63 lines
1.7 KiB
Markdown
63 lines
1.7 KiB
Markdown
---
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id: 2026-05-30T17:17:11-0400
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title: 2026-05-30 17:17:11
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tags: []
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daily: "[[2026-05-30]]"
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---
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# 2026-05-30 17:17:11
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Valuation of goods and services
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as a function of supply and demand
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can not adequately explain the behavior of individuals.
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The concept of [[utility]], or **satisfaction**, can.
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It is satisfaction, not dollar value,
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which influences decision-making.
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losing \$100 is usually _more unsatisfying_
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than gaining \$100 is _satisfying_.
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***
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**[[risk]]** is the possibility of an unsatisfactory outcome.
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If you enter an agreement
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which will cost you \$100 to \$120
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\$20 is **at risk**.
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We don't say that \$120 is at risk,
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because at least \$100 will certainly be spent.
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***
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I have never installed a gutter.
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I have no basis for the cost of the materials
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nor the labor hours necessary.
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I can therefore never determine
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if the service is "worth" the cost quoted to me.
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I can, however, estimate how _satisfied_ I would be
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with gutters on my house,
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and how _unsatisfied_ paying the quote would make me.
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With this information I can determine
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if agreeing to the service is net positive:
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if I'd be more satisfied than I was before.
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Seeking multiple quotes would only tell me
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what other contractors are getting away with charging.
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***
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Milo has an apple tree in his backyard.
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Every August it gives him many buckets of apples,
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so many that he could never eat them all himself.
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Milo keeps track of how many apples his tree produces.
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Since the tree reached maturity
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Milo has has harvested around 300 apples per season,
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and always at least 200.
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He prefers to keep 100 apples for himself.
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The rest he gives to his neighbors, friends, and family.
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***
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YouTube video title: "Risk Management Explained in n Minutes Using Minecraft"
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