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RE: Relative Utility Approach

in #economics4 years ago

Wow, all that work to avoid prices. And at the end of the day, it doesn't seem like relative utility itself has a higher relative utility than just plain old traditional price tags.


If markets can operate freely, price mechanisms can provide useful information regarding preferences. Prices are often distorted by tax, subsidies, and monopoly power.

There are also many things that are not captured particularly well by the market, such as externalities.

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 4 years ago 

Yes, I agree that prices do not capture everything. And they are most certainly distorted by the things you mention. But ideally, this just creates opportunity for people who have innovative models and a long time horizon.

I'm not sure if a structured metric like relative utility can be accurately applied, say hypothetically, in an unencumbered economy where speculators are free to explore different time horizons.