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Vaniver comments on The Cambist and Lord Iron: A Fairy Tale of Economics - Less Wrong
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You can in the context of that conversation, where it was decided that values would be considered revealed through action rather than stated intention. If your action is forced, then so is your value (even though your stated value or your value revealed in the absence of coercion are/would be different)..
...So if you're not allowed to sell your trumpet, you've been revealed as valuing your trumpet more?
Yes, because of how the word "value" has been defined in this context. One could add more detail to make it more convincing- "normally I would be willing to sell my trumpet for X, but if I sell my trumpet I will be punished an amount Y, and so I am not willing to sell my trumpet for more than X+Y." The trumpet's price has been inflated by the threat of punishment.
Okay, now I can see the application of this argument. You can think of the punishment as a tax, the cost of which gets tacked on to the price of the good so that the seller ultimately gets the same amount of benefit whether they sell it at X price with no punishment or at X+Y price with punishment. (As I understand it, something much like this trade-off happens in drug trafficking.) But when there's no punishment and you're just unable to sell?
The analysis seems to hold if you consider the tax infinitely large (or just arbitrarily large such that it's never the best option).
Wait, that seems too high to me. If you can't sell, then you are left unchanged or neutral. But an infinitely large punishment for selling and gaining a finite good means that you are infinitely badly off.
The only tax that leaves one unchanged or neutral is one exactly equal to the value of your gain. You sell for 10 rupees, the punishment is 10 rupees, and you are equally well-off whether you sell or don't sell.
(Assuming the item has no intrinsic utility or disutility, I guess. Adjust the tax from parity downwards or upwards respectively.)
Only if you take the option of selling it? Keep in mind the original conclusion we're going for- "a punishment that completely prevents me from selling my trumpet hijacks my revealed preference for keeping my trumpet, setting it at infinity."
(For the story's example, the punishments are finite- the prisoners could sneak in unhealthy foods or avoid exercise- and so we're just interested in the weaker statement that the punishment dramatically increases the prisoner's revealed preferences for eating healthily and exercising.)
But surely one's revealed preference for the trumpet wouldn't be infinity, say, but some small number like a million? So the infinity is excessive.
Like said in the grandparent, for a finite punishment the value would be finitely increased. But I don't see an issue with saying complete prevention results in infinite value, knowing that's an idealized case.