A.steve Posted May 26, 2009 Share Posted May 26, 2009 Yippee - I think we have found some kind of agreement - even if only between thou and I!I think the salient point you make is: "we are only around for a bit". Within that comprehension lies the answer. Yes. That we're only around for a bit gives us the equation of fear: f=a/(b-t) - where a and b are constants and t denotes time. This equation (or, rather, fear of an end) I think is crucial to the psychology of bubbles. How often have you heard the phrase "if we don't buy soon, we never will be able to afford it"? Quote Link to comment Share on other sites More sharing options...
Methinkshe Posted May 26, 2009 Share Posted May 26, 2009 (edited) Yes. That we're only around for a bit gives us the equation of fear: f=a/(b-t) - where a and b are constants and t denotes time. This equation (or, rather, fear of an end) I think is crucial to the psychology of bubbles.How often have you heard the phrase "if we don't buy soon, we never will be able to afford it"? Interesting; however, I'm not sure that "fear" is the required term. What about "limited supply" or something along those lines, to reflect that life has boundaries. Edited for typos. Edited May 26, 2009 by Methinkshe Quote Link to comment Share on other sites More sharing options...
Methinkshe Posted May 26, 2009 Share Posted May 26, 2009 Interesting; however, I'm not sure that "fear" is the required term. What about "limited supply" or something along those lines, to reflect that life has boundaries.Edited for typos. Edited to add: I think you have probably included that life has an end in your post - forgive me for my dull- wittedness. Quote Link to comment Share on other sites More sharing options...
A.steve Posted May 26, 2009 Share Posted May 26, 2009 (edited) Interesting; however, I'm not sure that "fear" is the required term. What about "limited supply" or something along those lines, to reflect that life has boundaries.Edited for typos. There's obviously finite demand and finite supply - and, if you believe in efficient markets, they'll always be in equilibrium. This does not cause bubbles. What causes bubbles is a focus on the fear-price (f) as the metric for reality - and, with rising prices, and an innate desire to plan, perception of a cut off (somewhere between t=0 and t=b - say t=b-d) is what causes fear of exclusion for a duration d. Mankind isn't very adept at dealing with the emotional consequences of being unable to estimate the future... and this leads to irrational behaviour. When vested interests aim to exploit this irrational thinking for profit, the strategy is most effective when the victims feel isolated and in competition. The bubble will burst when the fear is dispelled - which can be achieved in many ways. One way might be to establish a (rational or irrational) expectation of increased supply - or decreased demand; another way would be to facilitate communication among those who are being victimised by price propaganda. This is exactly why I think property-bee is such a an amazing tool, by the way... and an important weapon for the arsenal of would be house buyers in future. Edit to add: Of course, I assume it's obvious, if you can change the public's mental model such that it doesn't have the structure of the "equation of fear" - even if you change nothing else... then you'll fix things. Some might call this "doing magic." An example of a strategy here might be establishing "security of tenure" for renters... even if no-one depends upon the provision themselves - it will alter perception and change prices. Edited May 26, 2009 by A.steve Quote Link to comment Share on other sites More sharing options...
frozen_out Posted May 26, 2009 Share Posted May 26, 2009 Nope.That's a long since dismissed theory. Dismissed by who? Labour and marginal theories of value are not mutually exclusive. People cloud this issue with all kinds of philosphical musings and fancy terminology but it all comes down to one simple principle - we want to survive in the most comfortable manner possible. Some people are better at achieving this than others. Everything else is just window dressing. Quote Link to comment Share on other sites More sharing options...
Methinkshe Posted May 26, 2009 Share Posted May 26, 2009 Yes. That we're only around for a bit gives us the equation of fear: f=a/(b-t) - where a and b are constants and t denotes time. This equation (or, rather, fear of an end) I think is crucial to the psychology of bubbles. Interim posts notwithstanding, I still think you are shooting above base and not determining a cause. Quote Link to comment Share on other sites More sharing options...
Injin Posted May 26, 2009 Author Share Posted May 26, 2009 (edited) Dismissed by who? Labour and marginal theories of value are not mutually exclusive. People cloud this issue with all kinds of philosphical musings and fancy terminology but it all comes down to one simple principle - we want to survive in the most comfortable manner possible. Some people are better at achieving this than others. Everything else is just window dressing. Marvellous. Except your version of comfort doesn't match anyone elses. You've assumed objective values. Edited May 26, 2009 by Injin Quote Link to comment Share on other sites More sharing options...
Methinkshe Posted May 26, 2009 Share Posted May 26, 2009 (edited) Dismissed by who? Labour and marginal theories of value are not mutually exclusive. People cloud this issue with all kinds of philosphical musings and fancy terminology but it all comes down to one simple principle - we want to survive in the most comfortable manner possible. Some people are better at achieving this than others. Everything else is just window dressing. That is reductionist to the point of absurditiy. It does not correlate with life experience. We do NOT necessarily want to survive in the most comfortable manner possible; anorexic, alcoholic, paedophile....etc etc. Edited for typo. Edited May 26, 2009 by Methinkshe Quote Link to comment Share on other sites More sharing options...
frozen_out Posted May 26, 2009 Share Posted May 26, 2009 (edited) Marvellous.Except your version of comfort doesn't match anyone elses. You've assumed objective values. There ARE objective values. You just don't know what they are and have a tough time truly calculating them. People estimate these values and people reason and act in a way they believe best satisfies their own needs. Some people are better than others at this. That is reductionist to the point of absurditiy. It does not correlate with life experience. We do NOT necessarily want to survive in the most comfortable manner possible; anorexic, alcoholic, paedophile....etc etc. Of course it correlates with life experience. For a start we call these people sick/insane for a reason. Secondly, not everyone can succesfully work out how to survive in the most comfortable manner. Humans can balls things up big time in all kinds of ways. It's what seperates us from the other animals, we reason and act. Animals are born with their strategy for maximising their return on energy invested hard wired. We call this instinct. Humans aren't born with this FULLY hard wired and can employ various strategies with varying degrees of success. We call this reason. Some people get it right, others get lucky. It's what makes us human. In the end it all comes down to attempting to maximise the return on the energy you invest. Edited May 26, 2009 by frozen_out Quote Link to comment Share on other sites More sharing options...
A.steve Posted May 26, 2009 Share Posted May 26, 2009 (edited) Yes. That we're only around for a bit gives us the equation of fear: f=a/(b-t) - where a and b are constants and t denotes time. This equation (or, rather, fear of an end) I think is crucial to the psychology of bubbles. Interim posts notwithstanding, I still think you are shooting above base and not determining a cause. Interim posts notwithstanding, I don't follow.... A bubble is where prices rise without a rational cause - without exception. What I'm doing is identifying the abstract structure that leads to the irrational behaviour. I don't assume people think in algebra consciously - but I think that the algebra describes something fundamental about the similarity of all circumstances involving fear. I define fear as being a heightened sense that something bad will happen in the foreseeable future. Edited May 26, 2009 by A.steve Quote Link to comment Share on other sites More sharing options...
Methinkshe Posted May 26, 2009 Share Posted May 26, 2009 Interim posts notwithstanding, I still think you are shooting above base and not determining a cause.Interim posts notwithstanding, I don't follow.... A bubble is where prices rise without a rational cause - without exception. What I'm doing is identifying the abstract structure that leads to the irrational behaviour. I don't assume people think in algebra consciously - but I think that the algebra describes something fundamental about the similarity of all circumstances involving fear. I define fear as being a heightened sense that something bad will happen in the foreseeable future. Sorry, can't give my full attention at the moment; not even half attention. Will return when I have enough minutes to put together to hopefully make a coherent argument. In the meantime, have to go....sorry... Quote Link to comment Share on other sites More sharing options...
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