[Jewelry making - Article 01163] - Re: [Orchid] Problems with Pepe Mill sold by Stuller

[leonid surpin]

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    We went a little bit of topic. I used 2 prisoners as an example
    because that is how this problem defined in the text books, however
    Mafia example does not negate the problem, because by keeping quiet
    they are acting in their best interest, since the alternative is
    death. 

    The more general problem is to understand why the best result is not
    achieved by acting in one's self interest. To apply our understanding
    to Pepe Mill case, by acting in immediate self-interest and trying to
    preserve our capital, we purchase low quality product and suffer the
    consequences. We could make an argument that it would be acting in
    our self interest by purchasing better quality and spending more
    money, but element of uncertainty creeps in. What if we decide to
    close our shop in 3 months ? The fact that better quality mill can
    serve a life time is immaterial in this case. So it appears that
    self-interest is modified by the time and the longer the time
    interval, the more uncertain the prospect of deriving any benefit by
    acting altruistically. 

    I am not advocating either course of action. I am simply observing
    the difficulty in arriving at the right mix of quality that we trying
    to get and money that we are willing to spend. 

Leonid Surpin.
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