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fubarobfusco comments on Misapplied economics and overwrought estimates - Less Wrong Discussion

2 Post author: erratim 12 January 2015 05:10PM

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Comment author: fubarobfusco 12 January 2015 09:32:09PM -1 points [-]

I wrote: "I should not expect that I am the only one quitting X or switching to Y."

I didn't write: "I should expect that everyone else is quitting X or switching to Y."

Your response generalizes back to the stock market, too --- any time the market clears, the number of shares bought equals the number sold. So everyone intends to make money, but any time a nonzero number of people act on their belief "I should buy!" there is also a nonzero number of people acting on "I should sell!". (Not necessarily the same number, of course; nor does the market always clear.) This isn't necessarily because they have different preferences, but because they have different beliefs.

Indeed, for the market to clear, there have to be people with different beliefs or preferences. If literally everyone believes a stock is going to go to $0, nobody will buy it at any price. But if everyone thinks that it will monotonically rise, some people will at various points want to cash out due to their preferences — to buy a house or something.

Comment author: Lumifer 12 January 2015 09:44:04PM *  1 point [-]

I wrote: "I should not expect that I am the only one quitting X or switching to Y."

If you want to treat this literally, this is just a "well, duh" sentence. What's the deeper point behind it?