Alt. statement of UPB *redux

EclecticIdealist · August 6, 2016

I think I understand this, but why is = included in the first formula? If the perceived value exchange was 0 why would the transaction happen? ....Ah, is it then the perfect transaction because both parties value each other's item to exactly the same degree more than their own?

Yes, in the hypothetical instance that it is possible for the subjective valuation of two different individuals to be equal; which doesn't really make sense... that's like comparing how much a fan of Rock & Roll values listening to Rock & Roll vs how much a Country music fan values listening to Country music. If these could actually be quantified... then hypothetically, they could be equal; but how could one ever really determine this? There is no universal currency of subjective value - not even dollars or gold, etc.

August 7, 2016

Nope. $100 does not equal $1000. The height of the mountain doesn't change depending on the day, the time of day or the person climbing it. Value is subjective. Altitude is objective.

No, but now you're talking about objective, empirical quantities, not economic value. Economic value is not a zero sum game.Here is one great thing about mathematics, you avoid muddy definitions.

Well if economic value is subjective, then $100 can be equil to $1000.

Let's see if I have this right.

Person A cost = $99.99 + $0.01 or Person A cost = c_a + v_a

Person B cost = $0.99 + $0.01 or Person B cost = c_b + v_b

You're saying that because v_a = v_bthat you can simply ignore c_a and c_b? That they don't factor into the value? Were you taught economic theory by Karl Marx or one of his followers? What you're saying simply doesn't make any economic sense whatsoever. Value is subjective. Preference is subjective. In fact, Value is nothing more than an expression of relative preference... value is preferring one thing more than another thing or preferring something more than nothing, or preferring nothing more than something one does not want at all.

if you want to express UPB in terms of some kind of economic formula of sorts, it would be rendered something like this:

w_a = economic value (wealth) possessed by a

w_b = economic value (wealth) possessed by b

v_n = economic value (wealth) transferred to b from a

v_m = economic value (wealth) transferred to a from b

p = perceptual modifier of a

q = perceptual modifier of b

( pw_a - pv_n+ pv_m) + ( qw_b - qv_m+ qv_n) >= 0 where pv_m >= pv_n and qv_n >= qv_m

( pw_a - pv_n+ pv_m) + ( qw_b - qv_m+ qv_n) < 0 where pv_m < pv_n and/or qv_n < qv_m

I didn't say anything about person A and B trading with each other, they are trading with some third person. It is an example that two different prices can theoretically produce the same change in value for the person. In your equation C_Aand C_Bwould represent the value you have to add in order to overcome the value lost by reading the tome, V_Aand V_Bwould be the change in value.

I don't know what the bottom thing is, value as a function looks like this.

Were you taught economic theory by Karl Marx or one of his followers? What you're saying simply doesn't make any economic sense whatsoever. Value is subjective. Preference is subjective.

I've referenced Murry Rothbard, were you taught to read by Stevie Wonder?

shirgall · August 7, 2016

Well if economic value is subjective, then $100 can be equil to $1000.

I've got some old notes with a face value of one amount but a numismatic value that is different, depending on whether I can find a buyer. I know you are trying to limit things to a particular kind of money, but the domain of value, even economic value, is broader than that.

August 7, 2016

I've got some old notes with a face value of one amount but a numismatic value that is different, depending on whether I can find a buyer. I know you are trying to limit things to a particular kind of money, but the domain of value, even economic value, is broader than that.

I understand, I guess this is why ideal money should have the property of fungibility.

Tyler H · August 7, 2016

I understand, I guess this is why ideal money should have the property of fungibility.

But even still, a fungible currency will fluctuate value in relation to all other goods and services and the supply and demand of those goods and services, won't it?

August 8, 2016

But even still, a fungible currency will fluctuate value in relation to all other goods and services and the supply and demand of those goods and services, won't it?

I don't think so. Ayn Rand said it best,

Money is a great power—because, in a free or even a semi-free society, it is a frozen form of productive energy.

A. Rand, The Sanction of the victims, The Voice of Reason (154).

That is why they are in a room in UPB (I think), so that the total energy can be held constant. Once two people are in a room, you can imagine every possible thing they can do with each other existing in a platonic sense, so the total energy is constant and all goods and services that could possibly exist as a function of those people and that energy can be said to exist.

It might feel more intuitive to think of money as batteries.

Tyler H · August 8, 2016

I don't think so. Ayn Rand said it best,

A. Rand, The Sanction of the victims, The Voice of Reason (154).

That is why they are in a room in UPB (I think), so that the total energy can be held constant. Once two people are in a room, you can imagine every possible thing they can do with each other existing in a platonic sense, so the total energy is constant and all goods and services that could possibly exist as a function of those people and that energy can be said to exist.

It might feel more intuitive to think of money as batteries.

Hmm, I read that as more of a metaphor - akin to d'Anconia's speech on money in Atlas Shrugged. I'll look it up and see if the context helps me understand a bit more.

August 8, 2016

Hmm, I read that as more of a metaphor - akin to d'Anconia's speech on money in Atlas Shrugged. I'll look it up and see if the context helps me understand a bit more.

I did as well, then I asked.... why is John Galt a physicist?

Here is a video of Ayn Rands last public lecture, The sanction of the victims. It is the same article.

EclecticIdealist · August 8, 2016

Well if economic value is subjective, then $100 can be equal to $1000.

Under the right circumstances, $100 may be worth more than $1000 to the person willing to trade $1000 over time for $100 immediately. If you've ever purchased anything on credit you should know precisely what I'm talking about.

I didn't say anything about person A and B trading with each other, they are trading with some third person. It is an example that two different prices can theoretically produce the same change in value for the person. In your equation C_Aand C_Bwould represent the value you have to add in order to overcome the value lost by reading the tome, V_Aand V_Bwould be the change in value.

It matters not whether A and B are trading with each other or a third party. The principle remains the same. You speak of "the same change in value for the person", but you're being vague and ambiguous as to what this change in value actually is. Furthemore, you're suggesting that there is a difference in the value that must be added to each person to cover the value lost in reading the tome, but again you ignore the quantification of value and who is making such a quantification for the cost of reading the tome. Person A is indicating the cost to them is $100 whereas Person B is indicating the cost to them is a mere $1. That is how much much Person A and Person B regard the time, effort, and loss of opportunity respectively for each of them to read the book. That is a subjective valuation of their time on their part, not an objective one. So you are still faced with the inherent subjectivity of value and you've yet to identify what value there may be, if any beyond a purely financial one, which A and B might obtain from reading the book. You've only asserted that there is one, and that it is the same for A and B, both claims being made without justification or support--merely gratuitous assertions.

I don't know what the bottom thing is, value as a function looks like this.

You do understand that the equation you're referencing as a value function is actually a function "describing" the subjective anticipated value based on the probability of risk and reward as estimated by someone with a multitude of choices, and such an equation has only a passing relation to your initial example?

I've referenced Murray Rothbard, were you taught to read by Stevie Wonder?

As you've referenced Murray Rothbard, perhaps you'll be willing to educate yourself on Subjective Value by visiting Mises.or https://mises.org/library/subjective-value-theoryor if you already have, you can share why you consider their analysis to be incorrect.

I don't think so. Ayn Rand said it best,

"Money is a great power—because, in a free or even a semi-free society, it is a frozen form of productive energy." - A. Rand, The Sanction of the victims, The Voice of Reason (154).

You're actually mistaken about it not fluctuating as Tyler H asked. What Ayn Rand is merely stating with artistic license is that the origin of money if human production. I think she says it better in the words of her character Fransisco d'Anconia in his famous speech on money: "... Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. ... Money is made possible only by the men who produce. ..." - A. Rand - "Atlas Shrugged"

That is why they are in a room in UPB (I think), so that the total energy can be held constant. Once two people are in a room, you can imagine every possible thing they can do with each other existing in a platonic sense, so the total energy is constant and all goods and services that could possibly exist as a function of those people and that energy can be said to exist.

Now you're back to two in the room instead the two independently trading with a third? Fine. The equation I gave you still works. It may not be perfect, but it illustrates the principle well enough.

Tyler H · August 9, 2016

That speech blew me away when I first read it. She really had a talent.

August 9, 2016

Under the right circumstances, $100 may be worth more than $1000 to the person willing to trade $1000 over time for $100 immediately. If you've ever purchased anything on credit you should know precisely what I'm talking about.

Ceteris paribus.

It matters not whether A and B are trading with each other or a third party. The principle remains the same. You speak of "the same change in value for the person", but you're being vague and ambiguous as to what this change in value actually is. Furthemore, you're suggesting that there is a difference in the value that must be added to each person to cover the value lost in reading the tome, but again you ignore the quantification of value and who is making such a quantification for the cost of reading the tome. Person A is indicating the cost to them is $100 whereas Person B is indicating the cost to them is a mere $1. That is how much much Person A and Person B regard the time, effort, and loss of opportunity respectively for each of them to read the book. That is a subjective valuation of their time on their part, not an objective one. So you are still faced with the inherent subjectivity of value and you've yet to identify what value there may be, if any beyond a purely financial one, which A and B might obtain from reading the book. You've only asserted that there is one, and that it is the same for A and B, both claims being made without justification or support--merely gratuitous assertions.

Again, go back and read my posts. I've said value is a state function and referenced the freudian slip of Murry Rothbard.

You do understand that the equation you're referencing as a value function is actually a function "describing" the subjective anticipated value based on the probability of risk and reward as estimated by someone with a multitude of choices, and such an equation has only a passing relation to your initial example?

*edited

Just take an integral along the culmulative value function.

As you've referenced Murray Rothbard, perhaps you'll be willing to educate yourself on Subjective Value by visiting Mises.or https://mises.org/library/subjective-value-theoryor if you already have, you can share why you consider their analysis to be incorrect.

You've linked to something referencing Rothbard, I don't mean a small reference either, it literally states at the end of the second paragraph that this article is all taken from Rothbard's Man, Economy and State.

You're actually mistaken about it not fluctuating as Tyler H asked.

Read the post by Rosencratz.

What Ayn Rand is merely stating with artistic license is that the origin of money if human production. I think she says it better in the words of her character Fransisco d'Anconia in his famous speech on money: "... Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. ... Money is made possible only by the men who produce. ..." - A. Rand - "Atlas Shrugged"

You know Ayn Rand better than any it seems. Why didn't Ragnar give the moral speach and why is Galt a physicist?

also, more Rothbard.

The original factors may, in turn, be divided into two classes: the expenditure of human energy, and the use of nonhuman elements provided by nature. The first is called Labour; the latter is Nature or Land.

Same book, page 10, taking about the factors of production wherein production is defined as "the necessary process involved in all action".

You should quote Rothbard stating value is subjective so I can quote more Rothbard where he says value is a state so we can get to the conclusion that Rothbard, and thus the Austrians, don't have a precise definition of value (because in their own texts they contradict themselves).

Tyler H · August 9, 2016

What is the argument that value is objective? I apologize if it was posted earlier and I missed it or failed to comprehend it. I thought value was subjective because it only exists in the mind and does not describe something in reality but describes other subjective opinions of value in other minds.

EclecticIdealist · August 9, 2016

Ceteris paribus.

When is it ever in reality? I believe the most obvious way of proving that value is subjective is to point to the market... whether the stock market, the commodities market, even the corner market. Do you notice that all prices for goods are the same at all times and all stores or on all exchanges? One would have to be either completely, willfully blind or a devoted marxist to ignore the evidence before their eyes that value is anything other than subjective.

Again, go back and read my posts. I've said value is a state function and referenced the freudian slip of Murray Rothbard.

Value is not a state function. You can assert it all you wish and it won't make it so. If you wish for anyone to accept your notion, you must actually make a case for it, not merely assert it or attempt to justify it with equations that don't reflect the reality of how things actually work.

Put it in an intergral form and take the probability to be unity.

Okay, however, all that would do is indicate the predicted subjective value the person has for the exchange over all potential circumstances and outcomes. Integrating the probability curve renders the desire of the individual for the exchange over all probabilities. If the person is particularly risk averse as the article suggests, then the integrated value will be negative and the person will not engage in the exchange because they will expect to lose more than they will gain.

You've linked to something referencing Rothbard, I don't mean a small reference either, it literally states at the end of the second paragraph that this article is all taken from Rothbard's Man, Economy and State.

What's your point other than to dismiss it? Or maybe that's your point, rather than to actually learn something or propose a counter argument to the austrian economics view of subjective value.

Read the post by Rosencratz.

I've read it. When there is force involved (i.e. theft by deception or coercion) there is no free exchange of value and thereby, the net value in the system does not increase. You might consider the net value in the system to remain the same, but in fact, it has decreased, as the thief has destroyed the opportunity of creating a mutually beneficial situation for both. Free exchange of value is not unlike the Prisoner's Dilemma sometimes referred to as the "Red/Black Game". When both parties engage in a mutually beneficial way, both profit nominally. However, when one or the other seeks to take advantage of the other, they either both lose, or one "wins" at the short-term expense of the other until the other is either destroyed, engages in mutual destruction, or stops playing altogether.

You know Ayn Rand better than any it seems. Why didn't Ragnar give the moral speech and why is Galt a physicist?

Why would you say that? Simply because I am familiar with much of what she has written? As to why Ragnar did not give the moral speech, I assume you are talking about Francisco's speech about money (if you mean some other speech on morals, you'll need to be more specific. Atlas Shrugged had numerous moral speeches in it, some longer than others, John Galt's near the end being by far the longest.) First off, I imagine the greatest reason was the fact that he was not present and was off engaging in acts of "piracy" against those who had "looted" the producers of their goods and were attempting to "redistribute them to the supposed poor and needy" how they (the looters) saw fit (whereas Ragnar was returning the property to its rightful owners). As to why Galt is a "physicist", he's more of an Electrical Engineer and Inventor along the lines of Nikola Tesla than a physicist, per se, but that's fine, we'll call him a physicist. As to the question of why, because that is where his interests and abilities took him. It is where he decided to spend his time and energy to create value for others, until he saw that such time and effort was being squandered by collectivists who had no interest in engaging in moral behavior and justly compensating him for the value he was intent on creating for himself and others.

You should quote Rothbard stating value is subjective so I can quote more Rothbard where he says value is a state so we can get to the conclusion that Rothbard, and thus the Austrians, don't have a precise definition of value (because in their own texts they contradict themselves).

Ah, now you speak plainly. Your wish is to engage in ad hominem against Murray Rothbard and the other proponents of Austrian Economic Theory in order to denounce the subjective value theory rather than putting forth a sound argument demonstrating how it is wrong, or a counter argument demonstrating how an "objective value theory" is correct. How about I simply concede the assertion that Rothbard or his followers have failed to provide a precise definition of value to your liking and be done with it.

August 9, 2016

What is the argument that value is objective? I apologize if it was posted earlier and I missed it or failed to comprehend it. I thought value was subjective because it only exists in the mind and does not describe something in reality but describes other subjective opinions of value in other minds.

The argument is that value/utility/satisfaction is a state. (Rothbard uses about 8 different words for this term (value) including psycik income).

It is a state because it can be measured (with money) and it characterises an economic system in equilibrium (you only trade if it increases value/utility/satisfaction and equilibrium means you've acheived your ends and stopped acting).

You can measure it by defining a zero-value point and measuring from there, just like altitude is measured from sea level, itself an arbitary point (this is one reasong why sound money is required for "economic calculation")

If it can be measured once, it can theoretically be measured for every choice ever made in life and we would have a precise value/utility/satisfaction number.

Austrians will say value is subjective whilst in the same text identifying value as a state.

From, again, Man, Economy and State with Power and Market.

All action is an attempt to exchange a less satisfactory state of affairs for a more satisfactory one.

(page 19)

These scales of preference may be called happiness or welfare or utility or satisfaction or contentment… when an actor has attained a certain end, he has increased his state of satisfaction, or his contentment, happiness, etc. Conversely, when someone considers himself worse off, and fewer of his ends are being attained, his satisfaction, happiness, welfare, etc., have decrease.

(page 18)

So value/utility/satisfaction is very clearly defined as a state.

The way (I think) you marry these two ideas (as Shirgill said, subjective and objective elements) is you let preference be subjective and value/utility/satisfaction be objectivly revealed. Because if your preferences change you will see a change in value.

Going back to UPB, you can then let people have all sorts of different prefrences (I hate fish, some prefer it) and you can abstract the universal preference to be for an increase in value.

Once you've done this you can really simply characterise all possible exchanges in UPB between 2 people (Bill and Ted).

(dV is change in value, the value of the end state minus the value of the starting state, action is that which connects them in time)

1.

Bill dV > 0

Ted dV > 0

This is a universally preferable behaviour, whatever it was has lead to an ends (end/final state) that both people prefer and we know they prefer it because dV, change in value, is positive.

2.

Bill dV < 0

Ted dV < 0

UPB proves this doesn't exist (this is simultanious murder, or theft, or rape)

3.

Bill dV > 0

Ted dV < 0

or visa-vesa.

This is not UPB.

dV < 0 (change in value is negitive) is not UPB because a negitive change in value is never preferable. If you assume there is alway the option for Bill and Ted to not undergo the behaviour, that is you can have dV = 0, then dV = 0 is preferable to dV < 0 and that is when force/coersion must have been used.

*edit!

I forgot, there are a bunch of possible exchanges such as dV = 0 for both, dV = 0 and dV < 0 is forbidden (it is a volentry transition to an involentry state) and dV = 0 and dV > 0, dunno about this last one, I guess it could happen?

August 9, 2016

When is it ever in reality?

Sorry mate, life is to short to attempt to explain anything to anyone who can't acknowledge that 1 < 100.

August 9, 2016

---

If anyone wants the value function from prospect theory it is his papers.

EclecticIdealist · August 9, 2016