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Showing posts with the label discount rate

Just my thoughts #0765

Language has a grammar for communication. In other words, there is a form, and communication is only possible when society agrees on that form. Therefore, in communication, form is often more important than content. Different fields in society use different grammars and preferred language styles. For example, there are separate grammars and vocabularies used in law, and the same goes for marketing. This is especially common in advertising and public relations, where the form is usually more important than the content. In a world where focusing only on the form can seem showy, and emphasizing only the content can cause communication problems. - Joseph’s “just my thoughts”

Just my thoughts #0627

The relativity of values causes us to use money irrationally . I go to the supermarket to buy a $15 pen, and the clerk smiles and says, “You can buy this pen for $7 if you walk 5 minutes from here.” Then, most people walk five minutes and buy a $15 pen for $7. But if you want to buy a $1,000 jacket and the clerk smiles and says, “You can get a $992 jacket in five minutes from here,” most people simply buy the $1,000 jacket. Reasonably, walking for 5 minutes equals the effort, and the profit of $8 is the same. However, people might go to a store that sells pens more cheaply, but not for the jacket, because the discount rate is too low. In other words, the relativity of comparing values makes us act irrationally. The pen’s discount rate is 55%, and the jacket’s is only 0.8%. Yet, the total amount is the same for all $8, and the effort to gain that profit is identical. Attitudes and misconceptions about consumption influence how we build wealth . - Joseph’s “just my thoughts”