Thursday, March 27, 2008

"Diamond water paradox"


The Volokh Conspiracy - -:
"Oddly enough, the objectively reasonable price is always above what the buyers paid for it, after commissions.
The Abbotts paid $583,425 for their house last April. The market in Las Vegas has tanked since then, with prices down 20% from January 2007 to January 2008, according to the Case-Schiller index. I don't think it's the buyers who aren't being realistic. More generally, as famously explained via the solution to the 'diamond water paradox,' the value an item has in the marketplace is solely what the highest bidder is willing to pay, based on subjective valuation"

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