100 Economics Question of the Day: An Intermittent Blog: Gedankenexperiment II: Economic Value of Newslettering Cassandra

Tuesday, December 06, 2005

Gedankenexperiment II: Economic Value of Newslettering Cassandra

Remember your answer to the first question.

Now, assume that you know of a financial newsletter, such as Grant's, published by an acquaintance of Cassandra's. The editor/publisher finds her statements so improbable that s/he prints several of them as absurdities.

What is the value of the newsletter?

Does it increase or decrease if the Absurdities feature becomes a regular event?

Assuming that you view the value of the newsletter as being higher than speaking with Cassandra directly, explain your answer. Then explain how the value of the newsletter would, in an economically perfect world, be divided.

Explain differences between your ideal and your expectation of reality.

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