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2.The Fallacy Of Supply And Demand⚓︎

tl;dr

  • Great Law of Human Action: In order to make a man covet2 a thing, it is only necessary to make the thing difficult to attain.

  • Arbitrary Coherence: It's how we relatively find the value of something regardless of the aboslute value of it not just in present, but also in future; once we are anchored1 to arbitrary value in the first place due to the phenomenon called Imprinting3.

In this chapter, author introduces us to Anchors1 about anchors a Italian diamond dealer and how he earned his name the Pearl King.

The diamond dealer had taken black pearls of dubious worth and made it fabulously fine by using the great law of human action, namely, that in order to make a man covet2 a thing which effects the decision we make. He further explains that the Pearl King anchored1 his black pearls to the finest gems in the world which caused the prices to be followed forever after.

Further the author explains how he achieved it talking about an experiment ran by Konard Lorenz few decades ago about how goslings follows the first moving object they see upon breaking out of their eggs based on what's available in their environment and not just that how they stick with the decision irrspective of the changes introduced later once the decision is made. This natural phenomenon is called as Imprinting3.

The author introduces us the behavior called as Arbitrary Coherence which can described as how our minds shape only the present prices of something, but also future prices based on the arbitrary anchors introduced us in the first place.

Author explains arbitrary coherence with an example of purchasing TVs.

Take a moment to answer this before continuing further...

Given 52" TV is about RS. 48000/-, will you be paying
1. Rs. 38000/= for 32" TV or
2. Rs. 50000/- for 52" TV?

Regardless of whichever the TV you decided to purchase, see how you have always referred back to the original anchor1.

  1. An arbitrary benchmark. ↩↩↩↩

  2. Envy is a feeling of discontent and resentment based on someone else's possessions, abilities, or status, while covet is wishing, longing, or craving for something that belongs to someone else. ↩↩

  3. It is defined as a process whereby, during a brief period of susceptibility, a focal entity or actor (such as an industry, organization, or an individual) develops characteristics that reflect prominent features of the environment, and these characteristics continue to persist despite significant environmental changes in subsequent periods. Source: Wikipedia ↩↩

Last update: 2021-06-21
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