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brilee comments on [link] Betting on bad futures - Less Wrong
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Alice, believing that the world will end, will spend all her money by her predicted end-of-the-world date. She will then be unable to pay back. Bob, knowing this, would never lend her the money.
Alice will still have the human capital, in theory, to pay Bob back, though bankruptcy is an issue.
What do you mean by human capital? I imagine it involves the selling of humans in some form or other. Am I misunderstanding?
Human capital is training, skills, knowledge, etc. Essentially, the idea involves Alice then working to pay off her debts.
Ah, okay. Thank you; I'd heard it before, but for some reason this time only illicit activities came to mind.
Human capital:
http://en.wikipedia.org/wiki/Human_capital
http://www.econlib.org/library/Enc/HumanCapital.html
http://www.investopedia.com/terms/h/humancapital.asp
Alice secures the loan with collateral. At the end of the loan, Bob keeps the collateral.
But then Alice would like just as much to sell the collateral and not take part in the bet.
As I pointed out on the original post, if the collateral is something like a house, you can have your loan and live in it too.
Only assuming the collateral has no value. I wasn't saying that Bob should take possession immediately, just a lien and/or the title.