How much Money for Moo$e

Discussion in 'Pistons and NBA' started by KGREG, Nov 2, 2013.

  1. roscoe36

    roscoe36 All-Star Administrator

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    "Which exist" isn't an argument. All values without exception are subjective. I can only guess you're conflating value in terms of utility/price/opportunity cost with valueS like A, 17 degrees, 168cm.

    Context is different person to person, moment to moment. Their context isn't a statement about objective reality.

    "Measurable best interest" completely bypasses what I posted. No one has perfect knowledge, and value judgments can only be viewed relative to the actor making them. Which again, varies person to person, moment to moment.

    Which is why I explained that the only "perfectly rational" actor is God. It's an omniscient being that sees the universe as absolute determinism. So the notion that you, a human actor with imperfect knowledge and frankly, no "skin in the game" (you are neither offering or accepting these contracts) can come up with objectively "correct" values is demonstrably incorrect. And I have now twice laid out the logical case for why this is so.

    No matter how you try to come at it, there are no objective value judgments. I think you may be thinking of value comparisons based on arbitrary metrics like comparing the height of two players, or points per game of two players. But as you mentioned about context, the context is different for two players, always. "Any measure without context is meaningless". The only context that matters in a market exchange for the purpose of analyzing that exchange are that of the two parties involved. If Josh thinks he got a great deal, he did. If the Pistons think they got a great deal, they did. If they feel differently 4 years from now, that's ex post analysis. But at the moment of the exchange, both parties agreed because they thought the deal made them better off.

    They would not have signed the deal otherwise.

    This sentence doesn't make sense to me. How can YOU know what he is worth? What is your valuation WORTH if you're not willing to pay him what he is WORTH?

    I can go to a store and argue a $100 item is worth $5 but the store owner won't agree. Our values don't form a price. Likewise, I can go to a store and say "That $5 item is really worth $100" but the only way that means something more than conjecture, is if I actually would pay $100 for it. Then it is a price (all prices are past prices).

    If you're referencing the labor theory of value, that's been roundly refuted by marginalism.

    I have no idea what you're trying to say here. All value is subjective. That statement is so completely non-controversial, I am actually shocked we're debating it in 2013.

    Prices are formed at the moment of exchange. Your "estimates" are going to be arbitrary because they are not based on the real decision making of human beings, but rather some abstracted statistical analysis.

    The only "perfect market outcome" happens when two parties agree upon a price in exchange without coercion.
  2. The Panda

    The Panda Garbage Post All Star Forum Donor

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    I have this horrible feeling that I'm being beaten, both by you and myself, so Ill try and avoid the side stuff.

    No, just pointing out that if I make a hat that sells for $10 and I get paid $1, then by your measure, my worth is determined at $1. But my production is at $10. There is a difference between the cost of labour and its production. I'm not arguing there are other factors.

    Prices are rarely formed at the moment of exchange. Negotiation is rarely a part of it. That abstract stat analysis is what churns outs prices for phones and cars, air tickets and many other things, in reality.

    And this is really the whole problem in what something will , and what it is priced at. Josh Smith walks into a negotiation and he thinks 'I want the dollars' and Joe Dumars is like 'I ain't paying this guy nothing unless he gives me popcorn'. We end up at a 4 year 50 odd million dollar contract and your argument is that both parties have agreed on a price and that is the best representation of value. And I agree that the market has formed a price, and that's final - although I think this is a case of market failure.

    Even us forum goers could estimate the price that was going to emerge. This wasn't some negotiation in a vacuum, there are ways of approximating price from other sources of information. Josh Smith didn't start at 4yrs/80+m and Dumars at 1yr/vet min. There is information from other sources which allows companies like the Pistons to accurately gauge the ROI of a contract like Josh Smith's. So when Dumars walked in, he knew that Josh Smith was worth $Xm a year to his organisation, through wins/ticket sales/league pass views/brick to jumpshot ratios/whatever, and offered him $Ym/yr. Is this subjective? Yes, it is the perspective of the Detroit Pistons. At the time, were these other factors measurable? Yes - maybe only for one person.

    Is this mostly conjecture - yes.
  3. roscoe36

    roscoe36 All-Star Administrator

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    That's basically the labor theory of value. I don't feel it's really relevant to my comment about the market having come up with a contract which Josh Smith could accept (and did).

    There are also people who make hats for $1 and get paid $10. That's subjective value theory at work. The "value" of the good is not determined by the production cost, it's determined by the perception of value by the purchaser, and what they are willing to "trade off" to get it.

    We're talking about two different things. All prices are "past prices". A price is not formed until the exchange is complete. You can't get price data without both parties involved with "skin in the game" (actually transacting).

    That's why the Soviet system collapsed. One sided command economies cannot rationally allocate resources (efficiency, profit) without the commensurate trade off from the purchaser or seller.

    Prices are information, the way that an insurance premium is a measurement of your risk profile. Prices encompass a lot of complex data, data which we may not even realize is part of the transaction (emotions, instinct, mood).

    That's basic price theory, but yes. Joe got Josh for less than he thinks Josh is worth, and Josh got a contract from Joe which is worth more to Josh than the alternatives. That's how prices are formed in a market.

    Put differently, let's say you want a glass of water. I want $5 for it. You want $5 more than the glass of water, so I have to move my price closer to zero. I say $4, you think it over, but still too much. My price hasn't realized a transaction. For all intents and purposes, it could be $1 billion. It's more than you're willing to pay.

    I finally buckle, and I say, ok $2. You think, I'd rather have the water than $2. And I am thinking, I would rather get $2 than keep this water. And a price is formed, and an exchange is struck.

    It's that simple.

    Josh could blow out his knee tomorrow and his career would end. Again, only the omniscient can accurately predict prices in the manner you describe. For us lesser beings, who cannot predict the future, exchange is not an exact science.

    :)
  4. The Panda

    The Panda Garbage Post All Star Forum Donor

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    I'll award you the W here. I threw myself off in an earlier post and spent the whole time trying to claw back.

    And trust me, no hard feelings :p welldone:
  5. roscoe36

    roscoe36 All-Star Administrator

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    It's all good man. We're mostly shooting the crap, passing time.

    Thanks for the argument. :)

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