· Interesting lecture
EcEconomics Decisions- Is not all in!
· Marginal Costs
· “Cassie is unselfish person”
o Trust level.
o What is the good?
o What does it mean at the margin? Always?
o Does Health Care exist? “Health Care for every American.” – NO MEANING
o Do not say “I love you” too much because it will decrease the marginal vale of every single I love you. Once a month and their marginal value will be very high.
· Teacher VS. Athletes (“Water” and “Diamond” Paradox)
o Total value of water vales more than the total value of diamonds.
o Nothing wrong with the priorities but we do not understand margins.
o At the margin the athletes are more important.
o Why will it make sense to pay more to the IP than the eye glasses?
o Key Economic insight: Is not oil but what oil can do for you. Is not what the dengue killer but what they can do for you? (Test material)
· Value arises from human interpretation, not from objective measures.
· Sunk Costs (Value)
o No matter what you do or change your behavior so they cannot recover.
o Sunk and gone forever
o A sunk cost is a genuine cost made in the past.
· Human Acts with Purpose
· People respond to incentives
o When the benefits and costs of some action change, people’s behavior will change.
o That is very crucial!
· “Law of Unintended Consequences”
o 1970’s – Make cars more safety. Pass a law to make every car have a seatbelt.
§ Intention of the law was to prevent you death by not flying out of the car.
§ Unintended (maybe people will don’t care to drive nicely; make it more unsafe)
§ It made us UNSAFE! Like pedestrians and bicycles are unsafe thanks to the aggressive driving.
Rizzo
-Daniel Gaona
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