Back from the continent, where my wife and kids spent a month, and I spent a very enjoyable week. Saw old friends (but no absent lovers) and the weather was great.
Again, on my way to work, things kind of fermented in my brain, and several discussions from the last few days culminated into these thoughts:
a) the utility function of money is an interesting economical concept. The idea that 10 Euros are of different value to different people, based on their current economical situation, is definitely true. And if you got all the bases covered, the next 10 simoleans can be spent on luxury, while if you are struggling to make ends meet, the same next 10 simoleans are of different value to you
b) where the utility function of money fails though, is in this concept: the threshold function of money. Think about it, you spent the same 10 cents differently, based on what you want to buy. If you want to by a can of peas, you might pick a brand, based on it being 10 cents cheaper (you value price/performance) or on it being 10 cents more expensive (you value the value/quality). However, if you buy a car, you might not car about a 10 cent difference, even though mathematically speaking (and economically) 10 cents are 10 cents. So there's a definite difference to the value of the same amount of money based on what you are going to by (or in economical terms, what market you are in). Well enough, that is still covered by the utility function. However, some markets (like the IPO game, or luxury vehicles) have also certain thresholds, that you have to exceed, for you to participate. If you want to become a stock broker (in your own brokerage firm) you will have to have tens and hundreds of millions of dollars, euros or simoleans to play/enter. You might express this as a non-linearity in the utility function, but I think there's more about that.
Anyway, enough about these idle thoughts, back to work.
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