So considering the moutain of work i have due, i really shouldnt be penning down my random thoughts now but today's economics lesson was extremely interesting. It's times like these when I wonder why i don't attempt to pursue Economics as a major because the Economist's ability to link almost EVERYTHING in the world to the study of economics is ridiculously sensible.
From consumer preferences, to utility functions and eventually indifference curves. For 2 whole weeks a ton of graphs flooded the classroom together with a bunch of alien-looking like symbols within formulas. That's how it all began.
Today is Valentines Day.
What does Economics and Valentines Day have in common?
(For the layman's understanding)
We all have preferences. I prefer to type out this post instead of doing my homework right now because I enjoy this much more. Also, we derive preferences because of our personal view (information) on things and issues. This is private information.
On Valentines Day we shower our loved ones with gifts; yet we learn in Economics that benefits are maximised when our own preferences are met. We determine what we want. Hence, between giving you cash and giving you a gift, I should be giving you cash so you can maximise your benefit by purchasing something you like, with your private information in mind. You might prefer owning a pair of Nike sneakers over a bunch of 100 roses because you are desperate to go running.
Well the last time i checked, Tom got dumped when he gave that $50 bill to his girlfriend for Valentines Day.
So why is this so? In a relationship, just like in economics, information is asymmetric.
Giving a (assumption: IDEAL AND CORRECT) gift represents knowledge; it represents that you have knowledge of her private information. This has a direct correlation with the amount of love you have for her because you make an effort to find out what she likes. Hence, a gift signals your interest in her private information, which would otherwise be, private and unknown. (duh) In addition, other factors such as time and effort plays a role in the whole 'getting a gift' process. Walking to the ATM to withdraw $50 takes 10 seconds. Choosing an appropriate gift may take forever.
Hence Utility from gift = F( K, T, S)
where
K = knowledge of her private information
T = time
E = effort
This is an absurd and ridiculous post.
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