportional gain in our satisfaction.
[QUOTE=Just Seven;1163411]However, my mentality is a bit different. When I see something I want. I want it.[/QUOTE]You are Just Seven, no kidding.